2021 (5) TMI 397 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors or not - Existence of debt and dispute or not - HELD THAT - The Bench notes that the Petitioner has to disclose the type and details of the goods for which a debt has arisen and which is being claimed by the Petitioner. Since the Petitioner had not furnished any details for the provision of goods, this bench while hearing the mater on 27.02.2020, gave one last chance to the Petitioner to submit on affidavit enclosing all the invoices and proof of delivery of the material to the Respondent corresponding to the amount of debt which has been claimed in the Petition. This Bench concludes that there is nothing on record which shows that any outstanding Operational Debt as a claim in respect of provision supply of goods or services by way of invoices or any documents has been proved by the Petitioner. In fact, all the 37 invoices which have been put on record by the Petitioner as due from the respondent has been fully paid and are not outstanding. The additional claim amount raised by way of other charges is frivolous, unsubstantiated, not based on any documentary proof and not even any invoices to that effect has been raised from the Petitioner. Further any claim arising out of Journal entries are unilateral adjustment claims and by no stretch of imagination can be said to be a claim arising out of supply of goods and services. The contention of the Respondent that it had issued those two cheques of about ₹ 4.16 crores and about ₹ 7.76 lakhs was only as security keeping in mind the business relationship between the parties, appears to be tenable. In any case, the dishonor of the cheques is a subject matter of Negotiable Instruments Act, 1881 and only proves that the Respondent is not interested in paying any security deposit to the Petitioner. The Bench is of the view that it does not relate to any outstanding amount due from the Respondent by way of any operational debt. Petition dismissed.

Summary

Issues Involved:
1. Whether the debt claimed by the Petitioner qualifies as an "Operational Debt" under Section 5(21) of the Insolvency and Bankruptcy Code, 2016.
2. Whether the Petitioner has provided sufficient evidence to substantiate the claim of outstanding dues.
3. The authenticity and validity of the two confirmation letters dated 30.05.2019 and 01.07.2019.
4. The validity of the cheques issued by the Respondent and their relevance to the claimed debt.
5. The applicability of additional charges such as delayed payment charges, khalapur expenses, and travel charges claimed by the Petitioner.

Detailed Analysis:

1. Qualification of Debt as "Operational Debt":
The Bench reiterated the definition of "Operational Debt" as per Section 5(21) of the Insolvency and Bankruptcy Code, 2016, which requires a claim in respect of the provision of goods or services. The Bench noted that the Petitioner failed to disclose the type and details of the goods for which the debt has arisen, as required under the Code.

2. Evidence to Substantiate Claim:
The Petitioner initially did not submit any invoices or details of the goods supplied. Upon a subsequent directive, the Petitioner submitted 37 invoices dated from 11.11.2013 to 23.01.2018. However, the Respondent demonstrated that full and complete payment had been made for each of these invoices. The Bench found that the Petitioner’s ledger entries post-23.01.2018 were suspect and consisted of unilateral adjustment entries without supporting invoices or proof of delivery of goods.

3. Authenticity of Confirmation Letters:
The Respondent denied signing the confirmation letters dated 30.05.2019 and 01.07.2019, alleging them to be forged and fabricated. The Bench noted that the Respondent's contention appeared tenable, especially since the Petitioner failed to provide corroborative evidence to substantiate the authenticity of these letters.

4. Validity of Cheques:
The Respondent contended that the cheques issued for ?4,16,18,466 and ?7,76,706 were given as security for future transactions and not for any past dues. The Bench found this explanation plausible, especially since the dishonor of cheques falls under the purview of the Negotiable Instruments Act, 1881, and does not necessarily indicate an outstanding operational debt.

5. Additional Charges:
The Bench noted that the additional charges claimed by the Petitioner, such as delayed payment charges, khalapur expenses, and travel charges, were not supported by any invoices or mutual agreement. The applicable rate of 2.25% claimed by the Petitioner was not part of any invoices and was introduced without proof. Consequently, these claims were deemed baseless and unsubstantiated.

Conclusion:
The Bench concluded that the Petitioner failed to prove the existence of any outstanding operational debt. The 37 invoices presented were fully paid, and the additional charges claimed were frivolous and unsupported by documentary evidence. The two confirmatory letters were found to be potentially forged, and the cheques were considered security deposits rather than payments for past dues. Therefore, the Petition CP (IB)424/MB/2020 was dismissed. The Registry was directed to communicate this order to both parties.