2021 (5) TMI 276 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - pre-existing dispute or not - HELD THAT - It is seen that the Petitioner had entered into Directors on Employment Agreement dated 01.08.2015 and worked as a Director in the Board of the Respondent Company. The present application has been filed for claiming unpaid 15 months salary. The Petitioner has filed minutes of the meeting which has not been dated but has been signed by various parties. Pre-existing dispute between the parties based on the settlement has been arrived at. Since this matter is ex-parte there are no complete facts before this Adjudicating Authority. On perusal of documents it is clear that various meetings between both parties were held to arrive at amicable settlement. Since the respondent has not filed reply the responsibility of the applicant to prove debt and default is very high. The onus is on the Applicant to satisfy that there is no pre-existing dispute between the both. From the documents it is clear that there were lot of discussions and meetings between both. The outcome of the same is not before this Adjudicating Authority. Since the IBC is rigorous statue abundant caution ought to be exercised before passing order. Application dismissed.

Summary

Issues:
Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process due to default in payment.

Analysis:
1. The application was filed by the Operational Creditor against the Corporate Debtor for non-payment of an amount of Rs. 10,50,000 based on an Employment Agreement. The Corporate Debtor had admitted the debt previously, but no payment was made.

2. The Operational Creditor sent a demand notice under Section 8 of the Code, which was acknowledged by the Corporate Debtor, but no payment was made. The application was filed within the pecuniary jurisdiction of the Adjudicating Authority.

3. The Adjudicating Authority noted that the application was based on a salary claim by the Petitioner for 15 months of work as a Director. However, the minutes of the meeting presented were not dated, and there were indications of a pre-existing dispute between the parties.

4. Referring to the Supreme Court judgment in Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd., the Adjudicating Authority emphasized the need to reject the application if there is a plausible contention requiring further investigation or a record of dispute exists.

5. Despite various meetings and discussions between the parties for a settlement, the lack of a response from the respondent put a high burden of proof on the Applicant to establish the debt and default conclusively. The Adjudicating Authority highlighted the rigorous nature of the IBC and the need to exercise caution before passing orders.

6. As the complete facts and outcome of the discussions were not before the Adjudicating Authority due to the matter being ex-parte, the application was dismissed, emphasizing the importance of ensuring the absence of a pre-existing dispute before initiating insolvency proceedings.

7. The application IBA/1297/2019 was dismissed with no costs awarded, preserving the rights of the Applicant for potential recovery of dues through other legal means.