2021 (3) TMI 1347 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - pre-existing dispute or not - dishonor of cheque - appropriate forum - HELD THAT - The E-mail communications between the operational creditor and the Corporate Debtor clearly establishes the fact that there was pre- existing dispute between both the parties. The E-mail communication trail starting from date 28.02.2018, 03.07.2018, 05.07.2018 till 26.09.2018 between the Operational creditor and corporate debtor substantiate the fact that there was delay in supply of material to the Corporate Debtor due to which the Corporate Debtor was forced to purchase the goods at a higher price from the other sellers. The fact that a meeting was called upon on dated 16.02.2018 to address the issues relating to delay in supply and debit notes being issued by the corporate debtor substantiate the fact that there was a pre-existing dispute between the parties prior to the issuance of demand notice. It is clear from the decision of Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software (P) Limited 2017 (9) TMI 1270 - SUPREME COURT that the dispute must exist before the receipt of demand notice. Be that as it may, on appraisal of the arguments advanced by the Ld. Counsels, it emerges that there were disputes existing prior to the issuance of the Demand Notice. The E-mail communication trail starting from date 28.02.2018, 03.07.2018, 05.07.2018 till 26.09.2018 between the Operational creditor and corporate debtor substantiate the fact that there was delay in supply of material, the same was duly acknowledged by the Operational Creditor in the Email communications. The operational creditor regarding the issue of dishonoring of cheque has the option to file Criminal proceedings under section 138 of Negotiable Instruments Act, 1881, before the appropriate forum for the recovery of the same. Since there is a preexisting dispute between the parties, we have no option but to reject the prayer of the Operational Creditor to initiate proceedings under Section 9 of IBC, 2016 - Application dismissed.

Summary

Issues:
Application for corporate insolvency resolution process under Section 9 of the Insolvency and Bankruptcy Code 2016 due to alleged default in debt payment.

Detailed Analysis:
1. Alleged Default and Application Details:
- Applicant filed for CIRP against the Respondent for non-payment of a debt of ?32,08,640.
- Applicant claimed the Respondent failed to clear the debt for material supplied as per agreement.

2. Applicant's Contentions:
- Applicant stated the material was supplied as per the purchase order and invoices raised.
- Applicant highlighted the dishonored cheque and the subsequent criminal case lodged against the Respondent.
- Applicant sent a statutory demand notice under IBC, 2016, which was allegedly not responded to by the Respondent.

3. Respondent's Defense:
- Respondent claimed the material supply was incomplete, leading to additional costs and losses.
- Respondent mentioned communication and disputes regarding the supply and invoices raised.
- Respondent disputed the debit notes and highlighted issues with the lost cheque.

4. Legal Submissions:
- Applicant emphasized Respondent's admission of the invoices and the amount owed.
- Respondent cited legal judgments to support the existence of disputes and requirements for initiating CIRP.

5. Tribunal's Decision:
- Tribunal analyzed the email communications and meeting records to establish pre-existing disputes.
- Citing Supreme Court precedents, the Tribunal emphasized the need for disputes to exist before demand notices.
- The Tribunal rejected the application due to the presence of disputes prior to the demand notice issuance.

6. Conclusion:
- The Tribunal dismissed the application for CIRP initiation under Section 9 of IBC, 2016 due to the pre-existing disputes between the parties.
- The operational creditor was advised to pursue other legal avenues, such as criminal proceedings for the dishonored cheque.

This detailed analysis showcases the legal intricacies surrounding the alleged default, disputes, and the Tribunal's decision to reject the application based on the presence of pre-existing disputes between the parties.