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Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + Tri Insolvency and Bankruptcy - 2020 (7) TMI Tri This

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2020 (7) TMI 795 - Tri - Insolvency and Bankruptcy


Issues:
Initiation of Corporate Insolvency Resolution Process based on default in payment against a Corporate Debtor.

Analysis:
The petitioner, M/s Jai International Pvt. Ltd., filed a petition for Corporate Insolvency Resolution Process (CIRP) against M/s Jaroli Agro Private Limited, alleging default in payment of ?30,75,408. The petitioner had paid an advance of ?40,00,000 to the Corporate Debtor for consultancy services in export of agricultural products. The Corporate Debtor was introduced by Mr. Prajendra Jaroli, who was previously employed by the petitioner. The petitioner claimed that only ?10,00,000 was adjusted from the advance, leaving a balance of ?30,75,408 unpaid. The Corporate Debtor disputed the claim, citing a pre-existing dispute and contending that the amount was part of a Memorandum of Understanding (MoU) dated 24/08/2013. The Corporate Debtor argued that the amount was treated as a loan, not commission, and thus, not an operational debt as per the Insolvency and Bankruptcy Code. The ledger accounts presented by both parties showed conflicting interpretations of the nature of the payment, with the petitioner claiming it as commission and the Corporate Debtor considering it a loan.

The Tribunal observed that the ledger indicated the payment of ?30,00,000 as a loan, not an advance commission, as claimed by the petitioner. As per Section 5(21) of the Code, operational debt pertains to goods or services, which this payment did not fall under. The Tribunal also noted the ongoing dispute between the parties, as evidenced by previous legal proceedings initiated by Mr. Prajendra Jaroli against the petitioner. This pre-existing dispute fell under the definition of a dispute as per Section 5(6) of the Code. The Tribunal found that the petition was filed for recovery purposes, rather than as a genuine insolvency matter, and was not maintainable under Section 9 of the Insolvency and Bankruptcy Code. Additionally, the claim was held to be time-barred due to the lack of payment or acknowledgment of liability within the limitation period. The Tribunal dismissed the petition, stating that the Corporate Debtor's contentions regarding the nature of the payment, pre-existing dispute, and limitation period were valid reasons for the dismissal.

 

 

 

 

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