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Jindal Steel & Power Ltd. v. Dcm International Ltd.
Factual and Procedural Background
The Appellant is admitted to be a tenant of the Respondent, described as the "Corporate Debtor." The parties had, it is accepted for present purposes, entered into a Memorandum of Understanding concerning the premises. The Appellant moved under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("I&B Code") to trigger insolvency proceedings against the Corporate Debtor. The Adjudicating Authority dismissed that Section 9 application by an impugned order dated 6 October, 2017. The present appeal challenges that dismissal.
Legal Issues Presented
- Whether the Appellant, being a tenant (and notwithstanding the existence of a Memorandum of Understanding), qualifies as an "Operational Creditor" within the meaning of sub-section (20) read with sub-section (21) of Section 5 of the I&B Code so as to entitle the Appellant to initiate corporate insolvency resolution proceedings under Section 9 of the I&B Code.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The court's analysis proceeds as follows:
- The court accepts that the Appellant is a tenant of the Corporate Debtor and that a Memorandum of Understanding was entered between the parties regarding the premises.
- Despite the Memorandum of Understanding, the court found that the Appellant, as a tenant, had not made any claim in respect of the provision of goods or services.
- The court also noted that the debt for repayment of dues relied upon by the Appellant did not arise under any law for the time being in force payable to the Central Government or a State Government.
- On those bases, the court concluded that the Appellant does not fall within the statutory definition of "Operational Creditor" as set out in sub-section (20) read with sub-section (21) of Section 5 of the I&B Code, and therefore could not validly trigger insolvency proceedings under Section 9 of the I&B Code.
- Given this conclusion, the court found no reason to interfere with the Adjudicating Authority's dismissal of the Section 9 application by the impugned order dated 6 October, 2017.
Holding and Implications
DISMISSED
Holding: The appeal is dismissed for lack of merit; the Appellant is not an "Operational Creditor" under sub-section (20) read with sub-section (21) of Section 5 of the I&B Code and therefore could not initiate insolvency proceedings under Section 9. The Adjudicating Authority's order dated 6 October, 2017 dismissing the Section 9 application is upheld.
Implications: The direct effect is that the Section 9 application against the Corporate Debtor remains dismissed and the Appellant's attempt to trigger the insolvency process fails. No costs were awarded. The opinion does not discuss broader legal implications or purport to establish a new precedent.
1. Admittedly, the Appellant is a tenant of Respondent-‘Corporate Debtor’. Even if it is accepted that a Memorandum of Understanding has been entered between the parties in regard to the premises in question, the Appellant being a tenant, having not made any claim in respect of the provisions of the goods or services and the debt in respect of the repayment of dues does not arise under any law for the time being in force payable to the Central Government or State Government, we hold that the Appellant tenant do not come within the meaning of ‘Operational Creditor’ as defined under sub-section (20) read with sub-Section (21) of Section 5 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to ‘I&B Code’) for triggering Insolvency and Bankruptcy Process under Section 9 of the ‘I&B Code’.
2. For the said reasons, the Adjudicating Authority having dismissed the application under Section 9 of the ‘I&B Code’ by the impugned order dated 6 October, 2017, no interference is called for.
3. In absence of any merit, the appeal is dismissed. No Cost.
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