2020 (1) TMI 902 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Respondent Corporate Debtor failed to make repayment of debt - existence of debt and dispute or not - Whether the Respondent has brought to the notice of the petitioner the existence of a dispute preceding the receipt of the notice on 27.02.2018? - HELD THAT - In the instant case it cannot be said that a debt, at least as far as the outstanding dues towards the cost of DSTBs is concerned, is not due and payable in law or in fact. The Respondent cannot shy away from payment of this amount. Therefore, the contention of the Respondent that there was a pre-existing dispute cannot be accepted. The Respondent having defaulted in payment of the operational debt the Corporate Insolvency Resolution Process is triggered and the petition under section 9 of the Code is maintainable - The issue accordingly answered in the negative. In view of the finding the petition under section 9 deserves to be admitted. Petition admitted - moratorium declared.

Summary

Issues Involved:
1. Whether the Respondent has brought to the notice of the petitioner the existence of a dispute preceding the receipt of the notice on 27.02.2018?

Issue-wise Detailed Analysis:

Issue No. I:

8. There is no quarrel that the petitioner has supplied 45,000 DSTBs to the Respondent. It is not in dispute that the Respondent had not paid the total dues of ?4,81,95,000/- (Rupees Four Crores Eighty One Lakh Nine Hundred Ninety Five only) and the petitioner had raised invoices for the said amount between 02.06.2014 and 20.08.2015. The Respondent had made payment of ?3,15,56,500/- to the Petitioner. No payment was made after 20.08.2015. An amount of ?1,66,38,500/- (Rupees One Crore Sixty Six Lakhs Thirty Eight Thousand Five Hundred only) remain outstanding. The parties entered into Memorandum of Understanding (MoU) on 22.11.2015, regarding payment of the outstanding dues. This is not in dispute. They allegedly executed another MoU for payment of ?1,29,80,018/- (Rupees One Crore Twenty Nine Lakhs Eighty Thousand Eighteen only) towards Customs Duty. The execution of this MoU, dated 22.11.2015, is disputed. The Respondent has also claimed adjustment of ?68,75,300/- (Sixty Eight Lakhs Seventy Five Thousand Three Hundred only) paid directly to the IRDETO towards activation of CAS against the total invoice amount of ?4,81,95,000/- (Rupees Four Crores Eighty One Lakhs Ninety Five Thousands only) as it was not required to pay anything beyond the cost of DSTBs as agreed. The Respondent was also not required to pay the Customs Duty which was the Petitioner’s liability.

9. The Petitioner issued a Pleader's notice, dated 24.01.2018, bringing the fact of default to the Respondent. It was addressed to Mr. I. Rama Krishna Raju, the Managing Director of the Respondent in his correct address as given in the Articles of Association. The postal receipt shows that it was despatched on 24-01-2018 and delivered on 27.01.2018. The notice was not responded to. Subsequently, the Petitioner issued the notice under section 8 on 16.02.2018, demanding payment of the outstanding dues to the tune of ?2,36,18,508/- (Rupees Two Crores Thirty Six Lakhs Eighteen Thousand Five Hundred and Eight only) as per MoU, dated 22.11.2015. The notices were served on the Respondent on 27.02.2018. The Respondent did not reply within 10 days as statutorily required. It however sent an email 28.03.2018, enclosing the copy of a reply alleged to have been issued on 08.03.2018, informing that the said notice returned unserved. No material is placed before this Authority to show that the Respondent indeed had issued the reply on 08.03.2018. The reply is referred to only in the email, dated 28.03.2018. Section 8 of the Code requires that the Respondent (CD), shall within a period of 10 days of the receipt of the demand notice, bring to the notice of the petitioner the existence of a dispute, if any. In the instant case the Respondent has failed to comply with the statutory requirements. From the above it would appear that the Respondent has raised a dispute as regards the quantum of the debt which according to the petitioner is the outstanding dues towards the cost of the DSTBS and the dues towards Customs Duty. The Respondent has also disputed the execution of the 2nd MoU, dated 28.11.2015 under which the petitioner claims payment of the Customs Duty. Besides there is also the issue of payment of CAS dues. Whether or not a MoU to that effect was executed between the parties and is vitiated by fraud cannot be gone into by this Authority. Besides, the Respondent did not raise any dispute relating thereto within the statutory period of 10 days.

