2021 (3) TMI 1247 - 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 - The Corporate Debtor issued a legal notice dated 26.10.2019 to the Operational Creditor. In the said notice, the Corporate Debtor has stated that as per the terms of understandings between the beth parties, the licence numbers supra had been transferred / sold and the entire payment of ₹ 1,07,03,939/- was credited into the account of one of the directors of the Operational Creditor who was liaising with the Corporate Debtor. There also appears to be various meetings and discussions between the Applicant and the Respondent herein. Since there is pre-existing dispute between the parties prior to filing this application, this application is not admitted by this Adjudicating Authority. From the legal notice, reply notice and the oral submissions made by the Counsel for the Applicant, it is clear that there is pre-existing dispute between the parties. The details of transactions cannot be concluded in a summary proceedings since there is also fraudulent criminal allegations involved in these transactions. Application dismissed.

Summary

Issues:
1. Application under Section 9 of the Insolvency & Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.
2. Dispute regarding non-payment for transfer/sale of licenses.
3. Failure to serve notice on the Respondent.
4. Pre-existing dispute between the parties.
5. Application dismissal based on the existence of a dispute.

Analysis:

1. The judgment pertains to an application filed under Section 9 of the Insolvency & Bankruptcy Code, 2016 by an Operational Creditor against a Corporate Debtor for initiation of Corporate Insolvency Resolution Process. The Operational Creditor engaged the Corporate Debtor for the transfer/sale of licenses issued by the Director General of Foreign Trade, Ministry of Industry and Commerce, Government of India.

2. The dispute arose as the payment for the transfer/sale of licenses was not made to the Operational Creditor but was transferred to the personal account of the Operational Creditor's ex-employee. This non-payment led to the filing of the application under Section 9 of the IBC, 2016 by the Operational Creditor seeking resolution.

3. Despite attempts to serve notice on the Respondent, the notices were returned unserved with an endorsement of "INAPPROPRIATE ADDRESS." The Adjudicating Authority ordered private notices to be issued to the Respondent on various occasions, but till the date of the hearing, the notice was not successfully served.

4. The judgment highlights a pre-existing dispute between the parties, evident from legal notices exchanged prior to the application filing. The Corporate Debtor claimed an amount due from the Operational Creditor, leading to a response from the Operational Creditor. Due to the pre-existing dispute and the complexity of the transactions involving fraudulent criminal allegations, the Adjudicating Authority did not admit the application.

5. The judgment references the case of Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd., where the Supreme Court emphasized the importance of a genuine dispute for rejecting an application under Section 9 of the IBC. The Adjudicating Authority must assess whether the dispute is plausible and not a spurious defense, even if the defense's success likelihood is not a consideration at that stage. The judgment concludes by dismissing the application based on the existence of a genuine dispute, emphasizing the need to separate genuine disputes from baseless claims.