TaxTMI 
TaxTMI 
2022 (1) TMI 1135
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....fra Projects Pvt. Ltd. (Corporate Debtor) and the 2nd Respondent is a Director of the suspended Board of the said Corporate Debtor. 3) The Corporate Debtor purchased a plot of land admeasuring 8 Acres and 13 Guntas in Survey No.88/2 and 1 Acre and 28 Guntas in Survey No.89/2 both situated at Kannamangala Village, Kasabahobli, Devanahalli at Bengaluru for a total sale consideration of Rs. 24,06,00,000/- from the Respondent. 4) It is submitted that subsequent to the purchase of the said property, it was revealed that the Respondent had suppressed the following disputes pertaining to the said land viz. pendency of O.S. No.381 of 2015 filed by B.K. Rajashree and Ors. against the Respondent herein seeking declaratory and injunctury relief as to the said property. 5) Pendency of suit O.S. No.770of 2015 filed by the Civil Aviation and Meteorological Department Employees Co.op. House Building Society Ltd. against the Respondent herein seeking declaratory and injunctury relief against the sale by the Respondent herein to the Corporate Debtor. 6) It is submitted that prior to finalizing purchase of the said land the Corporate Debtor had given some cheques to show its bona fide to the Res....
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....ned Adjudicating Authority failed to take note of the fact that the cheques referred to therein pursuant to the Memorandum of Agreement dated 08.06.2015, do not have a date. 13) It is submitted that the claim made by the Respondent herein under the disputed Memorandum of Agreement and a suit is pending before the City Civil Court in O.S.No.1445 of 2020, therefore, it is a pre-existence of dispute. 14) It is submitted that the amounts claimed by the Respondent to the extent of Rs. 6 Crores, the said amount due to the Respondent is disputed under the Memorandum of Agreement, therefore, the disputed claim would not come within the definition of Operational Debt under Section 5(21) of the Code. 15) It is submitted that the disputed agreement cannot be proved to be genuine and did not know of its existence until the Respondent issued a reply on 06.10.2016 in reply to the legal notice dated 28.09.2016. Further the claim is barred by limitation. 16) In view of the aforesaid reasons, the Learned Counsel for the Appellant prayed this Bench to set aside the order passed by the Adjudicating Authority dated 16.04.2021 whereby a CIRP was initiated against the Corporate Debtor i.e. Metrik In....
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....e sale itself. The Operational Creditor provided declarations, representations and agreed to continue to indemnify the Corporate Debtor and defend the Corporate Debtor with regard to claims in the schedule property mentioned therein. 21) It is submitted that on 28.09.2016 the Corporate Debtor issued Legal Notice calling upon the Operational Creditor to settle the pending cases based on the Deed of Indemnity to pursue the disputes between the Operational Creditors and Civil Aviation Society. The Operational Creditor issued reply to the Legal Notice denying all allegations and confirmed that it defending the Corporate Debtor as per the undertaking under the Deed of Indemnity. It is pertinent to mention that there was no whisper about the service fee in the legal notice and the Operational Creditor reserved its rights to recover the service fee from the Corporate Debtor. 22) It is submitted that on presentation of cheques for encashment, all cheques were returned with an endorsement payment stopped by drawer. Despite the delivery of notice under Section 138 of NI Act, 1881, the Corporate Debtor instead of paying the cheque amount replied by denying execution of MOU as such. 23) It ....
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....rties. The issue emanates from the Memorandum of Understanding dated 08.06.2015 entered between the Corporate Debtor and the Respondent and signed both the parties. The basis for entering the MOU is for payment of liability by the Corporate Debtor/appellant for development carried out by the second party that is the Respondent herein in the schedule property and expenditure incurred for conversion of schedule property to residential purpose, approval of provisional plan from the BIAPPA, erection of fence around the compound wall of the schedule property, levelling of the schedule property, etc. and expenditure included for liaison of all such works arrived at Rs. 6 Crores. Class D of the MOU, it is stated that the Corporate Debtor having verified and ascertained the amount spent by the Respondent/Operational Creditor for development of the Schedule property has agreed to pay the said amount of Rs. 6 Crores and have paid the said amount in the following manner. In pursuance thereof, the Corporate Debtor issued 12 cheques each amounting to Rs. 50 Lakhs drawn on HDFC Bank, Kasturba Road Branch, Bengaluru. It is also stated in the Agreement that the Corporate Debtor admits that the pay....
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....res is false and relying on a concocted document. 34) It is seen that after presentation of cheques by the Respondent with the Bank, the cheques have been dishonored and the Respondent filed private complaint before the Civil Court under Section 138 of Negotiable and Instruments Act. 35) The moot point for consideration is whether the claim made by the Respondent is an Operational Debt and the Respondent is an Operational Creditor. In this regard, we refer to claim as defined under sub section 6 of section 3 means (a) a right to payment, whether or not, such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured (b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured. Further, sub section 11 of Section 3 defined 'debt' means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt. The word "Operational Creditor" defined under sub Section 20 of Section 5 of I&B Code, 2016,....
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....orate debtor is then given a period of 10 days from the receipt of the demand notice or copy of the invoice to bring to the notice of the operational creditor the existence of a dispute, if any. We have also seen the notes on clauses annexed to the Insolvency and Bankruptcy Bill of 2015, in which "the existence of a dispute" alone is mentioned. Even otherwise, the word "and" occurring in Section 8(2)(a) must be read as "or" keeping in mind the legislative intent and the fact that an anomalous situation would arise if it is not read as "or". If read as "and", disputes would only stave off the bankruptcy process if they are already pending in a suit or arbitration proceedings and not otherwise. This would lead to great hardship; in that a dispute may arise a few days before triggering of the Insolvency Process, in which case, though a dispute may exist, there is no time to approach either an Arbitral Tribunal or a court. Further, given the fact that long limitation periods are allowed, where disputes may arise and do not reach an Arbitral Tribunal or a court for up to three years, such persons would be outside the purview of Section 8(2) leading to bankruptcy proceedings commencing a....