2023 (4) TMI 831 - AT - Insolvency and Bankruptcy

Tribunal dismisses contempt case and refuses to revive CIRP

The Tribunal declined to find willful disobedience by the Respondent in failing to comply with the order dated 27.07.2022 regarding payments and charges ... CIRP - Initiation of Contempt proceedings - willful disobedience of order - Contemnor failed to remit the conducting charges after July 2022 for Paras Mall, Zirakpur - willful disobedience beyond reasonable doubt, proved or not - Revival of the CIRP against the Respondent - HELD THAT:- The law is well settled that jurisdiction for punishing a Contemnor can be exercised only when willful disobedience is proved beyond reasonable doubt. It is clear that in contemplation of the Settlement Agreement, payments were made by the Respondent and after the Settlement Agreement was entered on 14.07.2022, further payment of INR 58,20,378/- odds was made. For non-payments thereafter, the Respondent has come up with the plea as has been communicated by the Respondent to the Applicant by email dated 30.08.2022, as extracted above and other facts as pleaded in the reply filed to this Contempt Application. The facts and pleadings by the parties indicate that there were some issues between the parties regarding the premises for which conducting charges were required to be paid by the Respondent - the facts and circumstances do not indicate that there is any willful disobedience by the Respondent in discharging their obligations under the Settlement Agreement. It does appear that as per Settlement Agreement, certain payments have been made and issues arose between the parties after taking the possession of the premises by the Respondent and inspection and reports were obtained by the Respondent regarding the condition of the premises and structural stability. We are not inclined to proceed to punish the Respondent for any contempt of order of this Court dated 27.07.2022. We, thus, decline to proceed to punish the Respondent for contempt. We, however, make it clear that insofar as inter se rights of the parties regarding claims, we have not expressed any opinion and the same can be examined and decided in appropriate Forum. Revival of the CIRP against the Respondent - HELD THAT:- Section 9 proceedings were initiated by the Operational Creditor for a total amount of INR 1,16,79,622/-. It is true that settlement entered between the parties on 14.07.2022 was for an amount of INR 6,09,68,538/-, which was the amount claimed to be in default from 1st November, 2019 to 23rd March, 2020. The total debt in Section 9 Application having been paid, we are of the view that no useful purpose will be served in directing revival of Section 9 Application and proceeding of CIRP in respect of Corporate Debtor. The payments, having been made for which Section 9 Application was filed, it is clear that Respondent has capacity to make the payment and no CIRP needs to be undertaken at this stage - with regard to claim by the Operational Creditor, proceedings under Section 9 of the Arbitration and Conciliation Act, 1996 have been initiated as noted above, where notices have also been issued to M/s Cinema Ventures Private Limited, where claim of both the parties shall be examined and determined. This has also weighed in not reviving Section 9 proceedings initiated by the Operational Creditor. Contempt cases dismissed. Issues Involved:1. Alleged willful disobedience of the order dated 27.07.2022.2. Revival of the Corporate Insolvency Resolution Process (CIRP) against the Respondent.Summary:1. Alleged Willful Disobedience of the Order Dated 27.07.2022:The Applicant filed a Contempt Application alleging non-compliance with the order dated 27.07.2022 by the Corporate Debtor. The Applicant claimed that the Respondent failed to make payments as per the Settlement Agreement, which included monthly payments and conducting charges for Paras Mall, Zirakpur. The Respondent argued that there was no willful breach, citing payments made and issues with the premises' structural stability. The Tribunal noted that the Settlement Agreement was partially complied with, and subsequent issues arose due to the condition of the premises. Citing precedents, the Tribunal emphasized that willful disobedience must be proved beyond reasonable doubt and found no willful disobedience by the Respondent. Thus, the Tribunal declined to punish the Respondent for contempt.2. Revival of the Corporate Insolvency Resolution Process (CIRP) Against the Respondent:The Applicant sought revival of the CIRP based on a clause in the Settlement Agreement, which allowed revival in case of default. The Respondent argued that the entire amount for which the Section 9 Application was filed had been paid, and further claims were being pursued under the Arbitration and Conciliation Act. The Tribunal agreed that the Section 9 proceedings were initiated for INR 1,16,79,622/-, which had been paid, and noted that further claims were being addressed in arbitration. Consequently, the Tribunal found no purpose in reviving the Section 9 Application and dismissed the IA No.4842 of 2022.Conclusion:The Tribunal dismissed both the Contempt Case (AT) No.19 of 2022 and IA No.4842 of 2022, clarifying that no opinion was expressed on the parties' claims, which should be examined by the appropriate forum.