2018 (7) TMI 2234 - 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, the Invoice raised by the Operational Creditor has never been acknowledged by the Debtor - there is nothing on record which can prove that the Operational Creditor was enraged by the Debtor for providing Legal services, except the averment made by the Operational Creditor. The Operational Creditor has not produced any Vakalatnama/Memo of Appearance, by which the Operational Creditor has appeared before Court of Law on behalf of Debtor. Though it is accepted position that the Operational Creditor was engaged by the Debtor for his Legal services, it is crystal clear that for the services provided from Aug. 2005 to Jan. 2011 the Operational Creditor has duly received the fixed Professional Fees by the Debtor. And further, for the period of 2012-2014 he has received the amount of ₹ 3,60,000/- after deduction of ₹ 40,000 as TDS as full and final payment for his Services - the Debt claimed in this Petition/Application does not in existence and in our conscientious view this Petition/Application does not survive in the eyes of Law and deserves Rejection. The Operational Creditor has failed to prove that the amount of Debt as claimed ts in existence as defined U/s. 3 (11) of the Code and therefore, as the claimed amount is not in existence this Petition/Application is to be Rejected - petition dismissed.

Summary

Issues Involved:
- Petition filed by Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016 for non-payment of dues.
- Dispute regarding the existence of debt and default by the Debtor.

Analysis:
1. Petition by Operational Creditor:
- The Operational Creditor filed a petition invoking Section 9 of the Code, claiming an overdue amount from the Debtor for legal services provided.
- The Operational Creditor submitted details of the debt, including the principal amount and interest, along with evidence of invoices and demand notices served to the Debtor.
- Despite receiving the demand notice and failing to respond, the Debtor contested the claim, alleging the debt did not exist.

2. Submissions by Operational Creditor:
- The Operational Creditor asserted that services were rendered, invoices issued, and multiple demand notices sent to the Debtor for the outstanding amount.
- The Operational Creditor refuted the Debtor's claims and maintained that the debt was valid and overdue, seeking admission for Corporate Insolvency Resolution Process (CIRP).

3. Submissions by Debtor:
- The Debtor argued that the Operational Creditor's claims were false and frivolous, stating that the debt had been settled through a cheque payment in full and final settlement.
- The Debtor provided details of the alleged settlement, including the cheque issued and receipt acknowledging the payment, contending that no outstanding dues remained.

4. Findings and Decision:
- The Tribunal carefully reviewed the submissions, documents, and arguments presented by both parties.
- It was observed that the Operational Creditor failed to provide concrete evidence to substantiate the debt claim, including acknowledgment of invoices and legal services provided.
- The Tribunal noted discrepancies in the Operational Creditor's contentions regarding the cheque payment and receipt, raising doubts about the existence of the debt.
- Based on the evidence and lack of proof of the debt's existence, the Tribunal concluded that the petition was misconceived and dismissed it, ruling in favor of the Debtor.
- The Tribunal emphasized that the Operational Creditor's failure to establish the debt's existence under the Code led to the rejection of the petition, without imposing any costs on either party.

5. Conclusion:
- The judgment highlighted the importance of substantiating claims with concrete evidence in insolvency proceedings and emphasized the need for clarity and proof of debt existence.
- The decision to dismiss the petition underscored the significance of factual accuracy and evidentiary support in resolving disputes related to insolvency and bankruptcy matters, ensuring fair adjudication and upholding legal standards.