10. It is settled that the Adjudicating Authority under the Code needs to exercise a summary jurisdiction and would not be required to conduct an in-depth enquiry into the allegations, counter-allegations by way of examination of witnesses and critical examination of documents. The Adjudicating Authority needs only to see if a dispute has been raised within the statutory period and has been brought to the notice of the petitioner. In the present case that has not been done. The Hon'ble NCLAT by order in Pedersen Consultants India (P.) Ltd. v. Nitesh Estates Ltd. [CA (AT) (Insolvency) No. 720 of 2018, dated 24-7-2019] held that the claim means a right to payment even if it is disputed. Therefore merely because the Corporate Debtor has disputed the claim by showing that there is certain counter, claim, it cannot be held that there is pre-existence of dispute. It further went on to hold that, "The respondent disputed that the alleged debt is not the amount as shown in the Form. However, on mere dispute of amount, the application under Section 9 cannot be rejected, as in terms of Section 3(6) which defines 'claim' to mean a right to payment even if it is disputed. The Hon'ble Supreme Court in Innoventive Industries Ltd. v. ICICI Bank [(2018) 1 SCC 407] noticed the definition of 'claim' and observed that even if the right of payment is disputed, the Code gets triggered the moment default is of rupees one lakh or more (Section 4). In the circumstances, in absence of any pre-existing dispute, it was not open for the Adjudicating Authority to reject the application under Section 9."

11. In the instant case it cannot be said that a debt, at least as far as the outstanding dues towards the cost of DSTBs is concerned, is not due and payable in law or in fact. The Respondent cannot shy away from payment of this amount. Therefore, the contention of the Respondent that there was a pre-existing dispute cannot be accepted. In that view of the matter the citations Innoventive Industries Ltd. v. ICICI [2017] 84 taxmann.com 320/143 SCL 625 and Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. [2017] 85 taxmann.com 292/144 SCL 37 would have no application in the facts of the case in support of the Respondent. The Respondent having defaulted in payment of the operational debt the Corporate Insolvency Resolution Process is triggered and the petition under section 9 of the Code is maintainable. The issue accordingly answered in the negative. In view of the finding the petition under section 9 deserves to be admitted.

Order:

12. The petitioner has not suggested the name of the Insolvency Resolution Professional (IRP). The Respondent Company is headquartered at Visakhapatnam. Sri Immaneni Eswara Rao, IBBI/IPA-001/IPPO1224/2018-2019/11943, 40-26-22, Mohiddin Street, Opposite BSNL Exchange, Labbipeta, MG Road, Vijayawada - 520 010, Andhra Pradesh email: [email protected]. Mobile: 90520 00041 is appointed as the IRP. Meanwhile he had furnished his written consent in Form-2. No disciplinary proceeding is pending against him as verified from the IBBI website. Hence ordered.

ORDER

The Company Petition be and the same is admitted on contest.

i. The Corporate Insolvency Resolution Process of the respondent shall commence from this date and shall be completed within 180 days hence, as provided under Section 12(1) of the Code.

ii. Shri Sri Immaneni Eswara Rao, IBBI/IP A-001/IPPO1224/2018-2019/11943, 40-26-22, Mohiddin Street, Opposite BSNL Exchange, Labbipeta, MG Road, Vijayawada - 520 010, Andhra Pradesh, email: [email protected], Mobile: 90520 00041 is appointed as the Interim Resolution Professional (IRP).

iii. He is directed to take charge of the Respondent/Corporate Debtor's management forthwith and take necessary steps in furtherance of the CIRP in terms of Sections 13(2), 15, 17, 18 and 20 of the Code and Rules made thereunder.

iv. Moratorium under Section 14 of the Code in respect of the respondent is hereby declared.

v. The Directors, Promoters and/or any other person associated with the management of Respondent Corporate Debtor shall extend all assistance and cooperation to the IRP as stipulated under section 19 of the Code for effective discharge of his functions thereunder.

vi. The Registry is directed to communicate the order to the Petitioner/Financial Creditor and the Respondent/Corporate Debtor.

vii. The petitioner/OC and the Registry are also directed to send the copy of this order to IRP for necessary compliance.