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2020 (10) TMI 1068 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Appellant submitted that the Adjudicating Authority erred in going into the defence that the Corporate Debtor Company had internal disputes with one of the directors and that such defence put up by the Corporate Debtor could be looked into to refuse to admit the Application under Section 9 of I B Code, 2016 - HELD THAT - The stand taken by the Corporate Debtor shows that the branch office of Corporate Debtor had not communicated with the head office and they wanted to verify and confirm the transactions. The internal disputes of the directors would not be relevant for throwing out of the Application under Section 9 of I B Code, 2016. In any case, that was not a dispute which was raised or communicated to the Operational Creditor any time before Notice under Section 8 was sent. In the facts of the matter, we find that the Adjudicating Authority erred in approaching the Application under Section 9 and the form submitted in a manner as if a plaint was being examined or it was some suit. Considering the format and particulars required to be given in the format, if the Application is complete, it is required to be admitted unless the Corporate Debtor shows Pre-Existing Dispute. Here the dispute raised was that there was no dealing between the Corporate Debtor and the Operational Creditor; that there was no agreement. However, the same Corporate Debtor had in reply referred to its dispute with the branch office and stated that they wanted to verify the transaction. The matter remanded to the Adjudicating Authority - appeal allowed by way of remand.
Issues:
1. Application under Section 9 of Insolvency and Bankruptcy Code, 2016 filed by Operational Creditor against Corporate Debtor for outstanding payment. 2. Disputes regarding delivery of goods, internal disputes between directors, and non-payment issues raised by both parties. 3. Analysis of evidence, documents, and arguments presented by both sides before the Adjudicating Authority. 4. Adjudicating Authority's decision to reject the application under Section 9 and subsequent appeal to the National Company Law Appellate Tribunal. Issue 1: Application under Section 9 of IBC 2016 The Appellant, an Operational Creditor, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor for non-payment of an outstanding amount. The Appellant claimed that despite sending a demand notice and subsequent correspondence, the Corporate Debtor failed to make the payment, leading to the initiation of insolvency proceedings. Issue 2: Disputes and Allegations The Respondent, representing the Corporate Debtor, raised disputes regarding the delivery of goods, alleging that the goods were never received by the Corporate Debtor. They also pointed out internal disputes between directors and accused the Operational Creditor of corrupt practices. The Respondent argued that there was no agreement between the parties and no security obtained by the Operational Creditor, questioning the authenticity of the claim. Issue 3: Analysis of Evidence The Adjudicating Authority analyzed the documents and evidence presented by both parties. It noted discrepancies in the delivery address of the goods, internal disputes within the Corporate Debtor, and lack of proof of delivery of goods to the registered address of the Corporate Debtor. The Authority observed that the Operational Creditor failed to provide sufficient evidence to prove the claim, leading to the rejection of the application under Section 9. Issue 4: Tribunal Decision Upon hearing both sides, the Tribunal found that the disputes raised by the Corporate Debtor were not communicated before the issuance of the demand notice. The Tribunal highlighted the payments made by the Corporate Debtor as per the bank statements provided by the Appellant. It emphasized that internal disputes between directors were not relevant to reject the application under Section 9. The Tribunal allowed the appeal, setting aside the order of the Adjudicating Authority and remitting the matter back for further consideration, directing the Adjudicating Authority to admit the application under Section 9 unless the parties settle before the order is passed. This detailed analysis covers the issues involved in the legal judgment, highlighting the arguments, evidence, and decisions made by both the Adjudicating Authority and the National Company Law Appellate Tribunal.
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