IBC not meant to recover dues

The Insolvency and Bankruptcy Code cannot be invoked when there is a dispute over dues and the IBC machinery cannot be made a substitute to a recovery forum, the Supreme Court stated last week while setting aside an order of the National Company Law Appellate Tribunal, New Delhi, in the case, Transmission Corporation of Andhra Pradesh vs Equipment Conductors & Cables. The Supreme Court stated that in this case, the tribunal presumed that the Transmission Corporation, a state undertaking, owed money to the opposite party. The tribunal, therefore, warned the corporation to settle the claim, otherwise, it would pass an order initiating the Corporate Insolvency Resolution Process. On the other hand, the corporation disputed the claim and asserted that it owed no amount to the other company. The arbitration tribunal had rejected the claim of the company against the Transmission Corporation. Therefore, there was a dispute. The dispute had travelled a long winding way from courts in Punjab and Andhra Pradesh to the apex court. The Supreme Court pointed out that the appellate tribunal had not discussed the merits of the case and also not stated how the amount is payable. Instead, the tribunal gave a “veiled threat” to the state corporation by giving just one chance to settle the claim, failing which it would pass “appropriate orders”. Thus, the appeal was allowed.