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2019 (8) TMI 874 - Tri - Insolvency and BankruptcyAdmissibility of petition - initiation of Corporate Insolvency Resolution Process - Corporate debtor - scope of 'Operational Debt' - section 9 of Insolvency & Bankruptcy Code, 2016 - HELD THAT:- The debt in hand pertains to ‘liquidated damages’ and is not an Operational Debt within the meaning of Section 5(21) of the Code. The Liquidated damages are the damages whose amount the parties designate during the formation of a contract for the injured party to collect as compensation upon a specific breach, such as in this case, non-performance. The liquidated damages can be crystallised only after adjudication from a court of law. Its reasonableness is also decided by a court of law. on the other hand, the insolvency proceedings are not the appropriate forum to decide the reasonability of the liquidated damages or to file claim for damages. Hence, the damages claimed in the present case cannot be adjudicated as the same is the subject matter of a civil suit. Liquidated damages are not an actionable claim, until and unless adjudicated. This is the first reason for not considering the liquidated damages as ‘operational debt’ - Liquidated damages are provided in certain legal contracts as an estimate of otherwise intangible or hard-to-define losses to one of the parties. As against that, the meaning of ‘Operational Debt’ is a claim in respect of goods supplied, or services rendered as defined in section 5(21) of the Code. Therefore, it can be concluded that the impugned claim of damages, neither ascertainable nor crystallised, hence out of the ambits of the Operational Debt. This petition stands outside the scope of the Code and Section 9 thereof - appeal dismissed on maintainability.
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