2020 (5) TMI 365 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT - Though the purchase orders were placed with amendments from time to time, post inspection of the said machines, the machines were not delivered to the Corporate Debtor. The Corporate Debtor's email dated 5-8-2019 establishes the fact that the Petitioner was informed about the cancellation of the contract and that the order was closed. Hence, there is no debt and default committed by the Corporate Debtor. Application dismissed.

Summary

Issues:
1. Petition seeking Corporate Insolvency Resolution Process (CIRP) against Corporate Debtor for default in payment.
2. Allegations of default in making payment and invoking provisions of Sections 9 of I&B Code.
3. Purchase orders issued by Corporate Debtor and subsequent amendments.
4. Proforma invoice raised by Petitioner and Letter of Credit issued by Corporate Debtor's bankers.
5. Inability to affect inspection and dispatch due to termination of main contract.
6. Demand notice served under section 8 of the Insolvency and Bankruptcy Code.
7. Dispute raised by Corporate Debtor regarding cancellation of contract.
8. Corporate Debtor's contentions in response to the demand notice.
9. Petitioner's rejoinder denying Corporate Debtor's contentions.
10. Evaluation of purchase orders, amendments, non-delivery of machines, and contract cancellation.
11. Dismissal of the petition filed by Petitioner against Corporate Debtor.

Analysis:
1. The Company Petition was filed by the Petitioner seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for default in payment, amounting to ?54,02,387/- along with interest, invoking Sections 9 of the Insolvency and Bankruptcy Code (I&B Code).

2. The Petitioner had raised proforma invoices and the Corporate Debtor had issued Letter of Credit, but due to the termination of the main contract, the Corporate Debtor expressed inability to proceed with inspection and dispatch of materials, leading to the demand notice under section 8 of the Code.

3. The Corporate Debtor, in response, contended that the contract was terminated due to reasons beyond their control, and no materials were supplied by the Petitioner as per the purchase orders, denying any liability towards the alleged default.

4. The Petitioner, in the rejoinder, disputed the Corporate Debtor's claims, stating that the machines were ready for inspection on multiple occasions, and amendments were made to the purchase orders based on technical requirements.

5. After evaluating the facts and submissions from both parties, the Tribunal concluded that the machines were not delivered to the Corporate Debtor, and the email communication from the Corporate Debtor regarding contract termination established that there was no debt or default on their part.

6. Consequently, the Tribunal dismissed the Company Petition filed by the Petitioner against the Corporate Debtor, ruling in favor of the Corporate Debtor based on the evidence and arguments presented during the proceedings.