2019 (12) TMI 1410 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - time limitation - allegation that the Petitioner has not completed the work within the given time and there was a delay of 107 days in completing the work - HELD THAT - Clause 4 of the work order specifically provides for a time period of 67 days for completing the works which includes all holidays and weekly holidays and other non-working days. Therefore excluding the delay due to Petitioner s failure on account of local conditions is untenable and was disregarded by the Corporate Debtor. The work order was issued for an aggregate contract value of 1, 14, 04, 128/- and that the Corporate Debtor had already paid an amount of 1, 04, 52, 250/-. The ledger statement thus certified the amount paid by the Corporate Debtor to the Petitioner. The Corporate Debtor has enclosed the following emails which were all before the issue of demand notice dated 04.12.2018 to show that there is a pre-existing dispute - All the above emails were exchanged between the parties before the issuance of demand notice and upon perusal of the same it can be said that admittedly there is a delay in execution of the project and hence there is a pre-existing dispute covered under section 5(6) of the Code. It is beneficial to refer to the judgement of the Hon ble Supreme Court in the case of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED 2017 (9) TMI 1270 - SUPREME COURT wherein it was held that So long as a dispute truly exists in fact and is not spurious hypothetical or illusory the adjudicating authority has to reject the application. When the law laid down by the Hon ble Supreme Court in the above case is applied to the facts of the present case it is established that there is a clear dispute relating to the existence of debt as provided u/s 5(6)(c) of the Code since the Petitioner has not completed the project in time - petition dismissed.

Summary

Issues involved:
Petition seeking Corporate Insolvency Resolution Process due to default in payment; Existence of dispute regarding completion of work and delay; Application of Section 8 and 9 of the Insolvency & Bankruptcy Code; Pre-existing dispute based on email exchanges; Interpretation of relevant legal provisions; Reference to Supreme Court judgment on plausible contention and disputes.

Analysis:
1. The primary issue in this case was the petition filed by a company seeking to initiate the Corporate Insolvency Resolution Process against another company for defaulting on a payment, invoking Sections 8 and 9 of the Insolvency & Bankruptcy Code. The petitioner alleged that the respondent failed to make a payment, leading to the initiation of the process.

2. The petitioner claimed that the respondent had requested civil and interior work at Chennai Airport, and after issuing a work order, a final invoice was raised. The respondent disputed the claim amount, citing delays in completing the work and a pre-existing agreement on liquidated damages for delays. The respondent also provided ledger statements showing payments made to the petitioner.

3. The respondent contended that there was a dispute regarding the completion of work within the specified time frame, supported by email exchanges between the parties. These emails indicated a disagreement over delays and completion, demonstrating a pre-existing dispute as per the provisions of the Code.

4. The Tribunal referred to a Supreme Court judgment emphasizing the need to differentiate between genuine disputes and spurious defenses. Applying this principle to the case, the Tribunal concluded that there was a clear dispute regarding the existence of debt due to the petitioner's failure to complete the project on time.

5. Based on the above analysis and the legal principles outlined, the Tribunal dismissed the petition, granting liberty to the petitioner to pursue further action as per the law. No costs were awarded in this judgment, highlighting the importance of establishing genuine disputes before initiating insolvency proceedings.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the arguments presented by both parties, and the legal interpretation applied by the Tribunal, culminating in the dismissal of the petition due to the existence of a genuine dispute regarding the debt owed.