26 May 2020


Judgments

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI

Hardeep Singh Sawhney Vs. Sawhney Builders Pvt. Ltd.

MANU/NL/0540/2019

18.11.2019

Insolvency

Adjudicating Authority under IBC is not a 'Court of Law' and it does not decide money claim or 'Suit'

The Appellant/'Financial Creditor' had projected the Application under Section 7 of the Insolvency & Bankruptcy Code, 2016 ('I&B' Code,) read with Rule 4 of the 'I&B' Code Rules, 2016 before the Adjudicating Authority praying to initiate 'Corporate Insolvency Resolution Process' in respect of Respondent/'Corporate Debtor'.

The 'Appellant'/'Financial Creditor' as an 'Aggrieved' person has focused the instant Company Appeal before this Tribunal being dissatisfied the Impugned Order of dismissal of the Application under Section 7 of the 'I&B' Code passed by the Adjudicating Authority.

The Learned Counsel for the Appellant submits that, the mother of the 'Appellant'/'Financial Creditor' booked one Villa on 21st April, 2014. Learned Counsel for the Appellant/'Financial Creditor' points out that, the 'Respondent'/'Corporate Debtor' was to handover the possession of the said flat within 3 years from the date of 90% of the total payment of the said flat.

The clear cut stand of the 'Appellant' is that, no construction had commenced till date and this fact was ascertained on 28th November, 2016 from the Respondent, as regards the status of Villa etc. Therefore, he was forced to prefer an Application under Section 7 of the 'I&B' Code read with Rule 4 of the 'I&B' Rules, 2016 seeking to initiate 'Corporate Insolvency Resolution Process' against the 'Respondent'/'Corporate Debtor'.

The Pivotal contention advanced by the Learned Counsel for the Appellant is that, the Adjudicating Authority had failed to take into account that, if a 'Corporate Debtor' commits a default of a 'Financial Debt' then, the Adjudicating Authority is to see that the records of the 'Information Utility' or other evidence produced by the 'Financial Creditor' to satisfy that the 'Default' had occurred.

The Adjudicating Authority while dealing with an application under Section 7 of the Insolvency & Bankruptcy Code, 2016 ('I&B' Code) is not required to look into any other aspect for 'Admission' of the Application except that he is satisfied with an act of default and had enquired that the 'Application' was complete and any disciplinary proceedings were pending against the prospective 'Resolution Professional', which even he shall admit the Application.

If the 'Financial Debtor' is able to establish the existence of 'Debt' and the 'Corporate Debtor' default, an Application was complete in all aspects, then the Application would be admitted. To sustain an Application under Section 7 of the 'I&B' Code, the Applicant is to establish the existence of a 'Debt', which is due from the 'Corporate Debtor'. Existence of undisputed 'Debt' is 'Sine Qua Non' for triggering the 'Corporate Insolvency Resolution Process'. Always, it is open to the 'Corporate Debtor' or its Directors to point out that the 'Debt' is not payable by the 'Corporate Debtor' in 'Law' and in fact.

In the case on hand, not even an Agreement or allotment letter was produced on the side of the Appellant because of the reason that the Project was cancelled as early as in the year 2011. The Appellant had not come out clean in his Application under Section 7 of the 'I&B' Code because he had not mentioned about the fact that his father is Director and Shareholder of the Respondent Company.

As far as the present case is concerned, there exist serious dispute as to whether the Respondent/'Corporate Debtor' owes any sum to the Petitioner/'Financial Creditor' and said dispute cannot be determined in a summary proceedings under the 'Insolvency & Bankruptcy Code' in the considered information of this Court.

The dispute between the parties requires to be thrashed out by adducing necessary documentary and oral evidence before the 'Competent Forum'. Admittedly, the Adjudicating Authority under the 'I&B' Code is not a 'Court of Law' and it does not decide money claim or 'Suit'. In any extent, the Appellant has failed to establish when there is any 'Debt' recoverable from the Respondent Company and the occurrence of default. The Impugned Order in dismissing the Section 7 Application is free from any legal infirmities. Resultantly the present Appeal Sans merits and the same is accordingly dismissed.

Tags : Dispute Adjudication Application Maintainability

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