2017 (10) TMI 1284 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - existence of debt - Held that - Liability to pay the Operational Creditor for the service rendered has been in dispute even prior to the filing of the present petition. Disputes with respect to the quality of service rendered is evident from the various communications on record. Liability on account of delay in executing the job work arising out of the work order is also sought to be invoked. While it is beyond the scope of this Forum to adjudicate the evidentiary value of the dispute, its existence is sufficient ground for rejecting the present petition. Petition Rejected.

Summary

Issues:
Claim of Operational Creditor for non-payment, Quality of services rendered, Authorization for initiating insolvency resolution process, Dispute regarding liability and delay in job work execution.

Claim of Operational Creditor for non-payment:
The Petitioner, an Operational Creditor, sought initiation of Corporate Insolvency Resolution Process against the Respondent for non-payment of dues. The Operational Creditor was engaged in interior designing and finishing work for the Respondent's new Corporate office. Despite executing the contract for a specified amount, the Operational Creditor alleged non-payment of approved bills, leading to the initiation of the insolvency process under the Insolvency and Bankruptcy Code.

Quality of services rendered:
The Respondent disputed the quality of services rendered by the Operational Creditor, highlighting various deficiencies and defects in the work executed. The Respondent claimed that the Operational Creditor failed to complete several items, necessitating the engagement of third-party contractors to finish the work. Correspondence and meetings between the parties showcased ongoing disputes regarding the quality of work and delays in execution, with the Respondent emphasizing dissatisfaction with the services provided.

Authorization for initiating insolvency resolution process:
The Respondent contested the authorization granted to the Director of the Operational Creditor to initiate the insolvency resolution process, arguing that the resolution lacked specific authorization for such proceedings. Additionally, objections were raised regarding the certificate issued by the Bankers, alleging non-conformity with the requirements of the Insolvency and Bankruptcy Code. The Respondent questioned the validity of the petition based on these grounds.

Dispute regarding liability and delay in job work execution:
The Respondent highlighted disputes regarding liability for payment and delay in job work execution, citing clauses in the agreement that provided for damages due to delays. The Respondent contended that the Operational Creditor's actions caused extra expenses and inconvenience, leading to dissatisfaction with the work done. The Respondent characterized the initiation of insolvency proceedings as an attempt to misuse the legal process and emphasized the financial implications on the company's projects and public funds.

Judgment:
After considering the arguments presented by both parties and reviewing the pleadings, the Tribunal found that disputes existed concerning the quality of services rendered and the liability for payment even before the initiation of the insolvency petition. The Tribunal concluded that the disputes raised were substantial and beyond its scope to adjudicate on the evidentiary value. Therefore, the petition filed by the Operational Creditor was rejected, with no specific orders as to costs issued in the judgment.