2021 (4) TMI 1159 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Dishonor of Cheque - Operational Creditors - Existence of debt and dispute or not - HELD THAT - The date of default is 19.03.2018 that is the date of the last invoice issued which was unpaid, and the present application is filed on 20.05.2019. Hence the application is not time barred and filed within the period of limitation - The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - The Applicant has complied with the provision of Section 9(3)(b) of the Code, 2106. In order to deal with issue in hand with respect to preexistence of dispute as the alleged by the Corporate Debtor in the reply to the notice under Section 138 of Negotiable Instruments Act, 1881, We would like to refer to the judgment of the Hon ble NCLAT in SUDHI SACHDEV VERSUS APPL INDUSTRIES LTD. 2018 (11) TMI 1671 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI wherein it was held that In the present case, it is not in dispute that there is a debt payable to the Operational Creditor and default on the part of the Corporate Debtor. The pendency of the case under Section 138/441 of the Negotiable Instruments Act, 1881, even if accepted as recovery proceeding, it cannot be held to be a dispute pending before a court of law. Thereby we hold that the pendency of the case under Section 138/441 of Negotiable Instruments Act, 1881 actually amounts to admission of debt and not an existence of dispute. Thus, it is a clear admission of debt and this Adjudicating Authority does not have to indulge in the details or the quantum of debt if the debt proved is more than One Lakh and the default is shown to have occurred. Therefore, the Application is admitted and the commencement of the CIRP is ordered - application admitted - moratorium declared.

Summary

Issues:
1. Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Process initiation.
2. Operational Creditor's claim against the Corporate Debtor for unpaid printing paper supplies.
3. Dispute regarding the amount owed and acknowledgment of debt by the Corporate Debtor.
4. Jurisdiction of the National Company Law Tribunal, New Delhi.
5. Compliance with Section 9(3)(b) of the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:

1. The application was filed by M/S V.K JAIN & SONS under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency process against M/S THREE LEAVES BOOKS INTERNATIONAL PVT. LTD. The Operational Creditor claimed to have supplied printing paper to the Corporate Debtor, with invoices totaling &8377; 26,35,381, of which a significant amount remained unpaid.

2. M/S V.K JAIN & SONS, the Operational Creditor, provided details of the material supplied to the Corporate Debtor since December 2017, along with acknowledged invoices. The Corporate Debtor issued several cheques in lieu of payment, but all were dishonored due to insufficient funds. After a notice under the Negotiable Instruments Act, a partial payment was made by the Corporate Debtor.

3. The Corporate Debtor contested the claim, alleging a pre-existing dispute and discrepancy in the claimed amount. The Corporate Debtor argued that it only received printing paper worth &8377; 12,79,752, significantly less than the claimed amount. The Corporate Debtor claimed that the Operational Creditor pursued en-cashing the cheques despite being informed of the insufficient funds.

4. The Adjudicating Authority found that the Corporate Debtor had partially admitted the liability by making a payment before denying it in a subsequent reply. The Authority also addressed the issue of pre-existence of dispute, citing a judgment that the pendency of a case under the Negotiable Instruments Act does not constitute a dispute, but an admission of debt.

5. The Tribunal determined that the application was not time-barred, had jurisdiction over the matter, and that the Operational Creditor had complied with the necessary provisions of the Insolvency and Bankruptcy Code, 2016. Consequently, the application was admitted, and the Corporate Insolvency Resolution Process was ordered to commence.

This detailed analysis covers the issues involved in the judgment comprehensively, outlining the arguments presented by both parties and the Tribunal's reasoning for its decision.