2020 (2) TMI 1554 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT - In response to the demand notice dated 16.02.2019, the respondent had issued reply dated 01.03.2019 raising dispute regarding quality/quantity of the goods supplied by the applicant and claiming to have reconciled and settled the accounts between the two parties after considering the debit note and the rebate given later through the credit note. In the instant application, from the material placed on record by the Applicant, it is evident that there is/are preexisting dispute regarding the supply of goods and, therefore, the instant petition is not maintainable. Further, the petitioner has not filed affidavit of no dispute as required under Section 9 (3)(b) of the Insolvency and Bankruptcy Code, 2016 which is the requirement of an application filed under section 9 of the code - On perusal of the record it is found that it requires further investigation. The operational creditor cannot use the Insolvency Code either prematurely or for extraneous consideration as a substitute for debt enforcement procedure. The application so filed is not maintainable and hence stands dismissed.

Summary

Issues:
- Dispute over operational debt payment
- Pre-existing dispute regarding quality/quantity of goods supplied
- Lack of affidavit of no dispute
- Maintainability of the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016

Analysis:

Dispute over operational debt payment:
The operational creditor filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, claiming that the corporate debtor failed to make payment for coal supplied despite follow-ups. The outstanding amount claimed by the operational creditor was &8377; 9,39,730.14. The respondent raised objections, stating that a debit note for &8377; 11,12,721 was issued against the petitioner for quality difference, and accounts were settled after considering the debit note and rebate given later through a credit note.

Pre-existing dispute regarding quality/quantity of goods supplied:
The respondent contended that the debit note was raised before the demand notice, and accounts were reconciled after considering the debit note. The respondent reiterated the issue of the debit note and credit note in their reply to the demand notice. The Tribunal found that there was a pre-existing dispute regarding the quality/quantity of goods supplied, which led to the settlement of accounts between the parties.

Lack of affidavit of no dispute:
The Tribunal noted that the petitioner did not file an affidavit of no dispute as required under Section 9(3)(b) of the Insolvency and Bankruptcy Code, 2016. This failure to provide the necessary affidavit contributed to the dismissal of the petition.

Maintainability of the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016:
After reviewing the documents and arguments presented by both parties, the Tribunal concluded that there was a pre-existing dispute regarding the supply of goods, making the petition not maintainable under Section 9 of the Code. The Tribunal emphasized that the Insolvency Code should not be used prematurely or for extraneous considerations as a substitute for debt enforcement procedures. Therefore, the application was dismissed on the grounds of maintainability, with no order as to costs.

Conclusion:
The dismissal of the petition does not prevent the petitioner from seeking to enforce its claim through the appropriate forum. The Tribunal clarified that the observations made in the judgment do not constitute an opinion on the merit of the underlying controversy, as the dismissal was based on the issue of maintainability under the Insolvency and Bankruptcy Code, 2016.