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2019 (11) TMI 1533 - Tri - IBCMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - It is to be pointed that the initial Customer Agreement Form filed as Annexure C (page 21 to 24 with Petition) which is basic document for the instant cause of action is not properly executed. And particulars of the parties are not mentioned therein except the Authorised Signatory for M/s.Micronova Network Solutions Private Limited. All the material columns are left blank. Therefore it is very difficult to accept the legal validity of this Agreement under summary proceedings contemplated under the provisions of the Code and veracity of this document can be examined in a Civil Proceedings by adducing appropriate evidence. The Respondent also admittedly paid part payment for the service rendered by the Petitioner and they have also raised several times with regard to the deficiency of the service made by the Petitioner. It is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP for justified reasons as per objective of the Code. The Hon ble Supreme Court in the case of Mobilox Innovations Private Limited vs. Kirusa Software Private Limited 2017 (9) TMI 1270 - SUPREME COURT has inter alia held that IBC 2016 is not intended to be substitute to a recovery forum. The Petitioner failed to prove its case so as to initiate CIRP in respect of the Corporate Debtor. Therefore the Petition is liable to be dismissed by granting liberty to the parties to settle the issue and also granted liberty to the Petitioner to approach appropriate Civil Court for the remedy in accordance with law. Petition dismissed.
Issues Involved:
1. Whether the petition to initiate Corporate Insolvency Resolution Process (CIRP) is maintainable. 2. Whether there is an operational debt exceeding ?1 Lakh. 3. Whether the debt is due and payable. 4. Whether there exists a dispute regarding the debt. Issue-wise Detailed Analysis: 1. Maintainability of the Petition: The petition was filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016, seeking to initiate CIRP against the Corporate Debtor for an outstanding amount of ?15,42,403.11. The Respondent opposed the petition, arguing that the claims were baseless and not maintainable in law or facts, asserting that they were not liable to pay the alleged amount. 2. Existence of Operational Debt Exceeding ?1 Lakh: The Operational Creditor provided high-speed internet services to the Corporate Debtor and raised invoices amounting to ?30,51,379.75. After part payments and credit notes, the outstanding amount was ?12,87,687.20. The Respondent contended that additional credit notes were due and that they had already paid ?13,03,373. Therefore, they argued that the Operational Creditor owed them ?17,73,767 after adjustments. 3. Debt Due and Payable: The Respondent argued that the services provided by the Operational Creditor were deficient, leading to business losses and customer dissatisfaction. They claimed that the invoices included periods when the services were not operational, such as during the installation phase and the Vardha Cyclone. The Respondent also mentioned that they issued a cheque for ?1,27,726, which was dishonored due to insufficient funds, but they had instructed the Operational Creditor to present the cheque only after confirmation. 4. Existence of Dispute: The Respondent raised several issues regarding the quality of services and the period for which the invoices were raised. They argued that there were ongoing disputes about the service quality and the amounts claimed. The Tribunal noted that the initial Customer Agreement Form was not properly executed, and several material columns were left blank, making it difficult to accept its legal validity under summary proceedings. Judgment: The Tribunal emphasized that the IBC is not a substitute for a recovery forum and that the existence of an undisputed debt is essential for initiating CIRP. The Tribunal referred to the Supreme Court's judgments in Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd. and Transmission Corporation of A.P. Ltd. v. Equipment Conductors and Cables Ltd., which highlighted that the existence of a dispute precludes the initiation of CIRP. The Tribunal concluded that the Petitioner failed to prove its case for initiating CIRP and dismissed the petition. However, it granted liberty to the parties to settle the issue and allowed the Petitioner to approach an appropriate Civil Court for remedy. Conclusion: The petition to initiate CIRP was dismissed due to the existence of disputes regarding the debt and service quality. The Tribunal emphasized that the IBC is not intended for debt recovery but for resolving insolvency. The parties were encouraged to settle the issue or seek remedy through civil litigation.
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