2020 (2) TMI 1595 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors or not - pre-existence of dispute - HELD THAT - The e-mail produced shows that the tank fabrication was in progress, but not a single tank fabrication was completed. The workmanship was very poor as erection gang could not be retained by M/s. Lloyd Insultations (India) Limited (Appellant). In view of the pre-existence of dispute, it is not desirable to decide whether the dispute raised by the Respondent is genuine or not which can be decided by Court of Competent Jurisdiction and not by the Adjudicating Authority or this Appellate Tribunal - appeal dismissed.

Summary

Issues:
1. Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.
2. Rejection of the application by the Adjudicating Authority based on pre-existence of dispute.
3. Dispute regarding service rendered by the Appellant.
4. Examination of the evidence, specifically an email dated 25th July, 2014, indicating poor workmanship and incomplete tank fabrication.

Analysis:
1. The Appellant, 'Lloyd Insultations (India) Ltd.', filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 seeking the initiation of Corporate Insolvency Resolution Process against 'M/s. Sintex Prefab and Infra Limited' (Corporate Debtor). The Adjudicating Authority, in its order dated 2nd January, 2020, rejected the application citing the existence of a pre-existing dispute.

2. The Appellant's counsel argued that there was no pre-existence of dispute and that the evidence provided, including emails, did not indicate any dispute regarding the services rendered by the Appellant. However, upon review of the record, the Appellate Tribunal found that indeed there was a pre-existing dispute, as correctly determined by the Adjudicating Authority.

3. The Tribunal highlighted an email dated 25th July, 2014, which revealed that while tank fabrication was in progress, no tank fabrication had been completed, and the workmanship was subpar as the erection gang could not be retained by 'M/s. Lloyd Insultations (India) Limited'. This email served as crucial evidence of the dispute regarding the quality of services provided.

4. Given the pre-existence of the dispute, the Tribunal concluded that it was not within its jurisdiction to determine the genuineness of the dispute raised by the Respondent. The Tribunal emphasized that such matters should be resolved by a Court of Competent Jurisdiction and not by the Adjudicating Authority or the Appellate Tribunal. Consequently, the appeal was dismissed due to the absence of merit, and no costs were awarded in this matter.