2021 (6) TMI 91 - 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 - It is clear that the both parties were having business dealings for considerable time and payment were made. Goods were also supplied and some payment were also received by the Applicant. Subsequently, there appears to be some dispute between both the parties - IBC is a very rigorous enactment. Hence, the Adjudicating Authority ought to ensure extreme caution and detailed study before passing a final order of admission. Based on the agreement, documents and submissions made by the parties, it is clear that the Applicant could not prove that the goods were supplied by lorry to the Corporate Debtor address. The lorry details of the consignment, delivery challan in proof of the same are not enclosed. Based on few emails exchanged between the parties and dishonored cheques, it is not appropriate to conclude the debt and default. The Applicant failed to satisfy this Adjudicating Authority that as per the invoices the goods were delivered by a lorry consignment to the address of the Corporate Debtor. Hence, neither the debt nor the default is proved. Since there were business dealings between the parties, it is not possible to pick and choose the invoice and establish that there is alleged debt and consequential default. The transaction involves purchase order, modes of operation as agreed between the parties, the terms and conditions and violations if any, the details of C F agencies. Hence, from alleged debt out of few invoices, one cannot establish the case beyond doubt. The Applicant failed to establish the debt and default . Since IBC is a rigorous act, it ought to be exercised with abundant caution. There ought to be no doubt of alleged debt . Since there are lot of ambiguity regarding supply and payment, the application is dismissed.

Summary

Issues:
- Application filed under Section 9 of the Insolvency & Bankruptcy Code, 2016 seeking initiation of Corporate Insolvency Resolution Process.
- Dispute regarding invoices raised by the Operational Creditor for supplied goods.
- Allegations of non-delivery of goods by the Corporate Debtor.
- Lack of conclusive evidence to establish debt and default.

Analysis:
1. The application was filed under Section 9 of the Insolvency & Bankruptcy Code, 2016 by the Operational Creditor against the Corporate Debtor seeking initiation of Corporate Insolvency Resolution Process. The Operational Creditor claimed an outstanding amount of ?97,70,147 based on invoices for imported coal supplied to the Corporate Debtor.

2. The Respondent, Corporate Debtor, disputed the invoices raised by the Operational Creditor, alleging that the goods were never delivered. The Corporate Debtor claimed that the entire amount due had been settled and a Letter of Credit was issued and encashed by the Operational Creditor. Disputes arose regarding the delivery of goods, issuance of blank cheques, and non-receipt of materials mentioned in the invoices.

3. The Adjudicating Authority carefully examined the documents and submissions from both parties. It was noted that while there were business dealings and payments made between the parties, disputes arose regarding the delivery of goods. The Authority emphasized the need for conclusive evidence to establish debt and default, including lorry details, delivery challans, and proof of supply.

4. Referring to the case law of Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd., the Authority highlighted the importance of a genuine dispute and the need for further investigation if a plausible contention exists. It was emphasized that the mere exchange of emails and disputed invoices were insufficient to establish debt and default conclusively.

5. Ultimately, the Adjudicating Authority concluded that the Operational Creditor failed to provide sufficient evidence to establish that the goods were delivered to the Corporate Debtor. Due to the ambiguity surrounding supply and payment details, the application was dismissed. The Authority stressed the need for a detailed trial to establish debt and default conclusively under the rigorous provisions of the Insolvency & Bankruptcy Code, exercising caution to avoid any doubts regarding the alleged debt.