NCLT confirms jurisdiction under Section 60(5) IBC for corporate debtor disputes, orders payment of admitted liability

NCLT Mumbai held that it has jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 to adjudicate disputes relating to corporate debtor's insolvency. The respondent admitted liability of INR 12,36,28,455/- in email correspondence, creating no dispute regarding this amount. Citing Gujarat Urja Vikas Nigam Ltd, the tribunal emphasized that NCLT has exclusive jurisdiction over proceedings involving corporate debtors under the Code. The application was partly allowed, directing respondent to pay the admitted amount immediately. For remaining disputed amounts, liquidator was granted permission under Section 33(5) to initiate appropriate legal proceedings.

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Issues Involved:
1. Admissibility of claims under Section 60(5) of the Insolvency and Bankruptcy Code, 2016.
2. Jurisdiction of the National Company Law Tribunal (NCLT) to adjudicate disputes related to recovery of money during liquidation.
3. Legitimacy of the Respondent's claim of liquidated damages and deductions.
4. Entitlement of the Liquidator to recover admitted dues from the Respondent.

Issue-wise Detailed Analysis:

1. Admissibility of Claims under Section 60(5) of the Insolvency and Bankruptcy Code, 2016:
The Applicant/Liquidator sought directions under Section 60(5) read with Section 35(1)(b), (d), and (n) of the Insolvency and Bankruptcy Code, 2016, for the release of outstanding dues from the Respondent. The Respondent argued that the Liquidator is attempting to circumvent the legal process for recovery of money by invoking the residuary powers of the Tribunal. The Tribunal found that the Respondent had admitted liability for INR 12,36,28,455/- in an email dated 04.06.2022, and thus, no adjudication was required for this amount. Citing the Supreme Court's decision in Gujarat Urja Vikas Nigam Ltd v/s. Amit Gupta, the Tribunal held that disputes pertaining to insolvency can be resolved under Section 60(5) of the Code, emphasizing the need for a unified and expedited insolvency process.

2. Jurisdiction of the NCLT to Adjudicate Disputes Related to Recovery of Money During Liquidation:
The Respondent contended that disputes over payment should be resolved through arbitration or civil court proceedings, not under the NCLT's residuary jurisdiction. However, the Tribunal emphasized that the NCLT has jurisdiction over disputes arising from or related to the insolvency of the corporate debtor, as established in Gujarat Urja Vikas Nigam Ltd. The Tribunal noted that relegating the Liquidator to civil or arbitral proceedings for admitted dues would defeat the Code's objective of a time-bound insolvency process.

3. Legitimacy of the Respondent's Claim of Liquidated Damages and Deductions:
The Respondent claimed liquidated damages and made deductions from the amounts due to the Corporate Debtor, arguing that the Corporate Debtor had not fulfilled contractual obligations. The Tribunal found that the Respondent's imposition of liquidated damages and deductions was not supported by the facts, as the Corporate Debtor had completed the works and the Respondent had admitted the liability for INR 12,36,28,455/-. The Tribunal dismissed the Respondent's claims as they were raised after the completion of work and lacked substantial evidence.

4. Entitlement of the Liquidator to Recover Admitted Dues from the Respondent:
The Tribunal concluded that the Respondent had unequivocally admitted liability for INR 12,36,28,455/-, and thus, directed the Respondent to pay this amount to the Applicant forthwith. For the remaining disputed amount, the Tribunal granted permission to the Liquidator under Section 33(5) of the Code to initiate appropriate legal proceedings. The Tribunal emphasized that driving parties to unnecessary and lengthy litigation for undisputed liabilities would be counterproductive to the objectives of the Insolvency and Bankruptcy Code.

Conclusion:
The application was partly allowed, directing the Respondent to pay the admitted liability of INR 12,36,28,455/- to the Applicant immediately. For the remaining disputed amount, the Liquidator was granted permission to initiate legal proceedings under Section 33(5) of the Code. The Tribunal's decision underscores the importance of a unified and expedited insolvency process, ensuring that admitted claims are settled without unnecessary delays.

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