2018 (7) TMI 2292 - AT - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - it is alleged that the Corporate Debtor made frivolous attempt to deny the admitted dues and default - HELD THAT - The Adjudicating Authority came to a definite conclusion that there is 'existence of dispute' and refused to admit the application under Section 9 of the I B Code, while we have noticed the plea taken by the appellant that no reply pursuant to demand Notice was given by the 'Corporate Debtor', but that will not take away the right of 'Corporate Debtor' to take plea of 'existence of dispute' before the Adjudicating Authority at the time of admission of application under Section 9 of the I B Code. Appeal dismissed.

Summary

Issues:
Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of corporate insolvency resolution process rejected on the ground of existence of dispute.

Analysis:
The appellant, an Operational Creditor, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor. The Adjudicating Authority rejected the application citing the existence of a dispute. The appellant argued that there was no dispute as claimed by the Corporate Debtor, who allegedly made frivolous attempts to deny the dues and default. The appellant contended that the Corporate Debtor was confused in counting the quantity of goods delivered, although the matter had been resolved, and that cheques issued by the Corporate Debtor had bounced.

Upon hearing both parties and examining the record, the Adjudicating Authority considered objections raised by the Corporate Debtor. The objections included contentions regarding incomplete supplies as per purchase orders, manipulated invoices, discrepancies in the quantity of goods delivered, and alleged deliberate filing of illegible documents by the Operational Creditor. The Corporate Debtor also argued about non-compliance with payment terms specified in the purchase order, emphasizing the importance of timely and complete delivery of goods for accurate measurements.

The Adjudicating Authority concluded that there was indeed an existence of a dispute based on the presented facts. The Authority acknowledged the appellant's argument that the Corporate Debtor did not reply to the demand notice, but highlighted that the Corporate Debtor had the right to raise the dispute at the time of admission under Section 9 of the Insolvency and Bankruptcy Code. The Tribunal, considering the reasoned nature of the impugned order, declined to interfere and dismissed the appeal without costs.