2022 (5) TMI 755 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt of dispute or not - HELD THAT - Prima facie it appears that the claim raised by the applicant is towards the detention and demurrage charges incurred by the applicant for delay and failure to clear the cargo from the CFS at Mundra and Nhava Sheva ports. On perusal of the records it is found that on 08.09.2020 the applicant had issued legal notice to the corporate debtor demanding a sum of Rs. 3,16,46,277.29 towards detention and demurrage charges comprising Rs. 35,00,000/- on account of the estimated demurrage/detention charges, Rs. 12,73,961/- towards additional cost paid for clearance of 14 shipments by Hero MPPL, a sum of Rs. 9,23,257/- towards interest on account of the corporate debtor's failure to pay the invoices and Rs. 1,20,00,000/- towards the estimated detention and demurrage charges for the non-clearance of one shipment of three containers. The said legal notice was replied by the corporate debtor by email dated 08.09.2020 raising a dispute with regard to liability of the corporate debtor on the amount of clearance charges paid by the third party buyer. There is no claim regarding the principal amount and the issue of contention is demurrage and detention charges. The corporate debtor has averred that detention and demurrage charges does not fall under the definition of operational debt under Section 5(21) of the Code. It clearly reflects that a dispute was in existence prior to issuance of the statutory demand notice under Section 8 of the Code by the applicant. There is sufficient evidence to prove the existence of dispute. The instant application cannot be considered for admission and needs to be rejected - The instant application stands rejected and disposed of.

Summary

Issues Involved:
1. Existence of operational debt.
2. Pre-existing dispute.
3. Jurisdiction and limitation.
4. Liability for demurrage and detention charges.
5. Compliance with statutory demand notice requirements.

Detailed Analysis:

1. Existence of Operational Debt:
The applicant, a private limited company, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016) to initiate the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor. The applicant claimed an amount of Rs. 5,58,81,454.73 as due and payable. The corporate debtor argued that the claim for demurrage and detention charges does not fall under the definition of operational debt as per Section 5(21) of the IBC, 2016.

2. Pre-existing Dispute:
The corporate debtor contended that there was a pre-existing dispute regarding the liability for demurrage and detention charges. The debtor had communicated via email on 08.09.2020 disputing the charges. The Tribunal found sufficient evidence of a pre-existing dispute, supported by the Supreme Court judgment in "Mobilox Innovative Private Limited vs. Kirusa Software Private Limited," which mandates the rejection of an application if a genuine dispute exists.

3. Jurisdiction and Limitation:
The registered office of the corporate debtor is located in Ahmedabad, Gujarat, giving the Tribunal jurisdiction to entertain the application. The date of default ranged from 14.11.2019 to 28.11.2019, and the application was filed on 12.02.2021, making it within the limitation period and not barred by law.

4. Liability for Demurrage and Detention Charges:
The applicant argued that the corporate debtor had failed to clear the products from the container freight stations, resulting in demurrage and detention charges. The corporate debtor countered that the applicant had instructed the sale of the shipments to a third party, Hero Multi-Pap Private Limited (Hero MPPL), and that all payments were made either by the corporate debtor or Hero MPPL. The Tribunal noted that the primary issue was the liability for demurrage and detention charges, not the principal amount.

5. Compliance with Statutory Demand Notice Requirements:
The applicant issued a statutory demand notice under Section 8 of the IBC, 2016, on 12.11.2020. The corporate debtor replied, raising disputes regarding the charges. The Tribunal observed that the existence of a dispute prior to the issuance of the statutory demand notice was evident, and thus the application could not be admitted.

Conclusion:
The Tribunal concluded that the application could not be admitted due to the existence of a genuine dispute regarding the liability for demurrage and detention charges. The application was rejected and disposed of, with instructions to communicate the order to the applicant and corporate debtor and update the Master Data with the ROC.