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2022 (3) TMI 754 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - pre-existing dispute or not - HELD THAT - Apparently on behalf of the respondent, it is proved on record that there was no Striker on the box of articles containing steam iron qua the price which was apparently in violation of Legal Metrological Act. Therefore, the respondent could not resell the article further. Even the dispute was raised by respondent vide email dated 23.10.2020. In order to prove the same, the respondent corporate debtor has placed on record email dated 23.10.2020 and Debit note in order to establish the fact that there is a pre-existing dispute between the parties. The corporate debtor has also filed a debit note. The applicant in its rejoinder has not denied the fact regarding Debit Note and infact admitted that the goods were re-supplied/replaced because of quality issues. This further establish the version of respondent. The corporate debtor succeeded in establishing that there was a pre-existing dispute between the parties regarding quality of goods supplied - the present application is rejected and dismissed.
Issues:
Application for initiation of CIRP under Section 9 of IBC 2016 for alleged default by Corporate Debtor. Objections raised by Corporate Debtor regarding non-delivery of demand notice, pre-existing dispute on quality of goods, and inconsistencies in claimed amount. Analysis: 1. The applicant, an operational creditor, sought to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for an outstanding balance of ?68,33,055 on account of supplying Dry Iron and Steam Iron. The applicant supplied goods through various invoices and made efforts to recover the dues, including sending a demand notice under Section 8 of the code. The Corporate Debtor admitted part of the debt but failed to pay the outstanding amount, leading to the application for CIRP. 2. The Corporate Debtor raised objections, stating that the demand notice was not effectively delivered, and there was a pre-existing dispute regarding the quality of goods supplied. The Corporate Debtor alleged non-compliance with the Legal Metrology Act, 2009, resulting in the goods being unsellable. The Corporate Debtor also issued a debit note against the Operational Creditor, citing ongoing disputes and inconsistencies in the claimed amount. 3. The applicant rebutted the objections, asserting proper service of the demand notice and refuting the claims of the Corporate Debtor regarding the quality of goods. The applicant highlighted returning goods as per agreed terms and settlement agreements, denying the allegations of defective products. 4. After hearing arguments and examining the evidence, the Tribunal found that the Corporate Debtor established a pre-existing dispute on the quality of goods supplied. The Corporate Debtor provided email evidence and a debit note to support their claim. The Tribunal noted that the applicant did not contest the issuance of the debit note and acknowledged replacing goods due to quality issues, supporting the Corporate Debtor's position. 5. Consequently, the Tribunal rejected and dismissed the application, emphasizing the existence of a pre-existing dispute between the parties regarding the quality of supplied goods. 6. The Tribunal clarified that its decision should not prejudice the rights of the parties in any other forum, ensuring that the dismissal of the application does not impact the applicants' rights elsewhere. Overall, the judgment delves into the intricacies of the dispute, analyzing the contentions of both parties regarding the debt, quality of goods, and procedural aspects, ultimately leading to the rejection of the application based on the established pre-existing dispute between the parties.
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