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2019 (3) TMI 309 - Tri - Insolvency and BankruptcyCorporate insolvency process - existence of dispute in relation to quality - HELD THAT - Dispute can also relate to the quality of goods as supplied by the Operational Creditor to the Corporate Debtor and going by the correspondence as exchanged referred to above, being prior to the notice of demand issued under Section 8 by the Operational Creditor, from the Corporate Debtor clearly shows that an issue of quality has been raised in view of the differing test reports. By virtue of the notice of dispute as required to be sent under the provisions of Section 8 of IBC, 2016, under Section 8(2)(a) the existence of dispute in relation to quality has also been brought forth by the Corporate Debtor to the Operational Creditor. Further going by Section 9(5)(2) of IBC, 2016, it is seen that under sub-clause (d) of clause 2 of sub-section 5 of Section 9 of IBC, 2016, an onus is placed on this Tribunal in view of the notice of dispute sent, if the dispute raised is not otherwise sham of illusory, to dismiss the petition. In view of the reach of the above said provisions and as rightly contended by learned counsel for the Corporate Debtor delineated and as held by the Hon ble Supreme Court in Mobilox Innovations (P.) Ltd. case (2017 (9) TMI 1270 - SUPREME COURT OF INDIA) this petition is liable to be rejected
Issues:
1. Jurisdictional transfer of proceedings from New Delhi Bench to Jaipur Bench of the National Company Law Tribunal. 2. Claim by Operational Creditor for supply of goods under Insolvency and Bankruptcy Code, 2016 (IBC, 2016). 3. Dispute arising between parties regarding quality of goods supplied. 4. Defence by Corporate Debtor based on existence of dispute to dismiss the petition. 5. Interpretation of the definition of 'Dispute' under Section 5(6) of IBC, 2016. Issue 1: Jurisdictional Transfer of Proceedings The judgment outlines the transfer of proceedings from the New Delhi Bench to the Jaipur Bench of the National Company Law Tribunal due to the territorial jurisdiction of the State of Rajasthan being vested with the Jaipur Bench. The transfer occurred via a specific notification, and subsequent proceedings took place at the Jaipur Bench. Issue 2: Claim by Operational Creditor The petition filed by the Operational Creditor, seeking payment for the supply of goods (PVC pipes) to the Corporate Debtor, was detailed in the judgment. The claim amount, terms of the purchase order, and the notice of demand issued were all discussed. The Corporate Debtor's response, raising quality issues and disputing the claim, was also highlighted. Issue 3: Dispute Regarding Quality of Goods A significant dispute arose between the parties concerning the quality of the goods supplied. The Operational Creditor's assertions regarding quality standards, supported by test reports, were countered by the Corporate Debtor's defense, claiming an existence of dispute based on quality issues. Correspondence and legal provisions related to disputes over goods quality were thoroughly examined. Issue 4: Defence Based on Existence of Dispute The Corporate Debtor's primary defense against the Operational Creditor's claim was the existence of a genuine dispute, citing previous legal decisions to support their stance. The judgment discussed the arguments presented by both parties, emphasizing the importance of resolving the quality dispute to determine the validity of the claim. Issue 5: Interpretation of 'Dispute' under IBC, 2016 The judgment delved into the legal interpretation of the term 'Dispute' as defined under Section 5(6) of the Insolvency and Bankruptcy Code, 2016. The analysis focused on how disputes, particularly those related to the quality of goods supplied, impact the adjudication of claims under the Code. The judgment highlighted the obligations of the Tribunal in cases where disputes are raised genuinely and the implications for petition dismissal based on such disputes. This detailed analysis of the judgment provides a comprehensive understanding of the legal issues addressed, the arguments presented by the parties, and the Tribunal's interpretation of relevant legal provisions in the context of the dispute over the quality of goods supplied.
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