2021 (5) TMI 393 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT - Perusal of the documents reveal that the petitioner/operational creditor has sent the notice under Section 8 of IBC 2016 which was served on the corporate debtor on 28.09.2019. However, the Whatsapp chats and emails exchanged between the petitioner and the respondent between 23.02.2019 and 19.09.2019 clearly reveal that there is a dispute between the parties on the rat of CFT charged by the petitioner as well as matters relating to excess billing on the part of the petitioner/operational creditor. Further the respondent/corporate debtor vide email dated 16.09.2019 and 18.09.2019 intimated the petitioner/operational creditor about the debit notes of an amount of ₹ 1,01,23,915/- - All these clearly indicate the existence of dispute between the parties prior to the issue of notice under Section 8 of IBC 2016 by the petitioner/operational creditor. In the above circumstances this petition fails and this Tribunal dismisses the petition. Petition dismissed.

Issues Involved:
1. Existence of debt and default.
2. Pre-existing dispute regarding excess billing and CFT rates.
3. Alleged loan transactions between the parties.
4. Alleged fraudulent conduct and criminal proceedings.

Detailed Analysis:

1. Existence of Debt and Default:
The petitioner, proprietor of M/s. Galaxy Logistics Services, sought to initiate Corporate Insolvency Resolution Process (CIRP) against the corporate debtor for an alleged default amounting to ?96,66,919/-. The operational creditor provided freight forwarding services to the corporate debtor, who acknowledged the invoices but failed to settle the dues. Despite partial payment of ?25,00,000/- by the corporate debtor’s director, the remaining amount was not cleared, leading to the filing of the petition.

2. Pre-existing Dispute Regarding Excess Billing and CFT Rates:
The corporate debtor contended that there was a pre-existing dispute regarding the rates charged by the operational creditor. The corporate debtor claimed that the operational creditor continued to charge old and high rates despite mutual agreements to lower rates. Emails dated 16.09.2019 and 18.09.2019 from the corporate debtor intimated the operational creditor about debit notes amounting to ?1,01,23,915/- for excess charges. The Tribunal noted that the WhatsApp chats and emails exchanged between the parties from 23.02.2019 to 19.09.2019 evidenced a dispute over the CFT rates and excess billing, indicating a pre-existing dispute prior to the issuance of the Section 8 notice under IBC 2016.

3. Alleged Loan Transactions Between the Parties:
The corporate debtor alleged that the operational creditor had borrowed ?35,00,000/- from its Managing Director at an interest rate of 24% per annum, which was not repaid. The operational creditor allegedly returned ?15,00,000/- as interest but failed to settle the principal amount. The corporate debtor argued that the operational creditor served a false demand notice to misappropriate the loan extended to him.

4. Alleged Fraudulent Conduct and Criminal Proceedings:
The corporate debtor accused the operational creditor of fraudulent conduct in connivance with an ex-employee, leading to over-invoicing and financial losses. An FIR was registered against the ex-employee and others for over-invoicing. The corporate debtor also filed a civil suit for recovery of damages amounting to ?77,38,995/-. The Tribunal noted that these allegations and ongoing proceedings further substantiated the existence of a dispute between the parties.

Judgment:
The Tribunal dismissed the petition, concluding that there was a pre-existing dispute between the parties regarding the rates charged and excess billing. The existence of this dispute was evident from the communications exchanged before the issuance of the Section 8 notice. The Tribunal clarified that the observations made in the order should not prejudice the petitioner’s rights before any other forum.

Conclusion:
The petition to initiate CIRP against the corporate debtor was dismissed due to the existence of a pre-existing dispute between the parties, as evidenced by the communications and ongoing legal proceedings. The Tribunal emphasized that its observations should not affect the petitioner’s rights in other legal forums.

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