2022 (4) TMI 944 - AT - 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 evident from the Statement of Account that the payments which the Appellant contends have all been made, were not done invoice wise . Not a single payment is reflected as per the invoice raised. It is apparent from the material on record that there is a current account and running account between the Operational Creditor and the Corporate Debtor wherein demands were made, not specific to each invoice raised and therefore the contention of the Learned Counsel for the Appellant that the subject amount is an advance and no services were rendered by the Operational Creditor to the Corporate Debtor, is untenable. It is seen from the Statement of Account that amounts were paid periodically and purchases were made from time to time and invoices raised subsequently. Therefore, this Tribunal is of the earnest view that there were continuous transactions vide invoices raised between the parties to establish a running account. The Adjudicating Authority has rightly relied on the confirmation of debt as shown on 12.02.2019 for an amount of ₹ 4,90,01.183/- and admitted the Application. Additionally, it is pertinent to mention that the contention of the Appellant that this amount is actually an advance and that no services were rendered by the Operational Creditor, was never pleaded in the Reply filed before the Adjudicating Authority to the Demand Notice issued under Section 8 of the Code. This Tribunal is of the considered view that there is no illegality or infirmity with the Order of the Adjudicating Authority and hence this Appeal fails and is accordingly dismissed - Appeal dismissed.

Summary

Issues:
Challenge to Impugned Order dated 13.11.2019 by the Adjudicating Authority in CP (IB) 2556/MB/2019 under Section 9 of the Insolvency and Bankruptcy Code, 2016.

Analysis:
1. The appeal challenges the Impugned Order admitting the application under Section 9 of the Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority confirmed an unpaid amount outstanding payable to the Petitioner by the Corporate Debtor, establishing debt and default. An Interim Resolution Professional was appointed. The Appellant contends that none of the Invoices correspond to the claimed 'Operational Debt' and that the balance sheets issued by the Corporate Debtor were not related to the invoices in question.

2. The Learned Counsel for the Appellant argues that the Adjudicating Authority overlooked the definition of 'Operational Debt' under Section 5(21) of the Code and failed to consider proof of default, as the payments for the invoices were allegedly made by the Corporate Debtor. The balance sheet for the financial year 2015-16 was deemed an advance and not operational debt. The Appellant's submissions challenge the basis of debt and default.

3. On the other hand, the First Respondent-Operational Creditor presented ledger statements showing the outstanding amount due from the Corporate Debtor, specifically related to transactions of Goldbars. The Operational Creditor emphasized the due and payable nature of the debt without any pre-existing dispute, supporting the Adjudicating Authority's decision to admit the application under Section 9 of the Code.

4. The Second Respondent-Corporate Debtor denied any outstanding amounts or business transactions with the Operational Creditor. The Corporate Debtor refuted the claims made by the Operational Creditor regarding trading in Goldbars. The Tribunal's assessment revealed that payments for the Invoices were acknowledged by the Corporate Debtor, indicating transactions of Goldbars between the parties.

5. The Tribunal examined the Invoices and the Statement of Account, noting that payments were not made invoice-wise but through a running account. Continuous transactions were evidenced by the invoices raised, establishing a running account between the parties. The Tribunal highlighted the definition of 'Operational Debt' and the absence of specific payments corresponding to each invoice. The Adjudicating Authority's reliance on the confirmation of debt and admission of the application was deemed appropriate.

6. The Tribunal concluded that there was no illegality or infirmity in the Adjudicating Authority's Order, dismissing the appeal. The Appellant's argument that the amount was an advance and no services were rendered was not considered as it was not raised in the Reply to the Demand Notice. The appeal was dismissed without costs.