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2020 (11) TMI 849 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - default made by employees of Operational Creditor - existence of debt and dispute or not - HELD THAT:- The intent of Legislature is very vital for interpreting any law, which can be well deduced from the words of Section 8(2)(a) of I&B Code ‘existence of a dispute if any’. It can be easily inferred that dispute shall not be limited to instances specified in the definition as provided under Section 5(6), as it has far arms, apart from pending Suit or Arbitration as provided Under Section 5(6) of IBC. The IBC is not a substitute for a recovery forum - Section 9 of the IBC makes it very clear for the Adjudicating Authority to admit the application “if no notice of dispute is received by the Operational Creditor and there is no record of the dispute in the information utility.” Whereas, on the other hand, Section 9 also states that the Adjudicating Authority to reject the application so filed “if the Operational Creditor has received a notice of a dispute from the Corporate Debtor”. The Operational Creditor cannot take recourse that the payment if any made to the employees were in their personal capacity and not on account of Operational Creditor. As it is a well settled principle under Law of Agency that “where an employee does some wrongful act, within the course of his employment, then for that act the employer’s liability shall arise. The employee would be liable for the wrongful act he has done, whereas the employer would be liable vicariously for the act due to the principal-agent relationship between the two. In that situation, the aggrieved person is at the choice whether to sue principal or agent or both. Therefore, fraud committed by any of the employees of the Operational Creditor cannot be said to be done in their personal capacity. The Operational Creditor has admitted before the Adjudicating Authority that the Corporate Debtor have made the payment of ₹ 14,17,000/-, saying that those payments were towards the out of pocket expenses incurred during the process of custom clearing of Corporate Debtor’s goods - since there was a dispute existing prior to the issuance of Section 8 notice, the insolvency provisions cannot be invoked - Application admitted.
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