Tribunal rules debt not operational under IBC, releases Corporate Debtor from CIRP, and grants appeal.

The tribunal determined that the claim raised by Respondent No. 1 did not qualify as an operational debt under the Insolvency and Bankruptcy Code (IBC). As a result, the issues of whether the debt exceeded Rs. 1 lakh and if there was a default were not considered. The tribunal overturned the Adjudicating Authority's decision, released the Corporate Debtor from Corporate Insolvency Resolution Process (CIRP), and permitted it to operate autonomously under its board of directors. The appeal was granted, and all associated orders were invalidated and revoked.

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Issues Involved:
1. Whether the claim raised by Respondent No. 1 is an operational debt under IBC.
2. Whether the operational debt exceeds Rs. 1 lakh.
3. Whether there is a pre-existing dispute between the parties.

Detailed Analysis:

Issue 1: Whether the claim raised by Respondent No. 1 is an operational debt under IBC.

The primary issue revolves around the nature of the claim made by Respondent No. 1, whether it constitutes an operational debt. According to Section 5(21) of the IBC, an operational debt is defined as a claim in respect of the provision of goods or services, including employment or dues arising under any law payable to the government. The agreement between the parties describes them as "general profit sharing partners" in the Cathlab and Cardiac Surgery department. The agreement outlines shared responsibilities and investments, indicating a partnership rather than a service provider and recipient relationship. The tribunal concluded that the relationship between the parties was one of joint control and shared liabilities, thus not fitting the definition of an operational debt under IBC.

Issue 2: Whether the operational debt exceeds Rs. 1 lakh.

The tribunal did not need to delve deeply into this issue since it determined that the claim did not constitute an operational debt. However, it was noted that the Corporate Debtor had made payments of Rs. 5 lakhs on two occasions, which the Adjudicating Authority had used to justify the existence of a debt. The tribunal emphasized that the nature of transactions should be properly examined to prevent misuse of IBC provisions.

Issue 3: Whether there is a pre-existing dispute between the parties.

The tribunal noted that there were several disputes between the parties, including differences over profit-sharing calculations, responsibilities, and performance under the agreement. The existence of arbitration proceedings and police complaints further supported the presence of pre-existing disputes. The tribunal highlighted that the Adjudicating Authority had overlooked these disputes and had erroneously admitted the Section 9 application under IBC.

Conclusion:

The tribunal held that the claim made by Respondent No. 1 did not constitute an operational debt under IBC. Consequently, the question of whether the debt exceeded Rs. 1 lakh and whether there was a default did not arise. The tribunal set aside the Adjudicating Authority's order, released the Corporate Debtor from CIRP, and allowed it to function independently through its board of directors. The appeal was allowed, and all related orders were declared illegal and set aside.

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