2020 (1) TMI 238 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - default of the operational debt - third party dispute - the disputes existing between the parties/companies or not - HELD THAT - The Respondent after receipt of the Demand Notice has raised some dispute but the dispute is not between the Appellant/Operational Creditor and Respondent/Corporate Debtor the dispute is in regard to Third Party. The Third Party dispute cannot come within the meaning of Section 8 9 R/w Section 5(6) of Insolvency and Bankruptcy Code 2016. In this case the Demand Notice was issued on 31.01.2018 and it was replied on 12.02.2018 before that Respondent has raised a dispute which is evident from the correspondence by way of e-mails exchanged between the parties from 10.04.2015 to 04.01.2018 as observed in the impugned order. There is nothing on record to disprove this fact - there was a pre-existing dispute between the Operational Creditor and the Corporate Debtor. Appeal dismissed.

Summary

Issues:
1. Appeal under Section 61(1) of the Insolvency and Bankruptcy Code, 2016 for setting aside an order.
2. Operational Creditor's claim of unpaid invoices against the Corporate Debtor.
3. Dispute raised by the Corporate Debtor regarding repayment and transfer of liabilities.
4. Interpretation of relevant provisions of the Insolvency and Bankruptcy Code, 2016.
5. Analysis of previous judgments related to third-party disputes.

Issue 1: Appeal under Section 61(1) of the Insolvency and Bankruptcy Code, 2016
The case involved an appeal filed by SEITZ GmbH against the order passed by the Adjudicating Authority in CP(IB) No.293 (ND)/2018, seeking to set aside the dismissal of the Appellant's application. The appeal was made under Section 61(1) of the Insolvency and Bankruptcy Code, 2016.

Issue 2: Operational Creditor's claim of unpaid invoices against the Corporate Debtor
SEITZ GmbH, the Appellant/Operational Creditor, claimed that the Respondent/Corporate Debtor failed to make payments for invoices totaling EUR 229,020.48 between July 2014 and November 2017. The Respondent did not dispute the quality, quantity, or price of the goods supplied, and a Demand Notice dated 31.01.2018 was not responded to by the Respondent, indicating default in operational debt.

Issue 3: Dispute raised by the Corporate Debtor regarding repayment and transfer of liabilities
The Corporate Debtor, Simran Technologies Pvt. Ltd, raised a dispute regarding repayment of a loan to Mr. Sandeep Sood, transfer of customers and sales business, and outstanding amounts due on goods supplied. The Corporate Debtor argued that the accounts should be settled among all relevant stakeholders before any claim by SEITZ GmbH.

Issue 4: Interpretation of relevant provisions of the Insolvency and Bankruptcy Code, 2016
The judgment analyzed Section 9(5) and Section 5(6) of the Insolvency and Bankruptcy Code, 2016. Section 9(5) outlines conditions for admitting or rejecting an application, while Section 5(6) defines "Dispute" in a broader sense following the decision in Mobilox Innovative Pvt. Ltd. vs. Kirusa Software Pvt. Ltd. The Tribunal emphasized the need for a genuine dispute to exist for rejecting an application.

Issue 5: Analysis of previous judgments related to third-party disputes
The Tribunal referred to a previous judgment to differentiate third-party disputes from disputes between the Corporate Debtor and the Operational Creditor. It was established that in the present case, the dispute raised by the Respondent was not a third-party dispute but a pre-existing one between the Operational Creditor and the Corporate Debtor, leading to the dismissal of the appeal.

In conclusion, the Tribunal found no merit in the appeal and dismissed it without any costs, based on the analysis of the issues raised and the relevant legal provisions and precedents cited during the proceedings.