2019 (11) TMI 1412 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of dispute or not - HELD THAT - From the perusal of the reply filed by the Respondent it is clear that the Respondent has sent an email on 09.04.2018. complaining about the quality of service provided by the petitioner and the Respondent has mentioned that the Petitioner has not provided services after 2015 and also informed the Petitioner that their services are no longer required. The Respondent also has replied to the Petitioner's Section 8 of IBC Code. 2016, notice within the mandatory 10 days bringing to the notice of the petitioner of the pending dispute. These things prove the existence of dispute between the parties prior to the issuing of notice by the Petitioner. The petitioner has also not filed the affidavit as per section 9(3)(b) of the Insolvency and Bankruptcy Code. 2016, stating that the petitioner has no notice as to the existence of dispute with the respondent with regard to the unpaid operational debt. Application dismissed.

Summary

Issues:
- Application to initiate corporate insolvency resolution process under Section 9 of the Insolvency and Bankruptcy Code 2016 for alleged default in payment of professional legal services.
- Dispute regarding quality of services provided and non-payment of outstanding dues by the respondent.
- Existence of a pre-existing dispute between the parties.
- Failure to provide an affidavit as per section 9(3)(b) of the Insolvency and Bankruptcy Code, 2016.

Analysis:
1. The Applicant filed an application seeking to initiate corporate insolvency resolution process against the Respondent for defaulting on payment of professional legal services. The Applicant detailed the services provided, invoices raised, and the outstanding amount of ?63,29,169. Despite acknowledging the debt, the Respondent failed to make payments, leading to the Applicant issuing a Demand Notice under Section 8 of the Code. The Respondent disputed the claim, alleging lack of clarity on the amounts due and questioning the basis of the claim.

2. The Respondent, in its reply, raised concerns about the quality of services provided by the Applicant, stating that services were no longer required after 2015. The Respondent highlighted issues with the patent applications filed by the Applicant and disputed the claim of unpaid operational debt. The Respondent emphasized a pre-existing dispute regarding the services rendered and payments made, indicating a lack of agreement and dissatisfaction with the services provided.

3. The Tribunal carefully reviewed the documents and arguments presented by both parties. It noted the existence of a dispute prior to the issuance of the notice by the Petitioner, as evidenced by communications regarding service quality and non-requirement of further services. The Tribunal observed that the Petitioner failed to provide an affidavit as required by the Insolvency and Bankruptcy Code, indicating a lack of acknowledgment or resolution of the dispute regarding the unpaid operational debt.

4. Considering the contentions, documents, and disputes raised by both parties, the Tribunal rejected the application for initiating the corporate insolvency resolution process. It was determined that there was a genuine dispute between the parties regarding the quality of services, non-requirement of further services, and the outstanding dues. The failure to address the pre-existing dispute and provide necessary documentation led to the dismissal of the application without imposing any costs on the Petitioner.