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2020 (10) TMI 821 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- This Adjudicating Authority has to satisfy itself with the facts of the case and especially the fact that a clear case is made out for the initiation of CIRP under this provision and then exercise its discretion as to the fitness of a case for triggering the same. In this exercise, the Adjudicating Authority has to tread carefully to keep a balance between the Financial Creditor to whom monies are owed, and on the other hand, the Corporate Debtor and his business, and that its value should be maximised or at least not diminish to the detriment of all stake holders, including the financial creditor. It is also well settled that the provisions of the Code cannot be invoked for recovery of outstanding amount but can be invoked to initiate CIRP for justified reasons as per the Code - the Petitioner's recovery exercise had begun and is continuing when it has chosen to come prematurely before this Tribunal, although the Agreement itself provides other options for recovering its dues, such as by sale of the assets taken as security from the Respondent/Corporate Debtor. It is clear that the Petitioner intends to use this process for recovery alone, without making out a case for initiation of CIRP, which is not permissible. Since the Financial Creditor and the Corporate Debtor were seriously engaged in a settlement exercise, a more proactive approach would help, such as approaching the higher Authorities or Committees set up under the Banking Regulation (Amendment) Act, 2017, by the RBI to seek advice on the resolution of stressed assets, or taking recourse to the options available under the Agreement for recovery, by appropriating the assets held as security. Instead of exercising these options for recovery of its debt, the Financial Creditor has opted to hastily come to this Authority seeking initiation of CIRP against an otherwise solvent company. The Petition is therefore premature. Petition is disposed of with the directions that the Petitioner/Financial Creditor and the Respondent/Corporate Debtor should continue their settlement efforts, allowing reasonable time to the Corporate Debtor to organise funds from the proceeds of sold/ready for sale houses/plots, failing which it may pursue recovery of its debt through the mechanism mentioned and mutually agreed to in the Agreement dated 19.05.2016.
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