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2020 (3) TMI 97 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor has committed default for a total outstanding amount - existence of debt and default or not - HELD THAT:- The issue raised by the Petitioner is the non-payment of an amount stated to be owed by the Respondent/Corporate Debtor to the Petitioner/Operational Creditor and that the Respondent has committed a default in not paying the same. As per section 3(11) of the Code, a 'debt' means a liability or obligation in respect of a claim which is due from any person. Section 3(6) of the Code states that a 'claim' means a right to payment. This right to payment has to arise from a valid understanding or agreement between the two parties, which should contain specific terms as to the goods and services to be rendered and the terms and basis of payment. Due to the non-acceptance of the terms and details of payment by the Respondent, it cannot be said that the right to payment or claim arising from this Agreement will acquire the meaning of "Debt" under the Code, or make the Respondent a Corporate Debtor. It cannot be said that the amounts claimed by the Petitioner from the Respondent on the basis of MMG, as mentioned in the unsigned Agreement not agreed to or accepted by the Respondent could be the basis of a valid right to payment, claim or debt - The position of law on the issue is clear that the provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP for justified reasons as per the Code. Since there was no valid operational debt in the absence of an agreement being signed by both parties which was to be the basis of the payments due, the Respondent could not be termed as a Corporate Debtor within the meaning of the Code. Further, there was a pre-existing dispute between the parties over the basis of the payments sought. In both these circumstances, the provisions of Sections 8 and 9 of the Code cannot be invoked and the Application made under Section 9 of the Code has to be rejected - the Petitioner has attempted to use this forum for recovery of its dues by praying for ordering a CIRP against the Respondent, which is not the purpose for which the Code was enacted. Petition dismissed.
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