2022 (3) TMI 753 - 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 - Since the payment claimed in the petition by the Operational Creditor had already been received by the Operational Creditor, these proceedings could not have been continued by the Operational Creditor. The plea of the Liquidator of the Operational Creditor that payment has not been made cannot be believed. If the Liquidator had sought permission before pursuing these proceedings, this Adjudicating Authority would have considered this aspect at that stage itself. In reply to the notice sent by the Operational Creditor, the Corporate Debtor has opposed the demand of the Operational Creditor on two counts; (1) that the full payment has been made and as per the invoice issued; and (2) that some advance payment has also been made. The Corporate Debtor has filed the affidavit to this effect - In view of the fact that the payment as per the invoice has already been made and there is no liability outstanding, the petition does not deserve any consideration particularly because the Corporate Debtor has raised certain disputes in the reply affidavit which may be taken as per pre existing disputes. The Operational Creditor (Liquidator) of M/s. Global Infonet Distribution Pvt. Ltd. cannot claim anything more than the amount mentioned in the petition filed by its erstwhile Board of Directors. There are no merits in the petition - petition dismissed.

Issues Involved:
1. Initiation of corporate insolvency resolution process.
2. Existence of debt and default.
3. Payment disputes and adjustments.
4. Authority of the liquidator to continue proceedings.
5. Pre-existing disputes.

Issue-wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process:
The petition was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the corporate insolvency resolution process (CIRP) against M/s. Nishan Systems Private Limited (Corporate Debtor) by M/s. Global Infonet Distribution Private Limited (Operational Creditor). The petition was initiated due to the non-payment of ?12,79,433/- for supplied software components.

2. Existence of Debt and Default:
The Operational Creditor supplied various software components to the Corporate Debtor, issuing several invoices totaling ?12,79,433/-. Despite partial payments, the remaining amount was claimed to be unpaid. The Corporate Debtor, however, argued that all due payments were made, including adjustments for TDS and Marketing Development Funds (MDF).

3. Payment Disputes and Adjustments:
The Corporate Debtor contended that the entire debt was settled through bank transfers, TDS payments, and adjustments for MDF expenses. They provided bank statements and other documents to substantiate their claims. The Operational Creditor, now represented by a Liquidator, disputed these payments and adjustments, maintaining that the debt remained unpaid.

4. Authority of the Liquidator to Continue Proceedings:
The Tribunal noted that the Liquidator, appointed for the Operational Creditor, continued the proceedings without seeking permission or directions from the Adjudicating Authority, as required under Section 35 of the Insolvency and Bankruptcy Code. This procedural lapse was a significant factor in the Tribunal's decision.

5. Pre-existing Disputes:
The Corporate Debtor highlighted pre-existing disputes regarding payments and adjustments, which were not adequately addressed by the Operational Creditor. The Tribunal found that these disputes were genuine and predated the insolvency petition, rendering the claim of the Operational Creditor questionable.

Conclusion:
After examining the pleadings and hearing both parties, the Tribunal concluded that the payments claimed by the Operational Creditor had already been made. The Tribunal emphasized that the Liquidator's claim of unpaid debt was not credible, especially given the procedural oversight of not seeking appropriate directions before continuing the proceedings. Consequently, the petition was rejected due to lack of merit, acknowledging the pre-existing disputes and the full settlement of the claimed amount by the Corporate Debtor.

Order:
The Tribunal rejected the petition, stating that the Operational Creditor (Liquidator) could not claim any amount beyond what was initially mentioned, and certified copies of the order were to be issued to all concerned parties upon compliance with requisite formalities.

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