2018 (9) TMI 524 - Tri - Insolvency and Bankruptcy

Corporate insolvency process - neither the Petitioner nor the respondent has obtained the Product Acceptance of BSNL - Held that - The tribunal observes that the offer from the petitioner has no stipulation regarding the acceptance of the equipment by BSNL or any other third party. However, the purchase order of the respondent dated 13.09.2010 Page no.84 Annexure D mentions a condition which is as under Payment Terms 90 days from the date of Delivery Acceptance by BSNL. This constitutes a counter offer and the petitioner has implicitly accepted it by making delivery of the equipment in terms of the above purchase order. In view of this, the petitioner at this juncture cannot claim that he is no way concerned with the acceptance or otherwise of the installed equipment in the premises of BSNL. Tribunal further observes that by making the supply to the Respondent, the Petitioner Company has given implied consent to the counter offer made by the respondent. In this case, neither the Petitioner nor the respondent has obtained the Product Acceptance of BSNL and hence has not fulfilled the condition required. Thus the petition filed by the Operational Creditor under section 9 Rule 6 of the IBC, 2016 at this point of time is premature and is liable to be dismissed. The Tribunal further clarifies that the right of the operational creditor to approach this forum under Section 9 of IBC is unaffected if and when the respondent does not make any payment within a period of 90 days from the date of delivery of acceptance by BSNL.

Summary

Issues:
Company petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IB Code 2016) r/w Rule 6 of Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016, filed by Operational Creditor against Respondent for non-payment of operational debt.

Analysis:
1. Background Facts: The petitioner, a Limited Company from Germany, filed a petition against the respondent, a Public Company in India, for non-payment of operational debt amounting to US$ 2,48,080. The respondent failed to pay despite legal notices, leading to the petition under IB Code 2016.

2. Petitioner's Submission: The petitioner claimed that the respondent did not dispute the debt and failed to pay, necessitating the petition under IB Code 2016 to initiate insolvency proceedings against the respondent for the due amount.

3. Respondent's Defense: The respondent argued that the petitioner breached the contract by not fulfilling obligations under a project awarded by BSNL, leading to a dispute regarding payment terms and product acceptance. The respondent claimed the petition was not maintainable and that they are a solvent company.

4. Tribunal's Observations: The Tribunal noted the purchase order's payment terms requiring payment within 90 days of delivery acceptance by BSNL, constituting a counter offer accepted by the petitioner. As neither party obtained BSNL's acceptance, the petition was premature and liable to be dismissed under Section 9 Rule 6 of the IBC, 2016.

5. Decision: The Tribunal ruled that the petition was premature as the conditions of the purchase order regarding BSNL's acceptance were not fulfilled. The right of the operational creditor to approach the forum remains if the respondent fails to make payment within 90 days of BSNL's acceptance. The petition was disposed of with no costs awarded.

This judgment clarifies the importance of fulfilling contractual obligations, the impact of counter offers, and the significance of meeting payment terms before initiating insolvency proceedings under the IB Code 2016.