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2020 (7) TMI 202 - Tri - Insolvency and BankruptcyMaintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- Proceedings under the Code are summary proceedings, where even if there was a debt, the same should be undisputed and the default, as defined under section 3(12) of the Code should be clearly established. While the amounts had been given in December 2016 and January 2017, and became due by June 2017, the demand notice (under section 9 and not under section 7 of the Code) was sent by the Petitioner only on 26.09.2018, that is, after a lapse of more than a year. In the intervening period, when she wielded full powers, took all the decisions and signed all the minutes of the Meetings, there were disputes that led to financial due diligence being undertaken by the Company through an independent Malaysian Financial Consultant, at the behest of the investing Company/foreign Directors, which led ultimately to the resignation of the Petitioner in July 2017 from the Company, as it threw up issues of misrepresentation and misappropriation, fabrication of documents and accounts etc. It is a settled position of law 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 Hon'ble Supreme Court in the case of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [2017 (9) TMI 1270 - SUPREME COURT], has inter alia, held that Code, 2016 is not intended to be a substitute to a recovery forum and cannot be used to jeopardize the financial health of an otherwise solvent company by pushing it into insolvency. Section 7 (5) of the Code uses the term "may", which gives this Adjudicating Authority the option to weigh the pros and cons of initiating a CIRP against the Corporate Debtor. In the circumstances stated above, it is not considered justifiable to send the Respondent into CIRP, as that would have serious socio-economic repercussions on an Export oriented Company with huge foreign funding, and of the stature mentioned above, especially on the hundreds of employees and other stakeholders and customers, and that too when the Respondent Company is undergoing a temporary funding lull and expects to recover soon. The dismissal of this Petition will not come in the way of the Petitioner to settle its dispute, if any, with the Respondent/Corporate Debtor and seek refund of any amount due to it, by approaching any other forum or under any other Law - Petition dismissed.
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