Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + Tri Insolvency and Bankruptcy - 2020 (6) TMI Tri This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (6) TMI 747 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor had failed to redeem the Optionally Convertible Redeemable Preference Shares (OCRPS) on or before 15.04.2019 in terms of the Share Subscription and Shareholders Agreement (SSSA) - existence of debt and dispute or not - HELD THAT:- It is settled law that generalia specialibus non derogant – special law prevails over general law. In HINDUSTAN PETROLEUM CORPN. LTD. VERSUS PINKCITY MIDWAY PETROLEUMS [2003 (7) TMI 493 - SUPREME COURT] the Hon’ble Supreme Court held that where an arbitration clause exists, the court has a mandatory duty to refer dispute arising between the contracting parties to arbitrator. It quoted with approval the decision of the same court in P. ANAND GAJAPATHI RAJU & ORS. VERSUS PVG. RAJU (DIED) & ORS. [2000 (3) TMI 1068 - SUPREME COURT] wherein it was held that the language of section 8 of the Arbitration & Conciliation Act, 1996, is peremptory and the court is under an obligation to refer parties to arbitration. In a section 7 petition, there has to be a judicial determination by the Adjudicating Authority as to whether there has been a ‘default’ within the meaning of section 3(12) of the IBC - In the present case, the dispute centres around three things – (1) The valuation of the Respondent/Financial Creditor’s OCRPS; (2) The right of the Respondent/Financial Creditor to redeem such OCRPS when it had participated in the process to convert its OCRPS into equity shares of the Applicant/Corporate Debtor; and (3) Fixing of the QIPO date. All of these things are important determinants in coming to a judicial conclusion that a default has occurred. The invocation of arbitration in a case like this seems to be justified. The default has not occurred. It is noted that Mr Mustafa Doctor’s statements that the Applicant/Corporate Debtor is a solvent, debt-free and profitable company. It will unnecessarily push an otherwise solvent, debt-free company into insolvency, which is not a very desirable result at this stage. The disputes that form the subject matter of the underlying Company Petition, viz., valuation of shares, calculation and conversion formula and fixing of QIPO date are all arbitrable, since they involve valuation of the shares and fixing of the QIPO date. Therefore, an attempt must be made to reconcile the differences between the parties and their respective perceptions. Also, no meaningful purpose will be served by pushing the Applicant/Corporate Debtor into CIRP at this stage. Application allowed.
|