2021 (5) TMI 425 - Tri - Insolvency and Bankruptcy

Application for Corporate Insolvency Process Dismissed - Lack of Creditor Status

The Tribunal dismissed the application under section 9 of the Insolvency and Bankruptcy Code, 2016, for initiation of Corporate Insolvency Resolution ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - Existence of debt and dispute or not - HELD THAT:- The insolvency resolution process has serious civil consequences on the welfare of the company including its members and employees. Admittedly the Applicants are erstwhile directors/shareholders of the aforesaid company which has ceased to exist w.e.f 08.08.2018 and the said company has not been revived and no steps have been taken by the Applicants for restoration of the name of the company. Burden of proof clearly lies on the applicant regarding maintainability of the present application. The applicants however could not prove with documentary evidence as to how they are entitled to file present application as operational creditors of the corporate debtor when they have not supplied any goods or provide any service to corporate debtor in their personal capacity. It is seen that the company is not in existence. Section 250 of the Company Act, 2013 provides for the realization of the amount but this is not a recovery proceeding therefore the provision of the section 250 is not applicable on the application filed under Section 9 of the Code. The applicants are not the creditors of the corporate debtor and therefore they are not entitled to file the present application. That apart the claim has been disputed by respondent even before filing of present application. Petition dismissed. Issues:Application under section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.Analysis:1. The applicant filed an application under section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process against the respondent company, claiming to be the operational creditor. The applicant alleged non-payment of parking charges by the respondent company, leading to a significant outstanding amount.2. The respondent contested the application, arguing that the applicant, as erstwhile directors/shareholders of a company that had been dissolved, lacked standing to file the application. The respondent claimed that the invoices submitted by the applicant were false and fabricated, generated after the dissolution of the company, and disputed the existence of any operational debt owed to the applicant.3. The Tribunal noted that the burden of proof lay with the applicant to establish their entitlement as operational creditors of the corporate debtor. It was observed that the applicant failed to provide documentary evidence demonstrating their right to file the application, especially considering they had not directly supplied goods or services to the corporate debtor in their personal capacity.4. Additionally, the Tribunal found that the company in question had ceased to exist, and while Section 250 of the Companies Act, 2013 provided for realization of amounts due, it was not applicable in the context of the insolvency proceedings under Section 9 of the Code. The Tribunal concluded that the applicants were not creditors of the corporate debtor and therefore not entitled to file the application, especially since the respondent had disputed the claim prior to the application being filed.5. Consequently, the Tribunal dismissed the petition, emphasizing that the observations made in the order should not be construed as a judgment on the merits of the underlying dispute, and the rights of the applicants to pursue their claims in other forums remained unaffected by the dismissal of the instant application.