2019 (1) TMI 1935 - 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 careful perusal of the documents it is noticed that two out of the seven cheques issued by the Corporate Debtor to the Operational Creditor were never presented to the Bank for encashment, poses a serious doubt whether the cheque was for the payment for the services provided by the Operational Creditor or not. Also, the contention of the Operational Creditor is different in Form-5, from what was submitted in rejoinder. Form-5 says that 7 cheques were issued and only a payment of ₹2,00,000/- has been received, whereas, in the rejoinder the Operational Creditor submits that ten cheques have been received out of which, 3 have been cleared, 2 were not deposited and 5 were dishonoured. It seems as if the Operational creditor is not clear regarding the debt to be claimed and kept on changing its stance time and again. In the present case, it seems that the Petitioner is not sure about its claims and have mentioned different and inconsistent calculations of the alleged excess amount. The correct position of the outstanding debt has not been revealed to this Bench till date. It is clear that a dispute as to the existence of the amount of debt is in existence, and the same has been raised by the Corporate debtor time and again. There was a dispute or misunderstanding between the parties. Rather, in the present case, it is demonstrated that this is not a case where merely feeble legal argument was made; but this is a case where sufficient evidences are placed on record to substantiate the dispute time and again. On separation of grain from the chaff, it is evidenced that this is not a case of raising a spurious defence by the debtor, but a duly substantiated case of existence of dispute . Having considered the totality of the facts and circumstances mentioned above, the existence of dispute prior to issue of Demand Notice is established. Accordingly, the Petition does not deserve Admission. Finally, a conclusion is hereby drawn that this is not a case where the impugned Debt and the alleged default was free from existence of plausible dispute or merely a feeble argument; but duly supported by corroborative evidences, therefore, cannot be proceeded under the Insolvency Code so as to commence CIRP by declaring the Debtor Insolvent or Bankrupt. However, it is worth to put on record that the scope and jurisdiction of this Tribunal is limited and also confined to the provisions of Insolvency Code only while dealing with Petition filed under Section 9, therefore, the impugned Debt in question does not fall within those ambits. This Petition does not survive under the Insolvency Code, hence hereby Dismissed .

Summary

Issues Involved:
1. Existence of Operational Debt
2. Pre-existing Dispute
3. Compliance with Procedural Formalities
4. Adequacy of Evidence

Issue-wise Detailed Analysis:

Existence of Operational Debt:
The Petitioner, an "Operational Creditor," filed a petition under Section 9 of the Insolvency & Bankruptcy Code, 2016, claiming an operational debt of ?61,48,138/- against the Corporate Debtor. The operational debt arose from a Finance Advisory Service agreement for Lease Rental Discounting, with a total fund requirement of ?16.50 Cr. The consideration for the service was set at 3.5% of the sanctioned loan amount. The Operational Creditor assisted the Corporate Debtor in raising funds from Indiabulls Housing Finance Limited, resulting in a sanctioned loan of ?17.00 Cr. Despite the completion of the transaction, the Corporate Debtor failed to pay the balance advisory fees, leading to the issuance of cheques that were subsequently dishonored due to insufficient funds.

Pre-existing Dispute:
The Corporate Debtor, in its reply, outrightly rejected the claim, stating that the Operational Creditor played no role in availing the loan from Indiabulls. The Corporate Debtor contended that the invoice claimed by the Operational Creditor was fictitious and never received. The Corporate Debtor argued that the cheques issued were security cheques and not for the payment of services. The Corporate Debtor also denied the payment of ?15,00,000/- as shown in the Demand Notice and contended that the Operational Creditor did not perform the required services. The Tribunal found inconsistencies in the Operational Creditor's claims and noted that the balance sheet did not reflect the alleged trade receivables, indicating a pre-existing dispute.

Compliance with Procedural Formalities:
The Operational Creditor issued a Demand Notice under Section 8 of the IBC, seeking payment of the due amount. The Corporate Debtor replied, raising disputes regarding the claimed amount. The Tribunal observed that the Operational Creditor's stance kept changing, and there was no clear evidence of the debt claimed. The Tribunal emphasized that the existence of a dispute prior to the issuance of the Demand Notice was established, and the Petition did not deserve admission.

Adequacy of Evidence:
The Tribunal noted that the Operational Creditor failed to present clear and consistent evidence regarding the debt. The Operational Creditor's balance sheet did not corroborate the claimed trade receivables. The Tribunal cited the Supreme Court's decision in Mobilox Innovations Private Limited v. Kirusa Software Private Limited, which emphasized that the adjudicating authority must reject the application if there is a plausible contention of a dispute supported by evidence. The Tribunal found sufficient evidence of a pre-existing dispute and concluded that the Petition could not be admitted under the Insolvency Code.

Conclusion:
The Tribunal dismissed the Petition, concluding that there was a pre-existing dispute regarding the existence of the debt. The Tribunal emphasized that the scope and jurisdiction were limited to the provisions of the Insolvency Code, and the Petitioner could pursue claims under other applicable laws. The Registry was directed to close the file and consign the Petition to records.