2021 (2) TMI 1240 - 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 - The respondent has taken a defence of no prior agreement in writing and in para (d) of the reply, the respondent has taken a defence that the bills/invoices annexed with demand notice are not as per the agreed rates and the payment due has already been released but nowhere in the reply, the respondent has made what was the agreed rate and how the invoices raised by the applicant are not in terms of the agreed rates - the respondent has referred to certain bills and admitted that against these bills, the respondent had made the payments which shows that on the oral agreement, both the parties had acted upon. Therefore, the respondent at this stage cannot take a defence that there is no written agreement. The respondent in its reply has admitted that against some of the bills, referred in para 13, the payment has been made. These bills are enclosed by the applicant at page 45, 46, 49, 50, 65, 66, 53 and 54 and on perusal of these bills, we further notice that while making the payments of these bills, the respondent has not raised any dispute regarding the rate. Therefore, for the first time, the respondent has raised the dispute of rate. It has been established by the Operational Creditor that the application is complete, there is no payment of unpaid operational debt, the invoice or notice for payment to the corporate debtor has been delivered by the operational creditor, and though the reply has been received but it appears from the reply that no dispute in terms of Section 5(6) of the IBC has been raised by the respondent within 10 days from the receipt of demand notice and there is no record of dispute in the information utility. Application allowed - moratorium declared.

Summary

Issues Involved:
1. Pre-existing dispute regarding rental rates of scaffolding.
2. Absence of written agreement.
3. Legality of claimed amount.
4. Receipt and acknowledgment of invoices.
5. Dispute over the amount payable.
6. Demand notice validity.
7. Admission of liability by the Corporate Debtor.

Issue-wise Detailed Analysis:

1. Pre-existing dispute regarding rental rates of scaffolding:
The Corporate Debtor contended that there was a pre-existing dispute regarding the rental rates of scaffolding as per Section 8(2)(a) of IBC, 2016. The Tribunal found that the respondent failed to provide any documentation or prior correspondence evidencing such a dispute before the demand notice was issued.

2. Absence of written agreement:
The Corporate Debtor argued that there was no written agreement to support the rates claimed in the invoices. The Tribunal noted that both parties acted upon an oral agreement, and the respondent admitted to making partial payments based on this oral agreement. Therefore, the absence of a written agreement did not invalidate the claim.

3. Legality of claimed amount:
The Corporate Debtor questioned the legality of the claimed amount, including ?21,62,115 as principal, ?3,72,191.79 as interest, and ?35,00,000 as the cost of scaffolding/shuttering material. The Tribunal observed that the respondent did not provide any evidence to dispute the claimed rates or amounts and had admitted partial payments, which indicated acknowledgment of the debt.

4. Receipt and acknowledgment of invoices:
The Corporate Debtor claimed that the receipt of invoices by the security guard did not constitute acknowledgment of the debt. The Tribunal found that the respondent had not raised any issue regarding the non-receipt of invoices before the demand notice and had made payments against some invoices, indicating acknowledgment.

5. Dispute over the amount payable:
The Corporate Debtor contended that there was a dispute over the amount payable. The Tribunal found that the respondent had not raised any specific dispute regarding the rates or amounts before the demand notice and had admitted partial payments, which indicated acknowledgment of the debt.

6. Demand notice validity:
The Corporate Debtor argued that the demand notice was sent by a sole proprietorship firm not recognized under IBC, 2016. The Tribunal did not find this argument valid and focused on the substance of the demand notice and the respondent's reply.

7. Admission of liability by the Corporate Debtor:
The Corporate Debtor, in its written submissions, admitted its liabilities towards the Operational Creditor and stated its inability to clear the debts. The Tribunal took this admission into account while deciding the case.

Conclusion:
The Tribunal concluded that the dispute raised by the Corporate Debtor did not qualify as a dispute under Section 5(6) of IBC. The application was found to be complete, with no payment of unpaid operational debt, and no valid dispute was raised within 10 days of the demand notice. Consequently, the Tribunal admitted the application and initiated the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. An Interim Resolution Professional (IRP) was appointed, and a moratorium was declared in terms of Section 14 of IBC, 2016. The Operational Creditor was directed to deposit ?2,00,000 to meet the immediate expenses of the IRP, which would be reimbursed by the Committee of Creditors (CoC) as CIR costs. The Registry was directed to communicate the order to the IRP and both parties.