Sri Krishna Constructions vs Vasudevan, R.P Of Tiffins Barytes ...

Sri Krishna Constructions ...Appellant

Versus

Vasudevan, R.P. of Tiffins Barytes ...Respondents Asbestos & Paints Ltd.

For Appellant: Shri Subas Chandra Das, Sr. Advocate with B. Dhanaraj, Shri S. Santanam Swaminadhan and Shri Kartik Malhotra, Advocates

For Respondent: Shri M.A. Venkata Subramanian and K. Moorthy for RP

ORDER

12.06.2019 Operational Creditor, who may not be able to trigger CIRP process

under Section 9 of Insolvency and Bankruptcy Code, 2016 ('Code' - in short) due

to pre-existing dispute, wants to hold up pending CIRP process, insisting that

its claim be first decided.

2. Heard Advocate Shri Subas Chandra Das for the Appellant and Advocate

Shri M.A. Venkata Subramanian, who on his own appears for the Respondent -

Resolution Professional. Perused Impugned Order. In this matter, Section 7

Application was filed by Financial Creditor - M/s. Udhyaman Investments

Private Limited against M/s. Tiffins Barytes Asbestos and Paints Limited which

is admitted on 12th March, 2018. The Appellant claims to be an Operational

Creditor who moved the IRP with a claim of more than Rs.17 Crores claiming to

have provided services sometime between 2005 - 06 - 2008 - 09. The IRP while

collating did not accept the claim of the Appellant as not being supported by -2-

documents. The Appellant took up the matter with the Adjudicating Authority

(National Company Law Tribunal, Chennai) asking to admit its claim of

Rs.17,07,99,270/-; forensic audit and injunct CIRP in the meanwhile. The

Adjudicating Authority has after hearing the Appellant and going through the

record placed by the Appellant, noticed that the Appellant had earlier moved the

Hon'ble High Court of Madras for winding up without success. Annexure - A12

shows, Appellant had filed Petition against the Corporate Debtor for winding up

on ground of inability to pay debt and the Hon'ble High Court had found that

the claim of the Appellant was not substantiated, the claim of the Appellant

relying on an execution of Agreement dated 31.01.2005 was also doubtful

considering the partnership firm and its formation. The High Court had found

that mere statement of account was not sufficient to prove business transaction.

The High Court had after duly considering the claim, which was put up by the

Appellant, found the defence raised by the Corporate Debtor to be bona fide and

found it was likely to succeed in Civil Court and thus, it was observed that there

was sufficient reason for the High Court to reject the Petition which was filed by

the Appellant. Thus, the High Court had relegated the Appellant to Civil Court

and it appears that the Appellant moved Civil Court by filing Suit with Additional

Senior Civil Judge and CJM at Ballari in 2014 which is still pending. The learned

Counsel for the Appellant submits that in the Suit, there was also an Order of

attachment and so it should be accepted that the Appellant has a good case, and

that the Application of the Corporate Debtor for setting aside the attachment was

not accepted.

Company Appeal (AT) (INS) No.619 of 2019 -3-

3. We have gone through the material placed on record. The Judgement of

the Hon'ble High Court which was passed is perused. The High Court had

expressed surprise even regarding the manner in which claim was being made

where the Appellant in statutory Notice claimed Rs.20 Crores and odd, and in

the petition claimed Rs.10 Crores and odd. Now in NCLT, claim of Rs.17 Crores

and odd has been made. The NCLT has looked into the matter and found that

the claim being made is not substantiated by document.

4. Under Section 18, the IRP is required to receive and collate all the claims

submitted by the Creditors. This is not a process of sitting and deciding disputed

claims. For collating, the IRP has to receive the claim and examine the same.

While examining, the IRP did not find that the claim was made out with support

of appropriate documents. As such, the IRP may not have considered the claim

and the Adjudicating Authority has looked into it and did not find anything

wrong with the act of collating done by IRP. CIRP process cannot be converted

into adjudication Forum to settle claims already in disputes in Court. In the

circumstances, we do not find any reason to interfere with the Order which has

been passed. The Suit of the Appellant is already pending. Once the Moratorium

period is over, the Appellant would be free to pursue its suit.

We dismiss the Appeal without admitting the same.

No orders as to costs.

[Justice A.I.S. Cheema] Member (Judicial)

[Kanthi Narahari] Member (Technical) /rs/sk

Company Appeal (AT) (INS) No.619 of 2019