2018 (4) TMI 1442 - AT - Insolvency and Bankruptcy

Corporate insolvency process - application under 9 of I&B Code rejected as the certificate given by the Bank is not proper, the defects have not been removed within seven days and There is an existence of dispute - Held that - We find that there is an existence of dispute which has also been noticed by the Adjudicating Authority - The appellant has supplied the Microsoft software to the respondent Corporate Debtor. The Corporate Debtor brought the matter to the notice of the Microsoft authorities that there is a defect, which suggests that the dispute is relating to the quality of the goods supplied and the services rendered by the appellant. Learned counsel for the appellant further submits that the respondent has accepted the liability but that cannot be a ground to admit the application filed under Section 9 there being an existence of dispute. For the aforesaid reason, we are not inclined to interfere with the impugned order. In absence of any merit, the appeal is dismissed.

Summary

Issues:
Challenge to rejection of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 based on improper bank certificate, failure to remove defects, and existence of dispute.

Analysis:
The appellant, an Operational Creditor, contested the rejection of their application under Section 9 of the Insolvency and Bankruptcy Code, 2016, by the Adjudicating Authority. The rejection was based on three grounds: improper bank certificate, failure to rectify defects within seven days, and the existence of a dispute. The Appellate Tribunal noted the decision in 'Macquarie Bank Limited' Vs 'Shilpi Cable Technologies Ltd.' by the Hon'ble Supreme Court, which emphasized the sufficiency of the bank certificate to determine default and reversed the mandatory 7-day period for defect rectification. Regarding the existence of a dispute, parties were given the opportunity to address the court with relevant documentation.

Upon hearing arguments on the 'existence of dispute,' the Tribunal found evidence of a dispute, as acknowledged by the Adjudicating Authority in detail. The Authority highlighted email exchanges between the parties, indicating a clear dispute regarding the quality of goods and services provided. The appellant's counsel clarified that while an employee of Microsoft, Mr. Meetul Patel, was involved in the supply of software to the respondent, the dispute arose from the respondent notifying Microsoft of defects in the goods and services. Despite the respondent accepting liability, the presence of a dispute was deemed sufficient to dismiss the appeal.

In conclusion, the Tribunal declined to interfere with the impugned order due to the existence of a dispute, leading to the dismissal of the appeal. The decision was made in the absence of merit, and no costs were awarded in the case.