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Akshay Uday Ltd. v. Jones Long Lasalie Property Consultants (India) Pvt. Ltd. .
Factual and Procedural Background
The petitioner, an Operational Creditor, filed a petition against the Corporate Debtor under Section 8 and 9 of the Insolvency and Bankruptcy Code (IBC), 2016, claiming an operational debt arising from non-payment of salary for March 2018 and 13 days of April 2018, totaling approximately Rs. 1,16,667, along with commission. The Operational Creditor alleged that despite the Corporate Debtor's offer for full and final settlement dated 2 July 2018, the dues remained unpaid. A Section 8 notice was issued on 22 June 2018, to which the Corporate Debtor replied on 4 July 2018, followed by a rejoinder notice from the Operational Creditor. The correspondence revealed a dispute concerning alleged breach of confidentiality by the Operational Creditor, which led to an investigation and the Operational Creditor’s resignation on 13 April 2018.
Legal Issues Presented
- Whether there exists a pre-existing dispute between the Operational Creditor and the Corporate Debtor that would preclude initiation of insolvency proceedings under the IBC.
- Whether the petition filed under Sections 8 and 9 of the IBC, 2016, has any merit or is merely a tool to pressure the Corporate Debtor.
Arguments of the Parties
Operational Creditor's Arguments
- Claimed non-payment of salary and commission amounting to Rs. 1,16,667/- for March and part of April 2018.
- Contended that despite the Corporate Debtor’s offer for full and final settlement, payment was not made.
- Filed Section 8 notice on 22 June 2018 and rejoinder to the Corporate Debtor’s reply dated 4 July 2018.
- Submitted documents including correspondence and an undertaking required by the Corporate Debtor.
Corporate Debtor's Arguments
- Alleged breach of confidentiality by the Operational Creditor, who shared confidential data with competitors in breach of employment and IT policy.
- Conducted an investigation through an independent third-party agency which found the Operational Creditor guilty of wrongdoing.
- Highlighted that the Operational Creditor acknowledged the breach and resigned on 13 April 2018.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Mobilox Innovation v. Kirusa Software (P) Limited | Establishes that a pre-existing dispute between parties is a valid ground to dismiss a petition under IBC at the notice stage. | The court applied this principle to find a prima facie pre-existing dispute, leading to dismissal of the petition for lack of merit and to prevent misuse of IBC provisions to pressurize the Corporate Debtor. |
Court's Reasoning and Analysis
The court examined the correspondence and documents filed by both parties, focusing on the allegations of breach of confidentiality and the resulting investigation. It noted that the Operational Creditor was required to give an undertaking to the Corporate Debtor and that the Corporate Debtor had responded to the Section 8 notice with detailed allegations of misconduct. The court found that these facts indicated a pre-existing dispute between the parties. Applying the legal principle from Mobilox Innovation v. Kirusa Software (P) Limited, the court concluded that the petition lacked merit and was an attempt to misuse the IBC provisions as a tool to coerce the Corporate Debtor. Consequently, the petition was dismissed at the notice stage itself.
Holding and Implications
The petition filed under Sections 8 and 9 of the IBC, 2016, is dismissed at the notice stage.
This decision directly affects the parties by rejecting the Operational Creditor's claim for initiating insolvency proceedings due to the existence of a bona fide dispute. No new precedent was established beyond reaffirming the principle that pre-existing disputes bar such petitions under the IBC.
Learned Counsel for the petitioner is present and moves this petition. Id. Counsel for the Operational Creditor/petitioner has filed this Petition against the Corporate Debtor under Section 8&9 of IBC, 2016 as it is claimed that an operational debt arises due to non-payment of salary for the month of March, 2018 & 13 days salary for the month of April, 2018 which comes to around Rs. 1,16,667/- as well as commission. Ld. Counsel for the Operational Creditor points out that despite offer of the Corporate Debtor for full & final settlement, vide their letter dated 2 July, 2018, it has not paid the dues to the Operational Creditor. It is further pointed out by Ld. Counsel for the petitioner/Operational Creditor, Section 8 notice was given on 22.6.2018 and reply has also been given by the Corporate Debtor on 04.7.2018. It is further represented that a Rejoinder notice to the reply has also been given which has been filed along with the documents enclosed along with the Petition filed along with typed set of documents.
On going through the petition, it is seen that prior to the letter dated 02.7.2018, e-mail communication had transpired between the Operational Creditor and Corporate Debtor. The Operational Creditor was required to give an undertaking to the Corporate Debtor. It is also evident from the reply which has been sent to the Corporate Debtor to the Section 8 notice particularly at paragraphs 5, 6 & 7 as reproduced below:
“5. That sometime around March 27, 2018, it came to the knowledge of our Client, that you the Addressee in complete breach of the confidentiality terms under the Employment Agreement with JLL and IT Policy of JLL, released and shared confidential data with our Client's competitors, with the malafide intent of making wrongful gains at the cost of our Client.
6. That an independent third-party agency was appointed by our Client to conduct an enquiry into your wrong doings. That based on an investigation conducted by a third-party agency, you the addressee were found guilty of breach of confidentiality owing to your acts of sharing confidential information of our Client's to your personal e-mail id and to our Client's competitors including Ana rock.
7. That when our Client, confronted you the Address with the result of the investigation conducted by the third-party agency, you the Addressee acknowledged your wrongdoings and submitted your resignation to our Client on April 13, 2018.”
It is seen from the correspondence exchanged between the Operational Creditor and Corporate Debtor and taking into consideration the said paragraphs as well as undertaking to be given by the petitioner which was sent be the Operational Creditor and required to be given, this Tribunal finds prima facie that there is a pre-existing dispute as between the parties and hence as enunciated the case of Mobilox Innovation v. Kirusa Software (P) Limited, this petition stands dismissed at the stage of notice itself as we do not find any merits in the application/petition other than merely to act as a rules to put pressure upon the Corporate Debtor to come to his terms using the onerous provisions of IBC, 2016.
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