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Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + Tri Insolvency and Bankruptcy - 2018 (4) TMI Tri This

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2018 (4) TMI 1848 - Tri - Insolvency and Bankruptcy


Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) by Operational Creditor (OC) against Corporate Debtor (CD).
2. Existence of a pre-existing dispute between OC and CD.
3. Compliance with procedural requirements under Insolvency and Bankruptcy Code (IBC), 2016.

Issue-wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP) by Operational Creditor (OC) against Corporate Debtor (CD):
The OC filed an application under the provisions of IBC, 2016 to initiate CIRP against CD. The application was submitted in Form 5 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The OC claimed a total debt of ?6,98,03,036/- arising from the supply of power to CD, supported by a Power Supply Agreement (PSA) dated 24.7.2016. The OC also annexed bank statements and a certificate from Punjab National Bank confirming non-receipt of payment from CD.

2. Existence of a pre-existing dispute between OC and CD:
CD contended that the application was a misuse of the legal process, concealing material facts and that there was a pre-existing dispute. CD raised a counterclaim of ?19,59,98,528/- due to losses incurred from purchasing power at a higher rate from Maharashtra State Electricity Distribution Company Limited (MSEDCL) due to OC's breach of PSA. CD also filed a Civil Suit No. 4590 of 2017 against OC for recovery of the amount, pending adjudication before the District Court of Aurangabad. CD argued that OC's affidavit under Section 9(3)(b) of IBC, 2016 falsely claimed no notice of dispute was received, despite CD having sent a notice of dispute dated 19.10.2017.

3. Compliance with procedural requirements under Insolvency and Bankruptcy Code (IBC), 2016:
The Tribunal examined the compliance with procedural requirements under IBC, 2016, particularly Section 9(3)(b) requiring OC to affirm no notice of dispute was received. The Tribunal found that OC had suppressed material facts and filed a false affidavit, as CD had indeed sent a notice of dispute. The Tribunal referred to the Supreme Court's judgment in "Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software (P) Limited" which emphasized that the existence of a pre-existing dispute results in the rejection of the application for CIRP.

Conclusion:
The Tribunal concluded that there was a pre-existing dispute between OC and CD, predating the filing of the application. The dispute was not illusory or moonshine, as evidenced by ongoing litigation and the significant financial implications of the dispute with MSEDCL. The Tribunal found OC's affidavit under Section 9(3)(b) to be false, as it did not disclose the notice of dispute received from CD. Consequently, the Tribunal dismissed the application with a cost of ?1,00,000/-.

 

 

 

 

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