2020 (3) TMI 1381 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt abd dispute or not - Time limitation - HELD THAT - It is also a matter of record that the Petitioner could not be able to produce acknowledgement of service of the statutory demand notice of Section 8 of the I.B. Code. The present petition and the petitioner has stated that although it sent to the registered office of the company through a speed post. However, the same came back undelivered with a remark, concerned official not available. Hence, the petitioners took such plea that it tantamount to avoidance of accepting the service of demand notice. Hence, it is to be treated as deemed service - this Adjudicating Authority under the discipline of the I.B. Code is not expected to adjudicate such issue of disputed facts or to deal with such controversy while disposing of the present I.B. Petition. It is evident that the Corporate Debtor has raised Debit Note on 16.11.2015 and also got tested the quality of steam coal supplied. Further, the Petitioner in its petition in Column part4 (1)(b) Bullet Point No. (7) has stated that it made quite delayed payment on 25.11.2014. Such payment was received after rigorous follow up by the Operational Creditor. Thereafter, the Corporate Debtor did not even make a single payment to the Operational Creditor. Therefore, such raise prima-facie doubt about some pending dispute with regard to the quality of goods and or on existing dispute on terms and condition payment thereof, which are undisputedly of prior to issuance of the demand notice and filing of the present petition. The CIRP can be triggered in respect of Corporate Debtor only in situation where defence taken by the Corporate Debtor is found spurious and feeble. Which is not the case here as the Corporate Debtor has furnished the debit note and as well as copy of Coal Analysis Report based on lab test of coal supplied and the same was found of poor and inferior quality which are prima-facie evidence of dispute and such disputed question of facts are required to be agitated before a proper forum of Law, as it is out of purview of the I.B. Code to be adjudicated by this Adjudicating Authority. The present appeal is found to be filed beyond three (03) years from the date of default or the last payment received because, the Petitioner, itself in Part- 4, Column 1(b) of the present petition has pleaded that the Corporate Debtor made the last payment of ₹ 1500 Lakhs to the petitioner on 25.11.2014, that is too after a rigorous follow up by the Operational Creditor with the Respondent/ Corporate Debtor that means that there was some pre-existing dispute as well as the present petition is filed on 09.05.2018, which is beyond the prescribed limitation of three (03) years. The present I.B. Petition is not maintainable on the ground of pre-existing dispute as well as being hit by limitation - Petition dismissed.

Summary

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Allegation of delayed payments by Corporate Debtor
3. Dispute over the quality of supplied goods
4. Time-barred petition
5. Pre-existing dispute
6. Service of statutory demand notice

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The petitioner, M/s. Oriental Coal Corporation, an Operational Creditor, filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of CIRP against M/s. Decore Exxoils Pvt. Ltd., the Corporate Debtor. The petition was based on the Corporate Debtor's failure to pay for the supplied 'Steam Coal' as per the purchase orders dated 28.10.2013 and 24.09.2014.

2. Allegation of Delayed Payments by Corporate Debtor:
The Operational Creditor supplied 'Steam Coal' to the Corporate Debtor from the financial year 2011-12 until November 2014. Despite repeated follow-ups, the Corporate Debtor made only a partial payment of ?15,00,000 on 25.11.2014 and failed to clear the remaining dues. The total outstanding debt was ?19,93,848, consisting of ?9,63,808 as principal and ?10,30,040 as interest on delayed payments.

3. Dispute Over the Quality of Supplied Goods:
The Corporate Debtor contended that the supplied coal was of inferior quality, containing non-inflammable particles, and raised debit notes to reflect the same. The Corporate Debtor provided a coal analysis report from a certified lab indicating the poor quality of the coal supplied. The Corporate Debtor argued that this pre-existing dispute over the quality of goods negated the Operational Creditor's claim.

4. Time-Barred Petition:
The Corporate Debtor argued that the petition was time-barred as the last payment was made on 28.05.2014, and the petition was filed on 09.05.2018, beyond the three-year limitation period prescribed under the Limitation Act. The Tribunal agreed, citing precedents that the limitation period starts from the date of default.

5. Pre-Existing Dispute:
The Tribunal found evidence of a pre-existing dispute between the parties regarding the quality of the coal supplied. The Corporate Debtor had raised debit notes and provided coal analysis reports predating the demand notice, indicating a genuine dispute. The Tribunal referenced the Supreme Court's decision in Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software, which held that the existence of a bona fide dispute precludes the initiation of CIRP.

6. Service of Statutory Demand Notice:
The Operational Creditor failed to provide evidence of successful service of the statutory demand notice under Section 8 of the IBC. The notices sent to the registered office of the Corporate Debtor were returned undelivered. The Tribunal did not accept the argument of deemed service due to avoidance by the Corporate Debtor.

Conclusion:
The Tribunal concluded that the petition was not maintainable due to the pre-existing dispute over the quality of goods and the petition being time-barred. The Tribunal emphasized that the IBC is not intended for debt recovery but for resolving corporate insolvency. Consequently, the petition was rejected, and no order as to costs was made.