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2021 (11) TMI 792 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make payment of its debt - Operational Creditors - existence of debt and dispute - HELD THAT - The Respondent has reported deficiency of services from October, 2018 and also the issue of not getting the supporting documents form the Appellant showing compliances of various labour laws in spite of numerous correspondence between them - Correspondence between the parties in the form of email reflects prior to issue of demand notice revolving around non-submissions of documents for compliance of various labour laws as per agreement between them as also supply of shortage of staff and other related issue. The Hon ble Supreme Court in MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED 2017 (9) TMI 1270 - SUPREME COURT has laid down that Adjudicating Authority must reject the Application if a notice of dispute has been received by Operational Creditor. The Appellant has failed to comply with labour laws leading to labour dispute before the labour commissioner and the Respondent has to release certain amount directly to the employees of the Appellant - It is proved beyond doubt that the Appellant is chasing for payments which is not the object of IBC. It is amply clear that the Order passed by the Adjudicating Authority is in order and requires no review or reconsideration. There is no infirmity in the order passed by Adjudicating Authority - Appeal dismissed.
Issues Involved:
Appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 against an Impugned Order passed by NCLT regarding initiation of Corporate Insolvency Resolution Process under Section 9 of IBC. Detailed Analysis: 1. Dispute Existence: The Adjudicating Authority dismissed the application under Section 9 citing the existence of a dispute. The Appellant, a service provider, faced issues with the Respondent regarding outstanding dues, deficiency in bills, and labor disputes. The Appellant argued that the Respondent's actions were mala fide and intentional, leading to non-payment of dues and labor problems. The Appellant emphasized that TDS deductions without payment do not create a dispute later, citing legal precedents like "Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd." The Appellant contended that the Adjudicating Authority erred in dismissing the application without examining the nature of the dispute concerning services provided. 2. Contractual Obligations: The Respondent claimed that the Appellant failed to comply with statutory provisions and contractual obligations, leading to labor strikes and deteriorated services. The Respondent highlighted that they had to pay employees' salaries due to the Appellant's non-payment, citing legal precedents like "People's Union for Democratic Rights v. Union of India." The Respondent argued that the invoices raised by the Appellant were inflated and non-compliant with labor laws, justifying their actions under the agreements. 3. Observations and Legal Precedents: The Tribunal observed the history of agreements between the parties, noting that issues arose from October 2018 onwards. The Tribunal highlighted the importance of providing supporting documents for compliance with labor laws, emphasizing the need for clarity in contractual engagements. Legal precedents like "Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd." were referenced to support the rejection of the application if a notice of dispute had been received by the creditor. 4. Conclusion: The Tribunal concluded that the Adjudicating Authority's order was justified, as the Appellant's non-compliance with labor laws and pursuit of payments did not align with the objectives of the IBC. Legal references like "Transmission Corporation of Andhra Pradesh Ltd. Vs. Equipment Conductors and Cables Limited" were cited to support the dismissal of the Appeal. The Tribunal upheld the Adjudicating Authority's decision, dismissing the Appeal without costs. This detailed analysis covers the issues of dispute existence, contractual obligations, observations, legal precedents, and the final conclusion of the Tribunal regarding the Appeal under the Insolvency and Bankruptcy Code.
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