2020 (1) TMI 239 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - time limitation - Appellant has declared that he has filed the said Appeal within the period of limitation specified under Section 61(2) of the I B Code - existence of dispute or not - HELD THAT - It is a clear case of chasing of payments existence of disputes in terms of Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority can admit the Application only if the conditions imposed are fulfilled as per Section 9(5) of the I B Code, 2016. The Appellant is no doubt chasing payment continuously from 2015. They have also involved NTPC to pressurize to the Corporate Debtor to release the said payment - The Operational Creditor has not completed the work within the stipulated contract schedule and failed to fulfill their contractual obligations leading to disputes between the parties - There is exchange of legal notice and its reply in the month of March, 2018 where the disputed issues are raised in respect of recovery of debts and claims. The debt in question is disputed and the dispute was raised prior to issuance of demand notice under Section 8 of the Code. Accordingly, the Adjudicating Authority has rightly rejected the Application - appeal dismissed.

Summary

Issues:
- Appeal under Section 61(1) of the Insolvency and Bankruptcy Code, 2016 against the impugned order of the National Company Law Tribunal rejecting the Appellant's Application under Section 9 of the Code seeking initiation of Corporate Insolvency Resolution Process against the Respondent.
- Dispute regarding unpaid invoices and breach of contract between the parties.
- Interpretation of the Deed of Joint Undertaking and its implications on the payment dispute.
- Application of Section 9(5) of the I&B Code, 2016 in admitting or rejecting the application based on the existence of a dispute.

Analysis:
The Appellant, a part of Sandvik Group, filed an appeal seeking initiation of Corporate Insolvency Resolution Process against the Respondent, an EPC Contractor, due to unpaid invoices totaling a significant sum. The parties had a contractual agreement with NTPC, and the Appellant continuously pursued payment from 2015 onwards. However, the Respondent raised disputes regarding non-completion of work and contractual obligations, leading to legal notices and replies highlighting the contested issues.

The Deed of Joint Undertaking outlined the responsibilities of the parties in case of breach of contract, emphasizing prompt indemnification and dispute resolution mechanisms. The Respondent argued that the debt was disputed before the demand notice under Section 8 of the Code was issued, justifying the rejection of the Application by the Adjudicating Authority.

The Tribunal observed that the debt was indeed disputed, with issues raised prior to the demand notice, supporting the Adjudicating Authority's decision to reject the Application. Citing the Supreme Court's precedent, the Tribunal emphasized the need for a genuine dispute, not a spurious defense, to reject such insolvency applications. Consequently, the Appeal was dismissed for lack of merit, without any order as to costs.

In conclusion, the judgment delves into the complexities of contractual disputes, payment obligations, and the legal framework under the Insolvency and Bankruptcy Code, providing a detailed analysis of the issues involved and the application of relevant legal principles in reaching the decision to dismiss the Appeal.