2020 (2) TMI 1586 - 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 - It is clearly established that a debit note has been issued and delivered to the Applicant by the Respondent with respect to invoice no. 103 dated 13.04.2017 at least. The debit note NECPL/17-18/025 is not taken into consideration as the details in the debit note do not match the details in the invoice. Thus, the Respondent has successfully shown that there is a pre-existing dispute between the parties regarding the quality of goods supplied. The Applicant has contended that the Respondent has admitted its debt by issuing cheques for payment of the same and thus, cannot claim that the debt is disputed. Although it s true that the Respondent issued cheques for payment of the debt and in normal course this can be taken as an acknowledgment of debt, here it has to be noted that the cheques were not honored due to the reason that the Respondent stopped the payment of the same and not due to insufficiency of funds. This furthers the contention of the Respondent that there is a pre-existing dispute due to which the Respondent is not required to pay the Applicant s claims. Since the Respondent has successfully established the existence of a dispute between the parties the Tribunal deems it fit to dismiss the present application - Application dismissed.

Summary

Issues:
Application under Section 9 of Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process due to alleged default in payment.

Detailed Analysis:

1. Alleged Default by Respondent:
The Applicant filed an application against the Respondent for initiating Corporate Insolvency Resolution Process for a claim of ?20,82,383 due to non-clearance of dues. The Applicant supplied aluminum alloys to the Respondent as per purchase orders, and payments were made towards the balance. However, the Respondent allegedly issued cheques that were later returned with "Stop Payment" remarks, leading to outstanding amounts.

2. Claims and Counterclaims:
The Respondent contended that the Applicant failed to supply materials promptly, causing production delays and losses, resulting in the cancellation of orders. The Respondent also issued debit notes to the Applicant for allegedly inferior quality goods, contradicting the Applicant's claims. The Respondent argued that there was a pre-existing dispute regarding the quality of goods supplied.

3. Dispute Resolution:
After reviewing the documents and arguments, the Tribunal found that the Respondent successfully demonstrated the existence of a dispute over the quality of goods supplied. The issuance of debit notes and the non-honoring of cheques due to stop payment indicated a genuine disagreement between the parties. As a result, the Tribunal dismissed the application, considering the established dispute and declined to award costs.

This detailed analysis covers the issues involved in the legal judgment, highlighting the key arguments presented by both parties and the Tribunal's decision based on the evidence and legal provisions cited during the proceedings.