NATIONAL COMPANY LAW APPELLATE TRIBUNAL

NEW DELHI

Company Appeal (AT)(Ins) No. 499 of 2019

IN THE MATTER OF:

Harkirat S. Bedi

…Appellant

Versus

Oriental Bank of Commerce.

…Respondent

Present :

For Appellant:

Mr. Balaji Srinivasan and Ms. Pallavi Sengupta,

Advocates

O R D E R

08.05.2019

This appeal has been preferred by Mr. Harkirat S. Bedi,

Director of ‘M/s. IDEB Projects Pvt. Ltd.’ (Corporate Debtor) against order dated

29^th March, 2019 passed by the Adjudicating Authority (National Company Law

Tribunal), Bengaluru Bench admitted application u/s 7 of the Insolvency and

Bankruptcy Code, 2016 (for short, the ‘I&B Code’) filed by ‘Oriental Bank of

Commerce (Financial Creditor).

2.

Learned counsel appearing on behalf of the Appellant submitted that the

recovery proceeding is already pending before the ‘Debt Recovery Tribunal’

(DRT) which is the subject matter of the application u/s 7 of the I&B Code. She

further submitted that the challenge before the DRT is made with regard to

violation of clause 35 of the ‘Memorandum of Understanding’ (MOU) dated 9^th

May, 2012. It is submitted that the ‘Recovery Certificate’ bearing No. 9473 dated

23^rd March, 2016 issued by the DRT in O.A. No. 862/2010, which is the basis of

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Company Appeal (AT)(Ins) No. 499 of 2019

Section 7 application, has not attained finality as it is pending for consideration

before the Authority in a Revision Case No. 4174 of 2017 filed by the Appellant

bearing Miscellaneous No. 10 of 2018 seeking cancellation of the order in the

light of the fraud committed by consortium.

3.

Learned counsel for the Appellant submits that the amount of ‘debt’ is also

in dispute and it cannot be held that there is a ‘default’ as the matter is pending

for consideration in the Revision Application, which is pending before the ‘DRT’.

4.

We have heard the learned counsel appearing on behalf of the Appellant

and perused the record.

5.

Hon’ble Supreme Court in “Innoventive Industries Ltd. v. ICICI Bank,”

- (2018) 1 SCC 407] while dealing with the application u/s 7, observed as follows:

“27. The scheme of the Code is to ensure that when a

default takes place, in the sense that a debt becomes

due and is not paid, the insolvency resolution process

begins. Default is defined in Section 3(12) in very

wide terms as meaning non-payment of a debt once

it becomes due and payable, which includes non-

payment of even part thereof or an instalment

amount. For the meaning of “debt”, we have to go to

Section 3(11), which in turn tells us that a debt

means a liability of obligation in respect of a “claim”

and for the meaning of “claim”, we have to go back

to Section 3(6) which defines “claim” to mean a right

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Company Appeal (AT)(Ins) No. 499 of 2019

to payment even if it is disputed. The Code gets

triggered the moment default is of rupees one lakh or

more (Section 4). The corporate insolvency resolution

process may be triggered by the corporate debtor

itself or a financial creditor or operational creditor. A

distinction is made by the Code between debts owed

to financial creditors and operational creditors. A

financial creditor has been defined under Section 5(7)

as a person to whom a financial debt is owed and a

financial debt is defined in Section 5(8) to mean a

debt which is disbursed against consideration for the

time value of money. As opposed to this, an

operational creditor means a person to whom an

operational debt is owed and an operational debt

under Section 5(21) means a claim in respect of

provision of goods or services.

28.

When it comes to a financial creditor triggering the

process, Section 7 becomes relevant. Under the

Explanation to Section 7(1), a default is in respect of

a financial debt owed to any financial creditor of the

corporate debtor — it need not be a debt owed to the

applicant financial creditor. Under Section 7(2), an

application is to b