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2020 (8) TMI 790 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of dispute - whether the Corporate Debtor has raised a plausible dispute before Service of Notice dated 11.05.2018 under Section 8 of I B Code? HELD THAT - Admittedly, the Corporate Debtor has not replied statutory notice dated 11.05.2018. Thus, from the correspondence it cannot be inferred that the Corporate Debtor has raised any plausible dispute. The Corporate Debtor has raised the dispute that the sum of ₹ 2,75,00,000/- has wrongly been adjusted towards the interest. There is no such dispute raised before statutory notice. The Dispute raised in reply to the Application does not require any investigation and such dispute is a patently feeble legal argument and not supported by any evidence. The impugned order does not require any interference by this Appellant Tribunal - Appeal dismissed.
Issues Involved:
1. Pre-existing dispute regarding payment adjustment. 2. Maintainability of the application under Section 9 of the I&B Code. 3. Admissibility of the operational debt and default by the Corporate Debtor. 4. Validity of the statutory notice under Section 8 of the I&B Code. Issue-wise Detailed Analysis: 1. Pre-existing dispute regarding payment adjustment: The Corporate Debtor argued that there was a pre-existing dispute concerning the adjustment of payments made towards interest rather than the principal amount, contrary to the letter dated 03.06.2015. The Corporate Debtor claimed to have raised this issue through emails and letters before receiving the statutory notice dated 11.05.2018. However, upon examining the correspondence, it was found that the Corporate Debtor had not raised any objections to the adjustments made by the Operational Creditor. The Corporate Debtor's claims of another interlinked claim were not substantiated with particulars in the reply to the application before the Adjudicating Authority. 2. Maintainability of the application under Section 9 of the I&B Code: The Adjudicating Authority found that the objections raised by the Corporate Debtor were imaginary and unsupported by documents. The documents produced by the Operational Creditor were sufficient to establish that the operational debt was due and payable. The Corporate Debtor's argument that the dispute should be decided by a Court of Competent Jurisdiction was not accepted, as the Adjudicating Authority has the jurisdiction to admit the application under Section 9 of the I&B Code. 3. Admissibility of the operational debt and default by the Corporate Debtor: The Corporate Debtor acknowledged the debt of ?16,04,87,392/- with interest at 10.5% per annum in the letter dated 03.06.2015. Despite assurances to repay in 18 instalments, the Corporate Debtor defaulted in payment. The Corporate Debtor made ad-hoc payments totaling ?2,75,00,000/-, which the Operational Creditor adjusted towards interest. The Supreme Court's judgment in Leela Hotels Ltd. Vs. Housing and Urban Development Corporation Ltd. supported the creditor's right to adjust payments towards interest in case of default. 4. Validity of the statutory notice under Section 8 of the I&B Code: The Corporate Debtor did not reply to the statutory notice dated 11.05.2018. The Adjudicating Authority determined that there was no plausible dispute raised by the Corporate Debtor before the service of the notice. The dispute raised in reply to the application was deemed a patently feeble legal argument unsupported by evidence, as per the principles laid down in Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd. Conclusion: The Appellate Tribunal concluded that the impugned order by the Adjudicating Authority did not require interference. The appeal was dismissed, and the application under Section 9 of the I&B Code was admitted. The moratorium was declared in terms of Sub-Section (1) of Section 14 of the I&B Code. The Corporate Debtor's arguments were found to be without merit, and the objections raised were unsupported by any substantial evidence.
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