2019 (4) TMI 593 - Tri - Insolvency and Bankruptcy

Corporate insolvency process - Corporate Debtor defaulted paying the dues outstanding against the invoices raised by the Applicant - Corporate Debtor raised a dispute over the warranty from as back as 2015 by sending notices and emails, therefore the Corporate Debtor submits that this Petition is liable to be dismissed - pre-existing dispute - HELD THAT - There is a clear material inferring that the dispute is in existence in between the parties since 2015. Looking at the corporate debtor from time to time notifying the applicant not providing manufacturer warranty since 02.03.2015, that is far before the applicant sending statutory notice u/s. 434 of the Companies Act 1956, we believe that a single sentence of the Corporate Debtor e-mail dated 18.09.2014 confirming that as per the applicant combined statement, the total amount comes to ₹ 742.31 lacs, but as per the records of the corporate debtor outstanding amount as on date was of ₹ 699.42 (in the email dated 18.09.2014 at 5.49 p.m. from the corporate debtor side not disclosing as to whether it is in lakhs or not, therefore not suffixed with lacs, may be, it is lakhs only) will not have any bearing on the proof showing from 2015 onwards the corporate debtor insisting upon manufacturer warranty and this dispute being covered under the definition of dispute There being a money recovery suit pending before the Hon ble High Court of Delhi on the above subject matter before filing this company petition, which is also covered under the definition of dispute, this Bench without going into other merits of the case, this CP is hereby dismissed on the ground that dispute is in existence as on the date this Applicant filed winding up petition before Honourable High Court and before section 8 notice given by the Corporate debtor. Company Petition dismissed as misconceived.

Summary

Issues involved:
1. Default in payment by Corporate Debtor leading to filing of Company Petition under section 9 of the Code.
2. Dispute raised by Corporate Debtor regarding warranty obligations and performance guarantee.
3. Existence of a civil suit filed by the Operational Creditor against the Corporate Debtor before the Company Petition.

Detailed Analysis:

1. The Applicant filed a Company Petition under section 9 of the Code against the Corporate Debtor for defaulting in paying outstanding dues against invoices raised. The Corporate Debtor initially acknowledged its liability but later disputed it, leading to the initiation of CIRP process against the Corporate Debtor.

2. The Corporate Debtor raised a dispute regarding warranty obligations and performance guarantee as early as 2015, highlighting issues related to warranty provision, closure of manufacturing unit, and lack of enforceable manufacturer's warranty. The Corporate Debtor contended that the Applicant failed to provide warranty and performance guarantee as per purchase orders, leading to disputes and communications regarding the rejection of supplied goods.

3. The Corporate Debtor argued that the existence of a civil suit filed by the Operational Creditor against the Corporate Debtor before the Company Petition, based on the same subject matter, indicated an ongoing dispute between the parties. The Corporate Debtor claimed that the dispute was covered under the Code's provisions and cited relevant case law to support the dismissal of the Company Petition.

In the judgment, the Tribunal considered the dispute raised by the Corporate Debtor regarding warranty obligations since 2015, emphasizing the ongoing nature of the dispute. The Tribunal noted the communications and actions taken by the Corporate Debtor related to warranty issues before the initiation of the CIRP process. Additionally, the existence of a civil suit filed by the Operational Creditor before the Company Petition further indicated the presence of a dispute between the parties. As a result, the Tribunal dismissed the Company Petition, concluding that the dispute existed before the statutory notice and filing of the winding-up petition, thereby rendering the Company Petition misconceived.