2018 (7) TMI 2235 - 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:
Claim of operational debt under Section 9 of the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:

1. Claim of Operational Debt:
The Petitioner, an operational creditor, filed an application invoking Section 9 of the Code, claiming an operational debt of ?9,36,375 against the Debtor, a Limited Company. The debt comprised a principal amount of ?5,00,000 and interest of ?4,36,375 at the rate of 24% per annum. The Petitioner had provided legal services to the Debtor, and the debt was overdue from 2011 to 2016. The Petitioner issued demand notices in accordance with the Code before filing the application.

2. Submissions by the Operational Creditor:
The Operational Creditor submitted that services were rendered to the Debtor from 2011 onwards, and invoices were raised for the same. Despite multiple notices, the Debtor failed to make payments, leading to the application. The Operational Creditor contended that the raised invoice and non-payment established the existence of the debt and default by the Debtor.

3. Submissions by the Debtor:
The Debtor countered the claim, stating that payments were made for services rendered up to 2011. It was highlighted that a cheque was issued in 2014 as full and final settlement for services rendered post-2011. The Debtor provided evidence of the cheque and receipt, asserting that no outstanding amount was owed to the Operational Creditor.

4. Findings and Decision:
Upon reviewing the submissions and evidence, the Tribunal found discrepancies in the Operational Creditor's claims. The Debtor's evidence of payments made post-2011 contradicted the Operational Creditor's assertions of outstanding dues. The Tribunal noted the lack of acknowledgment of the invoice by the Debtor and absence of substantial proof of non-payment. Consequently, the Tribunal dismissed the application, ruling that the claimed debt did not exist as per the Code's definition. The application was rejected, and no costs were awarded.

5. Conclusion:
The Tribunal's decision emphasized the importance of substantiating claims of operational debt with concrete evidence. In this case, the lack of acknowledgment, contradictory evidence of payments, and failure to establish non-payment led to the dismissal of the application. The judgment underscores the necessity for operational creditors to provide irrefutable proof of debts to seek relief under the Insolvency and Bankruptcy Code.