Tribunal dismisses appeal challenging rejection of Insolvency Code application. Settlement Agreement deemed invalid.

The Tribunal dismissed the appeal challenging the Adjudicating Authority's decision to reject a Section 9 application under the Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority found discrepancies in the amounts claimed and terms of agreements, concluding that the petition was not maintainable for interest recovery. Additionally, the Tribunal deemed a Settlement Agreement invalid due to being anti-dated, unstamped, and unregistered, emphasizing that claims from the agreement did not constitute operational debt under the Code. The Tribunal clarified that contractual claims should be pursued through civil proceedings, not insolvency proceedings.

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Issues Involved:
1. Dismissal of Section 9 Application under the Insolvency and Bankruptcy Code, 2016 by the Adjudicating Authority.
2. Validity and enforceability of the Settlement Agreement dated 01.11.2018.

Summary:

Issue 1:
The Appellant appealed against the Impugned Order of the Adjudicating Authority under Section 9 of the Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority dismissed the Application citing that the petition was filed for the recovery of interest amount, which is not maintainable under Section 9 of the Code. The Adjudicating Authority noted discrepancies in the amounts claimed and the terms of the agreements between the parties. The Appellant contended that the Corporate Debtor had issued cheques that were dishonored, indicating an admission of liability. The Appellant argued that the Operational Creditor was entitled to a commission as per the Memorandum of Understanding for Business Development services provided. The Appellant also highlighted communications and agreements supporting the outstanding amount claimed.

Issue 2:
The main issue in the Appeal was the validity of the Settlement Agreement dated 01.11.2018. The Appellant relied on this Agreement to establish the debt due and payable. However, the Tribunal found that the Agreement was anti-dated, unstamped, and unregistered. The Tribunal noted discrepancies in the dates mentioned in the Agreement and the actual execution date. The Tribunal emphasized that claims arising from this disputed Agreement did not fall within the definition of Operational Debt under the Code. The Tribunal held that the Insolvency and Bankruptcy Code is not a recovery mechanism and that contractual claims like those arising from the MOU should be pursued through civil proceedings rather than insolvency proceedings.

In conclusion, the Appeal was dismissed by the Tribunal due to the lack of merit in the claims presented and the discrepancies found in the agreements and documents provided. The Tribunal emphasized the importance of adhering to legal requirements and definitions under the Code while highlighting the distinction between operational debt and contractual claims.

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