2020 (3) TMI 1278 - 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 - HELD THAT - The petitioner has admittedly acknowledged the receipt of complaint dated 28.12.2018 agreed to take back the unused material of 9116.4 kgs. On perusal of the records it is also found that both the parties have exchanged number of emails regarding quality of the material debit note raised on the petitioner by the respondent and rate of interest charged. On perusal of the records it is also found that against the defective material supplied by the petitioner respondent had issued debit notes - In the instant application from the material placed on record by the respondent it is evident that there is/are pre-existing dispute regarding quality of the material supplied by the operational creditor and therefore the instant petition is not maintainable. The Adjudicating Authority is of the considered view that the instant application devoid of merit and as such is not maintainable on the very reason that there is/are pre-existing disputes with regard to the quality of goods supplied - Application dismissed.

Summary

Issues: Application under Section 9 of The Insolvency and Bankruptcy Code, 2016 for non-payment of operational debt; Pre-existing dispute regarding the quality of material supplied.

Analysis:

1. The application was filed by M/S. Sumilon Polyester Limited as an operational creditor under Section 9 of The Insolvency and Bankruptcy Code, 2016, seeking payment of outstanding debt by the respondent company. The applicant alleged non-payment of a total sum of Rs. 19,07,560 by the respondent, which included charges due to delayed payment of invoices.

2. The respondent, a company registered under the Companies Act, raised objections claiming a pre-existing dispute regarding the quality of material supplied by the petitioner. The respondent stated that due to poor quality, their clients rejected the laminate quantity, resulting in a debit of Rs. 11.50 lacs on the respondent. The respondent also mentioned the communication of potential loss of Rs. 22.00 lacs to the petitioner due to material rejection.

3. The Adjudicating Authority analyzed the evidence, including emails exchanged between the parties regarding the quality of material supplied, debit notes issued by the respondent, and acknowledgments by the petitioner of complaints related to material quality. It was noted that there were pre-existing disputes regarding the quality of goods supplied by the operational creditor, rendering the application not maintainable.

4. Consequently, the Adjudicating Authority dismissed the application, emphasizing that the existence of pre-existing disputes on material quality made the application devoid of merit and not maintainable under the Insolvency and Bankruptcy Code, 2016. The decision allowed the petitioner to seek appropriate forums for enforcing the claim against the respondent, despite the dismissal of the petition based on maintainability issues.