(2024) ibclaw.in 538 NCLAT IN THE NATIONAL COMPANY LAW APPELLATE TRIBUNALPrincipal Bench, New Delhi Mr. DN Pratap Chowdaryv.Mr. Pankaj Bhattad […]
Mr. DN Pratap Chowdary Vs. Mr. Pankaj Bhattad and Ors. – NCLAT New Delhi Read Post »
The IBC is not intended to be a substitute for a recovery forum. However, the Applicant is on a forum shopping and when he could not get success in the proceedings under the MSME Act and Commercial Courts Act, he approached this Forum. This Forum cannot be misused as an alternative for alleged debt enforcement.
In this case, during CIRP pending for admission, an arbitration award passed u/s 18 of MSMED Act, 2006.
NCLT Allahabad Bench held that:
(i) Once a dispute exists, the Adjudicating Authority under the Code, 2016 is not required to examine the merit of dispute.
(ii) After the Operational Creditor has approached the grievances committee of MSME tribunal resulting into referring the dispute to the Arbitrator as per the scheme envisaged under the MSME Act/ Rules, and the arbitrator thus has finally decided the dues of the Operational Creditor as against the Corporate Debtor, the process of determination of the dues has thus already gone into.
(iii) Once, the dispute has been adjudicated by the Arbitrator and award has been passed in favour of the Operational Creditor to the extent of the amount mentioned in the award itself, the Operational Creditor cannot be allowed to go for forum shopping and rake up the issue for making a case for alleged default against the Corporate Debtor U/s 9 of the Code for remaining amount if any.
(iv) Moreover, the Corporate Debtor has been found to be a solvent company. It has been held in catena of judgments by the Hon’ble NCLAT as well Hon’ble Supreme Court that IBC is not meant to be used as a means to recover the disputed dues against a solvent company.
Hon’ble High Court held that in the present case, though a proceeding may have been initiated by the petitioner before the NCLT asserting that there is an admitted debt as has been pointed out by the respondent, but a mere assertion would not make it into an admitted liability especially when the respondent has been refuting it at every forum and in every proceeding. It is quite evident that there is consistent stand of the respondent challenging the amounts claimed by the petitioner. Clearly, there are arbitrable disputes in regard to the claimed amounts and the objection taken by the respondent in regard to non-existence of arbitrable disputes, is not tenable.
I. Case Reference Case Citation : (2022) ibclaw.in 715 NCLAT Case Name : Mahendra G. Wadhwani Vs. Reed Relays &
Mahendra G. Wadhwani Vs. Reed Relays & Electronics India Ltd. & Ors. – NCLAT New Delhi Read Post »
NCLAT set aside CIRP admission order of the Adjudicating Authority and held that the Bank/R1 is involved in forum shopping to the multiple Courts/Tribunals just to harass the Guarantor as it has moved the Hon’ble High Court of Calcutta at Calcutta to coerce the trust into paying of its debts and involving the Appellant in time consuming and expensive litigation at the behest of this concerned branch of the Bank/Respondent No.1. It is a settled law that the practice of Forum Shopping be condemned as it is an abuse of law. This case is beyond doubt falls under the category of Forum Shopping as it is a classic example of Forum Shopping when the Respondent Bank has approached one Court for relief but does not get the desired relief and then approached another court for the same or similar relief.
NCLAT held that the Financial Creditor can proceed simultaneously under SARFAESI Act, 2002 as well as under Code. Section 238 of Code provides that the provisions of this code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by the virtue of any such law. Thus, the non-obstante clause of the Code will prevail over any other law for the time being in force. Ld. Adjudicating has incorrectly held that after initiating proceedings under SARFAESI Act the Appellant i.e. Financial Creditor should be precluded from filing application under Section 7 of Code.
