Operational Creditors can only initiate CIRP against a Corporate Debtor in the Absence of Real Disputes Existing Between Parties: NCLAT
Operational Creditors – initiate CIRP against a Corporate Debtor – Absence of Real Disputes Existing Between Parties – NCLAT – TAXSCAN
Operational Creditors – initiate CIRP against a Corporate Debtor – Absence of Real Disputes Existing Between Parties – NCLAT – TAXSCAN
The Delhi bench of the National Company Law Appellate Tribunal(NCLAT) has held that operational creditors can only initiate the Corporate Insolvency Resolution Process (CIRP) against a corporate debtor in the absence of real disputes existing between parties.
Mr Satish Chinnadurai, the appellant challenged the Order dated 23.09.2022, passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench, Court – I), filed under Section 61 of the Insolvency and Bankruptcy Code, 2016, (The Code), whereby and whereunder the Company Petition preferred by `Mr. Ravindra Hirashingh Rawat’ (Respondent No. 1) under Section 9 of the Code was admitted and further `Mr. Pankaj Ramandas Majithia’ (Respondent No. 2) was appointed as Interim Resolution Professional (`IRP’) in the CIRP Proceedings.
The Appellant is the Director of DB Group India Private Limited (Corporate Debtor). On 06.11.2006, the Corporate Debtor was appointed by Respondent No. 1 as a Senior Manager - Finance and Administration, effective from 06.12.2006. The Corporate Debtor issued a promotion and increment letter to Respondent No. I promoted him to the position of Deputy General Manager.
Later, the Corporate Debtor issued an increment letter to Respondent No. 1 and increased his salary to Rs. 1,50,000 per month. On 22.01.2018, Respondent No. 1 addressed an email submitting his resignation to the Corporate Debtor.
On 22.01.2018, the Respondent No. 1 and the Corporate Debtor entered into a Non-Disclosure Agreement (`NDA’). Under the NDA, the Corporate Debtor and Respondent No. 1 agreed upon themselves that they would comply with their respective obligations as more particularly set out therein.
It was argued by the Counsel for the Appellant that the Adjudicating Authority while passing the Impugned Order failed to consider the correspondences between the Appellant and Respondent No. 1 dated 17.06.2018 to 22.06.2018. Further, the Adjudicating Authority has also not considered the Reply Affidavit filed by the Respondent (Appellant) before the Adjudicating Authority in the correct perspective.
It was submitted that the sum of Rs. 40,00,000/- claimed by Respondent No. 1 is not payable by the Corporate Debtor to Respondent No. 1, since the Corporate Debtor made all payments under the NDA and therefore the question of payment of any penalty does not arise. He further contended that the said claim by Respondent No. 1 is disputed by the Corporate Debtor under correspondences dated 17.06.2018 to 22.06.2018.
A Coram comprising Justice Anant Bijay Singh, Member (Judicial) and Mr Naresh Salecha, Member (Technical) set aside the Impugned Order passed by the Adjudicating Authority initiating CIRP of the Corporate Debtor and all other Orders issued under the Impugned Order.
While allowing the appeal, the Corporate Debtor is released from the rigours of CIRP and is allowed to function independently through its Board of Directors with immediate effect.
To Read the full text of the Order CLICK HERE
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