2019 (7) TMI 1929 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - in view of the existence if dispute, the application u/s 9 of the I B Code was rejected - HELD THAT - We are not deliberating on such issue whether the Corporate Debtor accepted the liability or not as it is found that the Corporate Debtor opposed the application u/s 9 of the I B Code and the Adjudicating Authority noted from letters dated 14th September, 2017 and 9th October, 2017 that there was an existence of dispute prior to issuance of Demand Notice u/s 8(1) of the I B Code which was issued on 13th November, 2017. The impugned order need not be interfered - appeal dismissed.

Summary

Issues:
- Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 rejected by the Adjudicating Authority.
- Existence of dispute regarding liability acceptance by the Corporate Debtor.
- Rejection of the appeal challenging the Adjudicating Authority's decision.

Analysis:
1. The Appellant, 'Universal Solutions of America LLC,' filed an application under Section 9 of the Insolvency and Bankruptcy Code against 'M/s. The Travancore Cements Limited,' which was rejected by the Adjudicating Authority. The Corporate Debtor had intimated the Appellant about the supply of Clinker without a letter of credit, leading to quality and operational problems causing a loss of Rs. 23,70,583. The Corporate Debtor intended to recover this loss from pending bills.

2. The rejection of the application under Section 9 was based on the existence of a dispute. The Adjudicating Authority noted that prior to the issuance of the Demand Notice under Section 8(1) of the I&B Code, there was a clear dispute as evidenced by letters dated 14th September, 2017, and 9th October, 2017. The Corporate Debtor opposed the application, indicating an ongoing disagreement regarding the liability.

3. The Appellant contended that the Adjudicating Authority did not consider the letters showing the Corporate Debtor's acceptance of liability. However, the Tribunal did not delve into this aspect, focusing instead on the presence of a dispute before the Demand Notice was issued. Consequently, the Tribunal upheld the decision of the Adjudicating Authority, dismissing the appeal but allowing the Appellant to seek appropriate relief from the relevant forum despite the dismissal of the appeal.