2019 (9) TMI 594 - AT - Insolvency and Bankruptcy

Admissibility of application - Initiation of CIRP - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Corporate Debtor - existence of dispute or not - HELD THAT - The Appellant has wrongly taken plea that there is difference between the amount as shown in the Demand Notice under Section 8(1) and the application under Section 9 (Form-5). From the Demand Notice, we find that unpaid amount has been shown as ₹ 20,58,704.00/-. Part-IV of Form 5 also shows that same amount i.e. ₹ 20,58,704.00/- as principal amount and ₹ 11,11,700/- towards interest @ 18% per annum i.e. total ₹ 31,70,404/-. There was no existence of dispute and there being a debt and default, the Adjudicating Authority rightly admitted the application under Section 9 of the I B Code - appeal dismissed.

Summary

Issues Involved: Challenge to order admitting application under Section 9 of the Insolvency and Bankruptcy Code, 2016 based on alleged differences in demand notices and pre-existence of dispute.

Analysis:

1. Challenge to Impugned Order: The Appellant, a shareholder of a Corporate Debtor, challenged the order passed by the Adjudicating Authority admitting the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 filed by the Operational Creditor. The Appellant contended that the demand notice shown by the Respondent in Form-5 was different from the Demand Notice issued under Section 8(1) of the I&B Code.

2. Pre-Existence of Dispute: The Appellant argued that there was a pre-existence of dispute between the Corporate Debtor and the Operational Creditor. The Appellant claimed that the goods supplied were of poor quality, leading to a debit note raised by another entity. However, the lack of supporting documents to prove the poor quality of goods or the communication between the parties weakened the Appellant's argument.

3. Discrepancies in Invoices: The Respondents highlighted discrepancies in the invoices referred to in the application under Section 9. The Appellant's reliance on a debit note dated 31st October, 2016, addressed to a different entity than the Operational Creditor, raised questions about the clarity and consistency of the Appellant's submissions regarding the debt owed.

4. Validity of Demand Notice: The Appellant's claim of a difference in the amount shown in the Demand Notice under Section 8(1) and the application under Section 9 was refuted by the Tribunal. The Tribunal found that the unpaid amount and interest were consistent in both the Demand Notice and Form-5, indicating no discrepancy in the principal amount or interest claimed.

5. Admission of Application under Section 9: Ultimately, the Tribunal concluded that there was no existence of a dispute, and a debt and default were established. Therefore, the Adjudicating Authority's decision to admit the application under Section 9 of the I&B Code was deemed appropriate. The appeal challenging the order was dismissed, with no costs imposed.

In summary, the judgment addressed the challenges raised by the Appellant regarding discrepancies in demand notices, pre-existence of dispute, and inconsistencies in invoices. The Tribunal's analysis focused on the lack of evidence supporting the Appellant's claims, the clarity of the debt owed, and the validity of the demand notices. Ultimately, the Tribunal upheld the Adjudicating Authority's decision to admit the application under Section 9, emphasizing the absence of a genuine dispute and the establishment of debt and default.