2022 (2) TMI 144 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - pre-existing dispute regarding the invoices raised by the applicant - discrepancies between the log books and the monthly reports of the applicant - breach of contract by the applicant - HELD THAT - In the present case, the main documentary evidences placed on record by the Applicant are the ledger statement, the invoices raised and the cheque for part-payment of ₹ 4,00,00/- only which was received from the corporate debtor but got dishonored and returned vide Return Memo dated 17.10.2018 with the remark Account Closed - It is the case of Corporate Debtor that it had much before the date of issuance of the demand notice under Section 8 of the IBC had raised dispute regarding the discrepancies in the Log books, monthly report and the issuance of incorrect invoices. However, we notice that the corporate debtor has failed to place on record or produce any communication, exchanged with the applicant, evidencing any 'PreExisting Dispute' prior to the issue of Demand Notice. It is also pertinent to mention that in its Reply to the Application, the applicant apart from raising a bald denial of liability, has not filed any substantive material in support of their contentions. The contention of the Corporate Debtor regarding false and fabricated invoices is unsustainable having regard to the fact that the invoices on record have even been acknowledged by the Corporate Debtor as per the attachment to its email dated 12.11.2018. Monetary amount involved - HELD THAT - As per the averments made in the application in Form-5 Part IV, a sum of ₹ 5,64,618/-, has only been received by the Applicant and a sum of ₹ 9,29,120/- is still due and payable. Accordingly, an unpaid operational debt of more than 1 Lakh is clearly due and payable to the Applicant. Further, the cheque issued by the Corporate Debtor towards part-payment of its liability is a clear admission of the outstanding liability. Also, during the course of hearing, the corporate Debtor has time and again stated that they are in the process of settling the matter amicably with the applicant, which is again, an admission of unpaid operational debt due and payable by them to the Applicant. Time Limitation - HELD THAT - The invoices raised by the applicant pertain to the period from February 2018 to August 2018. The present application is filed on 12.11.2019. Hence, the present application is well within the limitation period. The present Application is filed in the Form prescribed under Rule 6 of the Insolvency and Bankruptcy Code, 2016 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 r/w Section 9 of the Code and is complete - application admitted - moratorium declared.

Summary

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Pre-existing dispute regarding invoices and log books.
3. Breach of contract by the applicant.
4. Admissibility of evidence and compliance with procedural requirements.

Issue-wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
M/s. Reach International (Applicant/Operational Creditor) filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s. Altech Infrastructure Private Limited (Corporate Debtor). The application was filed due to non-payment of dues for industrial machines leased out by the applicant to the corporate debtor. The tribunal noted that the application was complete and met the requirements under the IBC, thus initiating the CIRP and declaring a moratorium in terms of Section 14 of the Code.

2. Pre-existing Dispute Regarding Invoices and Log Books:
The Corporate Debtor contended that there were pre-existing disputes regarding discrepancies in the log books and invoices, including overwriting and inflated work hours. However, the tribunal found that the Corporate Debtor failed to provide any substantive evidence of such disputes prior to the issuance of the demand notice. The tribunal referred to the Supreme Court's decision in 'Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited', emphasizing that a dispute must be genuine and supported by evidence. The tribunal concluded that the Corporate Debtor's claims were unsupported and constituted a "moonshine dispute."

3. Breach of Contract by the Applicant:
The Corporate Debtor argued that the applicant breached the contract by not adhering to the agreed terms, such as providing log books and monthly reports, and raising invoices for non-operational periods. The tribunal noted that the Corporate Debtor acknowledged the invoices in an email dated 12.11.2018 and issued a cheque for part payment, which was dishonored. This acknowledgment and the dishonored cheque were seen as admissions of liability, undermining the Corporate Debtor's claims of breach of contract.

4. Admissibility of Evidence and Compliance with Procedural Requirements:
The Corporate Debtor raised objections regarding the admissibility of evidence and procedural compliance, including the completeness of the application, the authorization of the person filing the application, and the validity of the affidavit under Section 65B of the Evidence Act. The tribunal found that the application was filed in the prescribed form and was complete. The tribunal also noted that the Corporate Debtor's repeated attempts to settle the matter indicated an admission of unpaid operational debt.

Conclusion:
The tribunal admitted the application under Section 9 of the IBC, initiating the CIRP and declaring a moratorium. Mr. Vinod Kumar Chaurasia was appointed as the Interim Resolution Professional (IRP). The Operational Creditor was directed to deposit Rs. Two Lakh with the IRP to cover expenses. The tribunal's decision was communicated to the relevant parties and authorities for compliance and record-keeping.