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2019 (1) TMI 786 - AT - Insolvency and BankruptcyCorporate insolvency procedure - pre-existence (bonafide) dispute raised by the Corporate Debtor - Held that - In the present case, the Corporate Debtor has not disputed the existence of debt , nor there is anything on record of the pendency of a suit or arbitration proceedings, or any pre-existing dispute raised prior to issuance of demand notice under Section 8(1). Therefore, no relief can be granted on the plea of so-called existence of dispute.
Issues:
Challenge to admission of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 based on existence of dispute and interest claimed by Operational Creditor. Analysis: The Appellant, a shareholder of the Corporate Debtor, challenged the order admitting the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, claiming the existence of a dispute and disputing the interest rate claimed by the Operational Creditor. The Appellant argued that the Operational Creditor wrongly claimed interest at 18% per annum from a specific date, which was not acknowledged by the Adjudicating Authority. Additionally, the Appellant contended that the application filed by the Respondents did not accurately reflect the amount of default and interest sought, as there was no admission by the Corporate Debtor regarding the differential amount and interest claimed. The Corporate Debtor raised several pleas before the Adjudicating Authority, including financial crisis due to fraud by ex-employees, lack of signature on the notice issued under the I&B Code, and disputes over the final settlement with the Operational Creditor. However, the Adjudicating Authority found no evidence of a genuine pre-existing dispute raised by the Corporate Debtor, leading to the dismissal of the appeal. Referring to the case of "Innoventive Industries Limited Vs. ICICI Bank and Another," the Tribunal emphasized the broad definition of default under the I&B Code, triggering the insolvency resolution process upon non-payment of a debt once due. The judgment highlighted the distinction between financial and operational creditors, with specific procedures outlined for each. Notably, the Tribunal clarified that even a partial amount becoming due constitutes a debt, and failure to pay amounts to default. In the absence of evidence supporting a genuine dispute or pre-existing claim by the Corporate Debtor, the Tribunal dismissed the appeal, emphasizing that no relief could be granted based on the alleged existence of a dispute. The judgment underscores the importance of adherence to the procedures outlined in the I&B Code and the significance of establishing clear evidence to support claims or disputes in insolvency proceedings.
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