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2022 (5) TMI 872 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - pre-existing dispute in between the Operational Creditor and the Corporate Debtor pending about the quality of goods supplied or not - HELD THAT - The dispute in between the directors/shareholders of the Operational Creditor cannot be a defense available for the Corporate Debtor for not paying the Operational Creditor its operational debt, which is otherwise payable under the Law. Whether, one of the directors of the Operational Creditor; Mr. Mayer can file this application for and on behalf of the Operational Creditor? - HELD THAT - The dispute in between directors/shareholders of the Operational Creditor is no defense available to the Corporate Debtor to request this authority to dismiss this application. Section 11 of the LB. Code, 2016 does not bar director of the Operational Creditor from initiating the CIRP against the Corporate Debtor under Section 9 of the LB. Code. In view of material and evidence on record, it is held that Mr. Andrew Mayer, being an authorized signatory of the Operational Creditor has rightly filed this application. The Corporate Debtor in its e-mail dated 23.01.2020 has clearly stated that there was no dispute except agenda of paying money for the machinery and raw materials not ordered for. In short, dispute about quality of goods has never been raised by the Corporate Debtor at any point of time. The other emails produced on record do not pertain to the dispute of quality goods. The Operational Creditor has successfully established that the operational debt of rupees one crore (as per the threshold limit provided under Section 4 of the LB. Code) is due and payable by the Corporate Debtor to the Operational Creditor and the Corporate Debtor, in-spite of receipt of demand notice did not pay the amount and has committed the default. There is no pre-existing dispute about the quality of goods or materials supplied. This application is free from defect. Hence, the application admitting the Corporate Debtor in CIRP is allowed. Petition admitted - moratorium declared.
Issues:
1. Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 filed by Operational Creditor against Corporate Debtor for default in payment. 2. Dispute regarding authorization of the person filing the application on behalf of the Operational Creditor. 3. Pre-existing dispute between Operational Creditor and Corporate Debtor about the quality of goods supplied. Issue 1: Application under Section 9 of the Insolvency and Bankruptcy Code, 2016: The Operational Creditor filed an application against the Corporate Debtor for defaulting on an operational debt of Rs. 2,13,69,379. The Operational Creditor supplied goods to the Corporate Debtor and issued invoices from 06.09.2018 to 21.07.2020, which remained unpaid despite repeated demands and a demand notice under Section 8 of the Code. Issue 2: Dispute regarding authorization of the person filing the application: The Corporate Debtor contested the application, claiming that the person filing on behalf of the Operational Creditor was not authorized due to ongoing disputes among shareholders/directors. However, the Tribunal found that the person, holding 50% shares and authorized signatory, had the right to file the application, as no evidence showed the withdrawal of his authority. Issue 3: Pre-existing dispute about the quality of goods supplied: The Corporate Debtor argued a pre-existing dispute about the quality of goods supplied, supported by emails. However, the Tribunal analyzed the evidence and emails, concluding that no substantial dispute existed regarding the quality of goods supplied. The Operational Creditor established the debt was due and payable, and the Corporate Debtor's failure to pay constituted a default. Judgment: The Tribunal allowed the application, admitting the Corporate Debtor to Corporate Insolvency Resolution Process (CIRP). An Interim Resolution Professional was appointed, and a moratorium was declared under Section 14(1) of the Code. The IRP was directed to manage the operations of the Corporate Debtor as a going concern. The Operational Creditor was instructed to pay an advance to the IRP for the CIRP process. The Registry was directed to communicate the order to relevant parties and upload it on the website. This detailed analysis covers the issues raised in the legal judgment before the National Company Law Tribunal, Ahmedabad Bench, regarding the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, and the disputes related to authorization and quality of goods supplied between the Operational Creditor and the Corporate Debtor.
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