Appeal Dismissed: No Privity of Contract or Financial Debt under Insolvency Law

The Tribunal dismissed the appeal as it found no privity of contract between the Petitioner and the Corporate Debtor, no evidence of financial debt as per the Insolvency and Bankruptcy Code, 2016, and no acknowledgment of debt in the balance sheets. The agreements presented were deemed not binding on the Corporate Debtor. The Tribunal emphasized that the claimed amounts did not meet the criteria of 'Financial Debt' under the Code, stating that the IBC is not meant for recovery or settling collateral disputes. The appeal was thus dismissed, upholding the Adjudicating Authority's decision.

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Issues Involved:
1. Privity of Contract between Petitioner and Corporate Debtor.
2. Existence of Financial Debt under Section 5(8) of the Insolvency and Bankruptcy Code, 2016.
3. Limitation and Acknowledgment of Debt in Balance Sheets.
4. Applicability of LLP Retirement and Supplementary Retirement Deeds.

Detailed Analysis:

1. Privity of Contract:
The Adjudicating Authority observed that there was no privity of contract between the Petitioner and the Corporate Debtor. The LLP agreement and the Supplementary Retirement Deed were not signed by both parties. The Tribunal noted, "there is no privity of contract between Petitioner and Corporate Debtor," and further emphasized that "a mere reference to certain liability while handing out cheques, confirmation of liability, it cannot be construed that there is a binding agreement of any debt due."

2. Existence of Financial Debt:
The Tribunal assessed whether the Petitioner demonstrated the basic ingredients of financial debt. It concluded that the Petitioner failed to show that the debt was disbursed against the consideration for time value and money. The Tribunal stated, "the Petitioner has failed to demonstrate the basic ingredients of financial debt along with interest, if any, which is disbursed against consideration for time value and money." The cheques presented as security did not establish any financial debt.

3. Limitation and Acknowledgment of Debt:
The Appellant argued that the claims were within the period of limitation due to acknowledgments in the Balance Sheets. However, the Tribunal found that these acknowledgments were for accounting purposes and did not constitute a financial debt. The Tribunal noted, "the acknowledgement in the Balance Sheets is only for the sake of accounting purpose and the same cannot be read dehors the facts."

4. Applicability of LLP Retirement and Supplementary Retirement Deeds:
The Tribunal scrutinized the LLP Retirement Agreement and the Supplementary Retirement Deed. It concluded that these agreements were between the 'Tridhaatu Group' and 'Prince Care Group' and did not bind the Corporate Debtor. The Tribunal stated, "both the Retirement Deed dated 12/08/2016 and the Supplementary Retirement Deed dated 13/08/2016 were entered into between the 'Tridhaatu Group' and 'Prince Care Group', to which the 'Corporate Debtor' 'Tridhaatu Aranya Developers LLP' is not a party."

Assessment and Conclusion:
The Tribunal concluded that the amounts claimed did not possess the essential ingredients of 'Financial Debt' as defined under Section 5(8) of the Code. It emphasized that the IBC is not a recovery proceeding or a code for settling collateral disputes. The Tribunal stated, "the 'amounts' do not possess the essential ingredients of 'Financial Debt' as defined under Section 5(8) of the Code." Consequently, the appeal was dismissed, with the Tribunal finding no reason to interfere with the Adjudicating Authority's order.

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