2019 (7) TMI 1555 - Tri - Insolvency and Bankruptcy

Maintainability of application - Initiation of CIRP - allegation that Corporate Debtor defaulted in making repayment - debt outstanding - existence of dispute or not - HELD THAT - There is a pending litigation between the parties it can be seen that there is a pending dispute existing between the parties to the petition. The claim of dispute suggests the need of elaborate investigation. It is reiterated that existence of dispute in the present case cannot be ruled out - it appears that there is an existence of prior dispute though civil suit and police complaints have been filed after the receiving of the demand notice. It is also seen that both the Operational creditor and Corporate Debtor are closely linked not only in relation to these 2 companies but also several other entities as well. The director of the operational Creditor and the Corporate Debtor have served other 3 entities that have been formed between them and they qualify to be treated as related Parties . The amount of claim raised by the applicant clearly falls within the ambit of disputed claim. Section 9 (5) (ii) (d) of the Code provides that adjudicating authority shall reject the application if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. Petition dismissed.

Summary

Issues Involved:
1. Territorial Jurisdiction
2. Outstanding Payment and Invoices
3. Existence of Prior Dispute
4. Pending Litigation
5. Limitation Period
6. Exchange Rate Calculation

Issue-wise Detailed Analysis:

1. Territorial Jurisdiction:
The Tribunal confirmed its territorial jurisdiction over the matter as the registered office of the Corporate Debtor is located in New Delhi.

2. Outstanding Payment and Invoices:
The Operational Creditor, a German company, supplied surface acting industrial detergents to the Corporate Debtor, an Indian company, and maintained a running account. The Corporate Debtor failed to make payments against invoices amounting to EUR 229,020.48 (INR 1,83,69,549.48). The invoices were detailed in the application, showing due dates and amounts.

3. Existence of Prior Dispute:
The Corporate Debtor argued that disputes existed regarding the amount claimed. The disputes arose from a business arrangement involving the formation of SEITZ India to expand the Operational Creditor's business in India. Emails exchanged between the parties and Memoranda of Understanding indicated ongoing disputes about the business transfer and capital contributions. The Tribunal noted that the claim was disputed with sufficient particulars and that there was material evidence of pre-existing disputes.

4. Pending Litigation:
The Corporate Debtor had filed a civil suit against the Operational Creditor and related parties before the Gurgaon District Court, and a criminal complaint was lodged with the police. The Tribunal acknowledged multiple proceedings filed by both parties, indicating that the amount claimed was part of broader disputes pending adjudication.

5. Limitation Period:
The Corporate Debtor contended that the amount claimed was barred by the limitation period, asserting that the claim was never made due to an understanding between the parties. The Tribunal did not specifically address this issue in its decision but noted the existence of disputes.

6. Exchange Rate Calculation:
The Corporate Debtor argued that the exchange rate used by the Operational Creditor was incorrect and should have been based on the date when the amount became due and payable. The Tribunal did not delve into the specifics of the exchange rate calculation but focused on the existence of disputes.

Conclusion:
The Tribunal concluded that there was a pending dispute between the parties, supported by emails and other documents. The existence of prior disputes and ongoing litigation suggested the need for elaborate investigation, which was beyond the scope of the Tribunal. Citing the Supreme Court's decision in the Mobilox case, the Tribunal emphasized that it should reject the application if a genuine dispute existed. Consequently, the petition was rejected under Section 9 (5) (ii) (d) of the Insolvency and Bankruptcy Code, 2016, which mandates rejection if there is a record of dispute.

Final Order:
The petition was dismissed, and it was clarified that the observations made in the order should not prejudice the Applicant's rights before any other forum. Copies of the order were to be served to the parties, and the case records were to be consigned to the record room.