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2019 (10) TMI 622 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor committed a default for total outstanding amount - Section 9 of the Insolvency and Bankruptcy Code, 2016 read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT - On perusing the facts of the instant petition filed under Section 9 of the Code, there appears to be an existence of dispute regarding the default and debt in question due to the deficiency in the goods and/or services supplied by the Operational Creditor - Whereas, in the instant case, the Respondent had raised certain issues regarding the goods and/or services vide its reply notice dated 24.08.2018. On perusal of the said notice, we find that the Respondent had raised a conceivable dispute that would require further investigation. However, the Tribunal cannot enter into enquiry with regard to the disputed questions in a case filed under the IBC, 2016, which is summary in nature and the issues to be primarily decided basing on the principles of natural justice. The question of deficiency in the goods and/or services as claimed by the Respondent has to be examined in an appropriate proceeding in a case filed in accordance with the law and the issue cannot be adjudicated in the instant company petition - there is a dispute with regard to debt in question due to the alleged deficiency in the goods and/or services provided by the Respondent and thus it is not fit to be admitted. The present case is not a fit case to admit - petition admitted.
Issues Involved:
1. Default by the Corporate Debtor for outstanding payment. 2. Dispute regarding the quality of goods and services provided. 3. Limitation period for filing the application. 4. Existence of a pre-existing dispute. Detailed Analysis: 1. Default by the Corporate Debtor for outstanding payment: The Petitioner, M/s. Amtech Electronics (India) Limited, filed C.P.(IB) No. 56/BB/2019 under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Ecolibrium Energy Private Limited for an outstanding amount of ?7,03,337.80 as per invoice no. 10000793 dated 17.10.2015. The Petitioner claimed that the goods supplied were accepted by the Corporate Debtor without any dispute regarding their quality, quantity, or durability. 2. Dispute regarding the quality of goods and services provided: The Respondent disputed the claim, stating that the goods and services provided by the Petitioner were defective/unsatisfactory, as evidenced by emails dated 12.10.2015 and 13.10.2015. The Respondent contended that the invoice dated 17.10.2015 was accepted based on assurances from the Petitioner regarding the quality of goods, which were not met, leading to withheld payments. The Respondent further detailed various quality issues and after-sale service problems, which led to financial losses and a damaged reputation. 3. Limitation period for filing the application: The Tribunal noted that the date of default, as per the Petitioner, was 17.10.2015, and the application under Section 9 was filed on 07.01.2019, which falls outside the limitation period of three years. The Tribunal referred to Section 238A of the Code, which applies the provisions of the Limitation Act to proceedings under the Code. Citing the Hon’ble Supreme Court’s decision in B.K. Educational Services (P.) Ltd. Vs. Parag Gupta & Associates, the Tribunal emphasized that if the default occurred over three years before the application date, it would be barred under Article 137 of the Limitation Act unless Section 5 of the Limitation Act is invoked to condone the delay. The Petitioner neither sought condonation of delay nor provided sufficient cause for the delay. 4. Existence of a pre-existing dispute: The Tribunal observed that there was a pre-existing dispute regarding the debt and default due to the alleged deficiencies in goods and services supplied by the Petitioner. The Respondent had raised these issues in their reply notice dated 24.08.2018. The Tribunal referred to the Supreme Court’s decision in Mobilox Innovations (P.) Ltd. v. Kirusa Software Private Limited, which mandates the rejection of a petition under Section 9(5)(ii)(d) if a notice of dispute is received by the operational creditor. The Tribunal found that the Respondent had raised a conceivable dispute requiring further investigation. Conclusion: The Tribunal concluded that there was a pre-existing dispute regarding the debt due to the alleged deficiencies in goods and services, making the case unfit for admission under the IBC, 2016. The Tribunal dismissed the Company Petition No. 56 of 2019 but allowed the Petitioner to pursue other remedies available under the law. No order as to cost was made.
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