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2018 (2) TMI 2014 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - whether dispute mentioned in the reply notice given by the corporate debtor to the operational creditor was there in existence even before the date of issuance of demand notice under Section 8 Of the Code? - HELD THAT - Dispute mentioned in the reply notice is operational creditor failed to supply the finished goods as per MOU dated 31.10.2013. Operational creditor also retained the raw material that supplied to the operational creditor from and on behalf of the corporate debtor. The fact that raw material belonging to the corporate debtor has been retained by the operational creditor is an admission by the operational creditor. To appreciate this fact, it is necessary to examine the dates of events. MOU was entered into on 31.10.2013. Amount claimed in the invoices is from 16.11.2013 to 01.01.2014. The supply of various chemical materials by the petitioner to the respondent from 10.06.2013 to 17.10.2013. According to the petitioner payments were made from 01.12.2013 to 04.09.2014. In the absence of any material to show that the cheques were issued on 31.10.2013 it shall be presumed that the cheques were issued on the date that was appearing on the cheques. Therefore, the issuance of cheques in the year 2014 and 2015 Clearly goes to show that there was no existence of dispute between the petitioner and respondent before issuance of demand notice. Therefore, it is a clear a case where a dispute has been raised for the first time in the reply notice. It is not a case where existing dispute has been brought to the notice of the petitioner by the respondent. The petition is complete in all respects it deserves to be admitted.
Issues Involved:
1. Misjoinder of parties. 2. Validity of Form 3 under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. 3. Limitation period for filing the petition. 4. Non-compliance with the Memorandum of Understanding (MOU) and retention of raw materials. 5. Purpose and misuse of cheques issued by the respondent. Issue-wise Detailed Analysis: 1. Misjoinder of Parties: The respondent argued that the petition was invalid due to the inclusion of SBSL's directors as parties. The Tribunal clarified that the petition was filed under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016, with KCPL as the applicant and SBSL as the corporate debtor. Since no relief was sought against the directors, the petition could not be dismissed on this ground. 2. Validity of Form 3 under Rule 5: SBSL contended that Form 3 was not compliant with Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The Tribunal examined Form 3 and Form 4, along with the petition, and found them to be in accordance with the prescribed rules. The forms were properly signed, and the necessary resolutions were filed, making the notice valid. 3. Limitation Period: SBSL argued that the petition was barred by limitation. KCPL countered that the claim was within time as the cheques issued by SBSL on 10.01.2015 and 04.04.2015 were dishonoured, and payments were made on a running account basis. The Tribunal referred to decisions by the NCLAT, which stated that the Limitation Act is not applicable to proceedings under the IBC. Therefore, the petition was not barred by limitation. 4. Non-compliance with MOU and Retention of Raw Materials: SBSL claimed that KCPL did not perform job work as per the MOU dated 31.10.2013 and retained raw materials worth ?34,91,581/-. KCPL admitted to retaining the raw materials but argued that no dispute was raised by SBSL before the demand notice. The Tribunal had to determine if the dispute existed before the demand notice. The Tribunal referred to the Supreme Court's decision in Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd., which stated that the adjudicating authority must reject the application if a genuine dispute exists. The Tribunal found that the issuance of cheques in 2014 and 2015 indicated no prior dispute, making the dispute raised in the reply notice an afterthought. 5. Purpose and Misuse of Cheques: SBSL contended that the cheques were issued as a guarantee and were misused by KCPL. The Tribunal noted that there was no evidence to support the claim that the cheques were issued on 31.10.2013 (the date of the MOU) rather than the dates mentioned on the cheques. The Tribunal concluded that the cheques were issued on the dates mentioned, showing no prior dispute. Conclusion: The Tribunal admitted the petition as it was complete in all respects. Mr. Sitansh Magia was appointed as the Interim Insolvency Resolution Professional. A moratorium was ordered under Section 13(1)(a) of the IBC, prohibiting suits, asset transfers, and recovery actions against the corporate debtor. The order was to be communicated to the petitioner, respondent, and Interim Insolvency Resolution Professional. The application was disposed of with no order as to costs.
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