2020 (11) TMI 1025 - 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 - On perusal of the record it is found that the demand notice dated 27.06.2019 is issued by advocate Mr. Avneesh Garg on behalf of the operational creditor (page 26-35). The applicant has not put on record any document authorising Mr. Avneesh Garg, advocate to issue demand notice. Thus, the demand notice is issued by the advocate without any authority. Moreover, the demand notice is not supported by documents like copy of invoices etc. - On perusal of the records it is also found that the respondent has produced a copy of letter/email, raising a dispute regarding quality of the goods supplied by the applicant. From the above it is evident that much before issuance of demand notice dated 27.06.2019, there is/was a dispute between the parties regarding quality of the goods. In the instant application, the material placed on record by both the parties clearly establish that there is/was dispute regarding quality of the goods supplied to the respondent by the Applicant. That apart, the advocate who has issued the demand notice is/was not authorised to issue the demand notice - Petition dismissed.

Summary

Issues:
Petition under Section 9 of The Insolvency and Bankruptcy Code, 2016 for operational debt due.

Analysis:
The applicant, a public limited company engaged in manufacturing pipes, filed a petition under Section 9 of The Insolvency and Bankruptcy Code, 2016 against the respondent, a private limited company, for operational debt due from eleven invoices. The applicant claimed that despite supplying goods worth a specific amount, the respondent failed to make the payment, leading to the petition. The applicant also issued a demand notice under Section 8 of the Code to recover the dues. Various documents were submitted to support the claim, including affidavits, bank statements, purchase orders, invoices, and a Board Resolution.

The respondent, in its reply, raised objections, stating a dispute existed regarding the quality of goods supplied by the applicant. During the proceedings, it was observed that the demand notice issued by the applicant's advocate lacked proper authorization and supporting documents. Additionally, a dispute over the quality of goods was raised by the respondent before the demand notice was issued. It was also noted that there were discrepancies in the service of documents and errors in mentioning the respondent's name in the application.

After considering the arguments and evidence presented by both parties, the Tribunal found that a dispute regarding the quality of goods existed between the applicant and the respondent. The Tribunal also concluded that the advocate who issued the demand notice was not authorized to do so. Consequently, the Tribunal dismissed the company petition on the grounds of maintainability under the Insolvency and Bankruptcy Code, 2016. The dismissal did not prevent the petitioner from seeking other appropriate forums to enforce its claim against the respondent.