2021 (3) TMI 873 - Tri - Insolvency and Bankruptcy

Operational Creditors' Joint Application Dismissed for Corporate Insolvency

YUVRAJ AGARWAL AND ADREEK MEDIA PRIVATE LIMITED Versus M/s ASPEK MEDIA PVT. LTD.

The Tribunal dismissed the application for initiating the Corporate Insolvency Resolution Process against the Corporate Debtor due to the legal invalidity ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - application filed by two Operational Creditors filed jointly - existence of debt and dispute or not - HELD THAT:- The date of default is 21.10.2018 which is the date of the last invoice issued which was unpaid, and the present application is filed on 18.12.2018. Hence, the application is not time barred and filed within the period of limitation. The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application. It has been observed by the this Adjudicating Authority that Section 8 Demand Notice issued and the application under Section 9 has been filed by both the Operational Creditors jointly. The amount in default is arising out of the claims of a person and a company which is a separate legal entity - in the present matter the Demand notice under Section 8 should have been issued by an 'Operational Creditors' individually and further the application under Section 9 has to be filed by Operational Creditors individually and not jointly. Joint application under Section 9 by one or more 'Operational Creditor' is not maintainable - prayer for initiating Corporate Insolvency Resolution process against the Corporate Debtor is not sustainable - Application dismissed. Issues:1. Application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency process against a Corporate Debtor.2. Claim of Operational Creditor for unpaid consultancy services.3. Dispute regarding breach of confidentiality and competing business relationship.4. Response of Corporate Debtor to the Demand Notice and allegations against Operational Creditor.5. Legal validity of joint application by Operational Creditors under Sections 8 and 9 of the Insolvency and Bankruptcy Code.Issue 1: Application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016The application was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, by the Applicant seeking to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor, based on unpaid invoices and reimbursement claims.Issue 2: Claim of Operational Creditor for unpaid consultancy servicesThe Applicant, an Operational Creditor, claimed to have provided consultancy services to the Corporate Debtor from April 2015 onwards. Despite payments made for invoices up to May 2018, the Corporate Debtor failed to clear the outstanding amount of Rs. 25,70,656 for services rendered from June 2018 to October 2018.Issue 3: Dispute regarding breach of confidentiality and competing business relationshipThe Corporate Debtor alleged that the Operational Creditor breached confidentiality agreements by engaging in a competing business relationship without consent. It was claimed that the Operational Creditor shared confidential information, initiated business relations with competitors, and operated in conflict with the Corporate Debtor's interests.Issue 4: Response of Corporate Debtor to the Demand Notice and allegations against Operational CreditorIn response to the Demand Notice issued by the Operational Creditor, the Corporate Debtor raised a Notice of Dispute, accusing the Operational Creditor of misconduct, including sharing confidential information and engaging in competing business activities. The Corporate Debtor terminated the services of the Operational Creditor based on these allegations.Issue 5: Legal validity of joint application by Operational Creditors under Sections 8 and 9 of the Insolvency and Bankruptcy CodeThe Tribunal observed that a joint application under Section 9 by one or more Operational Creditors is not maintainable. It was held that a Demand Notice under Section 8 should be issued individually by Operational Creditors, and the application under Section 9 must also be filed individually. Therefore, the Tribunal rejected the joint application and deemed the prayer for initiating Corporate Insolvency Resolution process against the Corporate Debtor as unsustainable.In conclusion, the Tribunal dismissed the application for initiating the Corporate Insolvency Resolution Process against the Corporate Debtor due to the legal invalidity of the joint application by Operational Creditors. The judgment highlighted the importance of individual filings by Operational Creditors under Sections 8 and 9 of the Insolvency and Bankruptcy Code to maintain legal compliance and procedural requirements.