Skip to main content

Internal Problems Of Corporate Debtor Cannot Be Termed A Dispute As Per IBC Code

In Mr. Chetan Sharma Vs. Jai Lakshmi Solvents (P) Ltd., the Corporate Debtor tried to raise the issue of existence of dispute within the company before the Ld. NCLAT.  The Corporate Debtor said that the delivery of goods against which payment has been claimed by the creditors were fraudulently taken by the MD, who has since accepted his liability and has undertaken all the liabilities of the ‘Corporate Debtor’ incurred by him fraudulently. Thus, according to the Appellant, a novation of the contract took place, which makes the alleged sums recoverable only from Mr. Dinesh Arora and not from the ‘Corporate Debtor’.

The Ld. Tribunal held that it is a settled law that unilateral ‘transfer’ of liability does not constitute a ‘dispute’ within the meaning of Section 5(6) of the ‘I&B Code’. The ‘dispute’ under Section 5(6) of the ‘I&B Code’ has to be between the ‘Corporate Debtor’ and the ‘Operational Creditors’ and an inter-se dispute between two groups of shareholders of the ‘Corporate Debtor’ does not constitute a ‘dispute’ in reference to ‘Operational Creditors’.

An outstanding in the account of a borrower (customer), is a debt due and payable by the borrower to the Creditor. The Creditor is the owner of such debt. Such debt is an asset in the hands of a Creditor, whether ‘Secured Creditor’ or ‘Unsecured Creditor’ or ‘Operational Creditor’ or ‘Financial Creditor’. The creditor can always transfer its assets (debt) to an assignee but the borrower cannot transfer its liability of debt to a third party. Therefore, the Appellant cannot take advantage of agreement of transfer of liability of debt of ‘Corporate Debtor’ to Mr. Dinesh Arora.


Comments

Post a Comment

Most viewed this month

Deposit Of Minimum 20% Fine/Compensation U/s 148 NI Act Mandatory

In OP(Crl.).No.348 OF 2019, T.K.SAJEEVAN vs FRANCIS T.CHACKO, the appeal was filed against the order of the lower court to deposit 25% of the fine before filling of appeal. The appellant argued that the deposit introduced through the Section 148 of the NI Act after amendment was directory in nature as it used the term 'may' while mentioning the issue of deposit. The Kerala High Court however disagreeing held that in view of the object of the Legislature while incorporating Section 148 into N.I. Act, the word 'may' will have to be read as 'shall'. The imposition of payment contemplated under Section 148 N.I. Act cannot be restricted to some prosecutions and evaded in other prosecutions. Since the amount directed to be deposited being compensation, undoubtedly, it is liable to be ordered to be deposited irrespective of the nature of the prosecution. Therefore, the word 'may' can only be taken to have the colour and meaning of 'shall' and there
Post a Comment
Read more

NCLT - Mere admission of receipt of money does not qualify as a financial debt

Cause Title : Meghna Devang Juthani Vs Ambe Securities Private Limited, National Company Law Tribunal, Mumbai, CP (IB) No. 974/MB-VI/2020 Date of Judgment/Order : 18.12.2023 Corum : Hon’ble Shri K. R. Saji Kumar, Member (Judicial) Hon’ble Shri Sanjiv Dutt, Member (Technical) Citied:  Carnoustie Management India Pvt. Ltd. Vs. CBS International Projects Private Limited, NCLT Swiss Ribbons Pvt. Ltd. & Anr vs. Union of India & Ors. (2019) Sanjay Kewalramani vs Sunil Parmanand Kewalramani & Ors. (2018) Pawan Kumar vs. Utsav Securities Pvt Ltd 2021 Background Application was filed under section 7 of the Insolvency and Bankruptcy Code, 2016 alleging loan of Rs, 1.70 cr is due. The Applicate identified herself as the widow and heir of the lender but could not produce any documents proving financial contract between her Late husband and the CD but claimed that the CD has accepted that money was received from her husband. The applicant subsequently filed rejoinder claiming the debt t
Post a Comment
Read more

Jurisdiction of consumer forum is not ousted even if the other party has filed suit on the same matter in Civil Court

In Yashwant Rama Jadhav v. Shaukat Hussain Shaikh, First Appeal No. 1229 of 2017, decided on 18.11.2017,  the grievance of the petitioner before the National Consumer Disputes Redressal Commission was that appellants/complainants had entered into agreements with the respondents for purchase of residential flats, which the respondents were to construct and despite paying the substantial amount to the respondents, the construction of the flats had not been completed. The State Commission dismissed the complaints and ruled in favor of respondents against which the appellants approached the National Commission. The NCDRC held that Section ‘3’ of the Consumer Protection Act, to the extent it is relevant provides that the provisions of the Act shall be in addition and not in derogation of the provisions of any other law for the time being in force. Thus the remedy available under the Consumer Protection Act is an additional remedy, which Parliament has made available to a consumer. Even
Post a Comment
Read more