Written Response From Corporate Debtor not Necessary for Deciding Preliminary Issue of Maintainability of Petition u/s 9 of IBC: NCLT [Read Order]
The NCLT held that a written response from the corporate debtor is not necessary for deciding the preliminary issue of maintainability of petition u/s 9 of IBC
Corporate Debtor – Written Response – Maintainability – Deciding Preliminary Issue – Maintainability of Petition – NCLT – TAXSCAN
Corporate Debtor – Written Response – Maintainability – Deciding Preliminary Issue – Maintainability of Petition – NCLT – TAXSCAN
The New Delhi Bench of the National Company Law Appellate Tribunal (NCLT) observed that the servicer of aircraft lessors has no locus standi to file insolvency proceedings against Spicejet in the absence of privity of contract.
Mr Milan Chitalia applied to the Adjudicating Authority by Mr. Milan Chitalia, the Authorised Representative of the Operational Creditor, duly authorized to initiate Corporate Insolvency Resolution Process (“CIRP”) proceedings under Section 9 of the Insolvency and Bankruptcy Code, 2016 (“Code’). The total amount due as of 10.04.2023 is claimed to be Rs 53,96,65,759/-.
The counsel for the operational creditor submitted that SpiceJet entered appearance without filing any vakalatnama and attempted to orally raise several protracted and meritless objections on the maintainability of the Petition. WLFC repeatedly objected to such conduct. This Adjudicating Authority permitted SpiceJet, without being asked to place any facts or submissions in a counter-affidavit, to orally raise its objections on the maintainability of the Company Petition.
It was submitted by the Corporate debtor that neither any goods nor services have been provided by WLFC to SpiceJet nor there is any contractual relationship between the parties. Admittedly, the dispute arises out of 9 lease agreements executed by SpiceJet with 4 different lessors. It is submitted that a perusal of Section 5(21) of IBC makes it clear that ‘Operational Debt’ is a claim in respect of the provision of goods or services which should be based on a contract duly entered between the Corporate Debtor and the Operational Creditor.
Further, it was pointed out that it is settled law that an Operational Creditor is a person to whom an operational debt is owned. Therefore, in the absence of privity of contract between two parties, it cannot be contended that an operational debt is owed to SpiceJet.
A Two-Member Bench of the Authority comprising Rahul Bhatnagar, Member (Technical) and Mahendra Khandelwal, Member (Judicial) observed that “According, this Adjudicating Authority is of the view that the present application filed by Willis Lease Finance Corporation (Operational Creditor), under section 9 of the Code read with rule 6(1) of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiating CIRP against SpiceJet Limited (‘Corporate Debtor’), lacks merit, is not maintainable and therefore stands dismissed without costs.”
To Read the full text of the Order CLICK HERE
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
