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2020 (2) TMI 635

..... is pre-existing dispute. There is no defined agreement entered into between the parties. That apart, the Corporate Debtor is a going concern and there are more than 80 employees engaged with the Corporate Debtor whose livelihood is dependent upon the Corporate Debtor - In view of such serious dispute, which is the matter of trial, cannot become the subject matter of I&B Code when the main object of the I&B Code is resolution and not the recovery. In other way, it can be said "resolution is rule and liquidation is exception". The same is evident from the long title of the IB Code. On perusal of the various correspondence as also the Notice of Dispute and the paper publication, it is clear that there is/are pre-existing ongoing dispute(s) between the parties which require further investigation. It is admitted by the Operational Creditor that he has not used the Tata Steel as assured - while recovery bleeds the "Corporate Debtor" to death, resolution endeavours to keep the "Corporate Debtor" alive. If fact, the IB Code prohibits and discourages recovery several ways. The petition is dismissed on the ground of pre-existing dispute. - IA NO. 605 OF .....

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..... o liable to pay interest from 27th September, 2018, till the date of actual realization along with the legal charges in respect of the aforesaid Petition. The Operational Creditor has annexed with the Petition, Ledger account of the Corporate Debtor in the books of Operational Creditor and marked as Exhibit C. 5. It is further stated by the Operational Creditor that statutory Demand Notice in Form-3 along with Form-4 dated September 26, 2018, as required under Section 8 of the Code, sent to the Corporate Debtor, is annexed with the Petition and marked as Exhibit G which is sent by Speed Post to the Corporate Debtor. The Speed Post Receipt is also annexed with the Petition and marked as Exhibit H and Track Report of the Speed Post-delivery as Exhibit I. 6. It is submitted that Operational Creditor/Applicant reminded the Corporate Debtor, from time to time for the said dues, however, the aforesaid dues remained unpaid. The Operational Creditor has annexed with the Petition, copy of the email conversation between the Operational Creditor and the Corporate Debtor as Exhibit N. The Operational Creditor has also annexed with the Petition, statement of Bank Account showing the amounts rai .....

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..... has lost his image in front of the guests and the huge gathering present at the site. The said task was completed after 2 months causing huge loss to the Corporate Debtor to the tune of ₹ 50.00 lakh (Rupees Fifty Lakhs) which is required to be compensated by the Operational Creditor himself. It is stated that the matter of non-installing of the statue was also published in the newspaper. It is further submitted by the Corporate Debtor that Operational Creditor has assured and agreed to use Tata Steel which is the prime condition of the job assigned to the Operational Creditor but for the first time that Corporate Debtor came to know through undated reply of the Petitioner that the Operational Creditor has not used Tata Steel. Because of the incident, the Temple Management did not release the bill of the Corporate Debtor. 12. During pendency of the hearing of the Petition, the Corporate Debtor filed an IA being numbered as IA No. 605 of 2019, with following prayers: (a) To dismiss the present C.P. (IB) No. 16/9/NCLT/AMD/2019 and impose penalty upon the opponent - Zeus Engitech Pvt. Ltd. in exercising power under section 65 of the insolvency and Bankruptcy Code, 2016, read wit .....

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..... in the local newspapers. Findings: 18. Heard both the sides at length and also seen the documents annexed therein. 19. It is settled by the Hon'ble Supreme Court in Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. [2017] 85 taxmann.com 292/144 SCL 37, that while examining the application under section 9 of the Act, the Adjudicating Authority, will have to determine the following: 1. Whether there is an "operational debt" as defined under the Code which exceeds ₹ 1 lakh? (See Section 4 of the Act)? 2. Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid? and 3. Whether there is existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute? If any of the aforesaid conditions is lacking, the application would have to be rejected. 20. While going through the records, it is found that it is also an admitted position, that Operational Creditor could not provide quality steel cage along with other accessories to the Corporat .....

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..... esolution and not the recovery. In other way, it can be said "resolution is rule and liquidation is exception". The same is evident from the long title of the IB Code. It is for reorganization and insolvency resolution of Corporate Persons, Partnership Firms and Individuals in a time bound manner for maximization of value of assets of such persons to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders. The recent ordinance explicitly aims to promote resolution over liquidation. Thus, first order objective is "resolution". The second order objective is "maximization of value of assets of the Corporate Debtor" and the third order objective is "Promoting entrepreneurship, availability of credit and balancing the interest". 27. Since "IB Code" prohibits and discourages recovery in separate ways, therefore, there is no substance in the pleading so put forward by the Petitioner. Recovery is an individual effort by a creditor to recover its dues. I B Code cannot be allowed to be used for recovery purpose and or for arm twisting method, so as, to bring the death of Corporate Debtor which is a g .....

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