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2020 (8) TMI 460 - AT - IBCMaintainability of application - initiation of CIRP process - application was rejected on the ground that the claim of the Appellant falls within the ambit of disputed claim - the Respondent has filed Civil Suit after receipt of the demand notice - HELD THAT - Appellant had regularly supplied goods to the Respondent i.e. earlier to the 5 invoices. The Respondent has denied that the Appellant has never delivered 5 invoices referred in the application but subsequently he admits that the Appellant has supplied goods as per invoice dated 26.11.2016 and 20.12.2016. In the C-Forms delivered by the Respondent to the Appellant there is reference to all the 5 invoices, the Respondent has no courage to say that the C-Forms are forged. From the ledger of Respondent maintained by the Appellant it is apparent that there was a long business relationship between the parties. Ledger and bank account enteries corroborate with 5 invoices. If really the Appellant was unable to supply raw material due to shortage then Respondent could have filed the correspondence with the Appellant in this regard. The Respondent has not placed on record any of the invoice to show that he had to purchase material from Appellant s competitors. In this case in reply to the notice the Respondent has raised a vague and baseless allegations against the Appellant which are not supported by any documentary evidence. Therefore, the dispute is spurious or hypothetical, hence the Adjudicatory Authority has to reject such defence. The Adjudicating Authority wrongly rejected the claim on the ground that the claim raised by the Appellant falls within the ambit of disputed claim. Merely disputing a claim cannot be a ground, as held by the Hon ble Supreme Court in Innovative Industries Ltd Vs ICICI Bank and Anr. 2017 (9) TMI 58 - SUPREME COURT wherein it is observed that claim means a right to payment even it is disputed. The Code gets triggered the moment the default of ₹ 1 Lakh or more . The Respondent has defaulted to pay more than ₹ 1 Lakh and in absence of any pre-existing dispute and the record being complete, the application u/s 9 preferred by the Appellant was fit to be admitted - Appeal allowed.
Issues Involved:
1. Whether there is an "Operational Debt" exceeding ?1 Lakh. 2. Whether the debt is due and payable and has not yet been paid. 3. Whether there is a pre-existing dispute between the parties. 4. Whether the application under Section 9 of the Insolvency & Bankruptcy Code (I&B Code) is maintainable. Issue-wise Detailed Analysis: 1. Whether there is an "Operational Debt" exceeding ?1 Lakh: The Appellant supplied goods between 30.08.2016 and 20.12.2016 and raised five invoices amounting to ?23,22,537/-. The Respondent acknowledged the balance as of 31.08.2018 but failed to honor the invoices. The Appellant issued a demand notice on 07.09.2018 under Section 8(1) of the I&B Code for ?31,73,578/- (including interest). The application under Section 9 of the I&B Code was supported by documentary evidence such as invoices, ledger accounts, bank statements, and a balance confirmation letter. The Tribunal found that the operational debt exceeding ?1 Lakh was due and payable and had not been paid. 2. Whether the debt is due and payable and has not yet been paid: The Respondent claimed to have paid ?8,05,395/- against the invoices and disputed the balance confirmation letter as forged. The Appellant admitted receiving ?5 Lakh on 18.11.2017 but denied the forgery allegation. The Tribunal noted that the Respondent did not provide documentary evidence to support its claim of payment or forgery. The Tribunal concluded that the operational debt of ?23,22,537/- was due and payable. 3. Whether there is a pre-existing dispute between the parties: The Respondent argued that there was a pre-existing dispute and had filed a civil suit after receiving the demand notice. The Tribunal referred to the Supreme Court's judgment in Mobilox Innovations Pvt. Ltd. Vs. Kirussa Software Pvt. Ltd., which outlined the criteria for determining the existence of a dispute. The Tribunal found that the Respondent's allegations were vague and unsupported by evidence. The civil suit was filed after the demand notice, indicating no pre-existing dispute. The Tribunal held that the dispute raised by the Respondent was spurious and hypothetical. 4. Whether the application under Section 9 of the I&B Code is maintainable: The Adjudicating Authority initially rejected the application, citing a disputed claim. However, the Tribunal referenced the Supreme Court's judgment in Innovative Industries Ltd Vs ICICI Bank and Anr., which clarified that a claim means a right to payment even if disputed. The Tribunal found that the Respondent defaulted on the payment of more than ?1 Lakh and, in the absence of any pre-existing dispute, the application under Section 9 was fit to be admitted. Conclusion: The Tribunal set aside the Adjudicating Authority's judgment dated 30.09.2019, finding that the operational debt of ?23,22,537/- was due and payable, and there was no pre-existing dispute. The case was remitted to the Adjudicating Authority for admitting the application under Section 9 of the I&B Code, allowing the Corporate Debtor an opportunity to settle the matter prior to admission. The appeal was allowed with no costs.
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