2019 (12) TMI 1361 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - It is true that assets of Company are to be made available for payment or discharge of its liabilities and obligation even after the date of the order removing the name of the Company from the Registrar Companies. However it is settled position of law that provisions of Code cannot be invoked for recovery of outstanding amounts. It is settled position of law that the provisions of Code cannot be invoked for recovery of outstanding alleged amount. This is not a fit case for admission and it is liable to be rejected - petition rejected.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process (CIRP) against a Corporate Debtor for default in payment.

Analysis:
The case involved C.P.(IB) No. 407/BB/2019 filed by M/s. Bharat Elevator & Spring Co. as the Operational Creditor against M/s. Silicon Elevator Pvt. Ltd., seeking to initiate CIRP due to a default of Rs. 3,26,865. The Operational Creditor had delivered elevator parts to the Corporate Debtor as per purchase orders and invoices, but the payment remained outstanding. Despite reminders and a demand notice, the Corporate Debtor failed to pay the amount.

The Counsel for the Petitioner argued that the debt and default were admitted, and the Corporate Debtor did not respond to the statutory demand notice. Various judgments were cited to support the claim for initiating CIRP.

However, the Tribunal noted that as per the Code, CIRP cannot be initiated against a Company whose name has been struck off by the Registrar of Companies. The judgment cited in Elektrans Shipping Ltd. case clarified that the Code cannot be invoked for recovery of outstanding amounts. The Supreme Court's decision in Mobilox Innovations Private Limited case emphasized that IBC is not a substitute for a recovery forum, and the existence of an undisputed debt is crucial for initiating CIRP.

Consequently, the Tribunal rejected C.P.(IB) No. 407/BB/2019, stating that it was not a fit case for admission under the Code. The order did not prevent the Petitioner from seeking other remedies under different laws. No costs were awarded in this decision.