In the matter of Averx Drugs Pvt. Ltd.
- CitationIA(IBC)/267/2024 in CP (IB)/20/7/AMR/2024
Ratio decidendi
The rule this decision rests on
The Tribunal, for the Financial Creditor's petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 to be maintainable, requires the petitioner to establish the existence of a debt and a default, and that failure to file the demand notice with proof of service on the Corporate Debtor, and failure to file the Board Resolution and bank statements evidencing the advance, leaves those ingredients unproven and renders the petition not maintainable. A petition under Section 7 founded on an award passed by a Lok Adalat in a settlement is not maintainable before the National Company Law Tribunal, because the Tribunal is not the executing court for Lok Adalat settlements; where a Lok Adalat settlement fails, the Lok Adalat Rules require the parties to approach the court in which the proceedings were originally pending. Where the Section 7 petition is dismissed, an application under Section 65(1) seeking penalty for fraudulent or malicious initiation of insolvency proceedings becomes infructuous and falls to be disposed of accordingly.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
IN THE NATIONAL COMPANY LAW TRIBUNAL AMARAVATI BENCH (Through Hybrid Mode) Item No.2 IA(IBC)/267/2024 in CP (IB)/20/7/AMR/2024 IN THE MATTER OF: Mr. Chappidi Swaminadha Rao …Financial Creditor Versus M/s.Averx Drugs Pvt. Ltd. …Corporate Debtor Under Section: 7, 65(1) of IBC, 2016 Order delivered on 03.04.2025 CORAM: SHRI UMESH KUMAR SHUKLA SHRI KISHORE VEMULAPALLI HON’BLE MEMBER (TECHNICAL) HON’BLE MEMBER (JUDICIAL) PRESENT: In CP For the Financial Creditor : Mirza Moinullha Baig, Adv. For the Corporate Debtor : Proxy Counsel for Dr.S.V.Ramakrishna, Adv. In IA IA(IBC)/267/2024 For the Applicant : Proxy Counsel for Dr.S.V.Ramakrishna, Adv. For the Respondent : Mirza Moinullha Baig, Adv. ORDER CP (IB)/20/7/AMR/2024: Counsel for the Financial Creditor filed this Petition against the Corporate Debtor for executing the Award passed by the Lok Adalat in O.S. No.45 of 2021 dated 16.08.2021. On perusal of the records, it is noticed that Counsel for the FC has not filed necessary documents such as the Board Resolution of the Company for borrowing the money from the CD and failed to show the entries of Bank statements and also failed to establish his case showing that the CD borrowed money from the FC. He further submitted that based on the Award passed by the Lok Adalat settlement, he filed the instant CP.
Furthermore, he failed to file the Demand Notice along with the proof of serving the same on the CD. The Petitioner failed to establish that there is a proof of ‘debt’ and ‘default’, and hence the Petition u/s 7 of the IBC, 2016 is not maintainable. It is also not maintainable owing to the reason that he filed the CP
Jahnavi &RSN
//2// on the ground that Lok Adalat passed the Award in its favour. The Lok Adalat Rules specifically provides once the settlement of the Lok Adalat fails, the Parties has to approach the same Court to conduct the proceedings further. However, he filed the CP in this Tribunal, which is not maintainable, as the same is not an Executing Court to execute the Lok Adalat settlements.
In view of the aforesaid reasons, the instant Company Petition bearing CP (IB)/20/7/AMR/2024 is devoid of merits, and is accordingly dismissed.
IA(IBC)/267/2024: This application has been filed by the Corporate Debtor u/s 65(1) of the IBC, 2016 seeking penalty for fraudulent initiation of proceedings u/s 7 of the Code by the Financial Creditor with mala fide intention. In view of the dismissal of the main CP, the instant IA becomes infructuous.
Sd/- Sd/- (UMESH KUMAR SHUKLA) (KISHORE VEMULAPALLI) MEMBER (TECHNICAL) MEMBER (JUDICIAL))
Jahnavi &RSN
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