9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (7) TMI 364 - Tri - Insolvency and BankruptcyMaintainability 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 - The Corporate Debtor has tried to convince that there were preexisting disputes as regards short supply, price and quality but the arguments of Ld. Counsel for the Corporate Debtor are not at all convincing, because the short supply and other alleged dispute do not relate to the transaction in question. For taking advantage of any complaint with regard to quality, short supply or price it should be relatable to the transactions in question with regard to which the Operational Creditor has filed the petition. In this matter all the so-called pre-existing disputes regarding short supply quality or price cannot be put in the category of pre-existing disputes because all of them cannot be said to be relating to the transactions in question. If the Corporate Debtor had previously made a complaint but consumed the goods and made payments and again placed orders on the Operational Creditor, in spite of alleged complaints, the Corporate Debtor cannot be allowed to use the previous complaints for future transactions. The Corporate Debtor cannot be allowed to take benefit of any earlier complaints made in the past, which transactions had already been paid for and settled, maybe even by issuance of credit notes. In the business, so many transactions take place and complaints made as regard the goods supplied. A Corporate Debtor can take advantage of the goods or specific supplies made with regard to which complaint/ dispute has been raised prior to service of notice under section 8 of the IBC. The disputes or complaints raised long before in the past cannot be allowed to be made use of in every future transactions. If such a tendency is encouraged, it will cause havoc in the business circles. On the one hand, the Operational Creditor has proved its case of outstanding debt and the default and on the other hand, the Corporate Debtor in spite of its best efforts to bring this matter in the category of preexisting dispute has failed to do so - petition admitted - moratorium declared.
Issues Involved:
1. Existence of debt and default. 2. Pre-existing disputes regarding quality, quantity, and price of goods supplied. 3. Solvency of the Corporate Debtor. 4. Appropriateness of initiating Corporate Insolvency Resolution Process (CIRP). Issue-wise Detailed Analysis: 1. Existence of Debt and Default: The Operational Creditor, M/s Geo Source, supplied goods to the Corporate Debtor, M/s Phular Construction Co. (Pvt.) Ltd., against various purchase orders. Six tax invoices amounting to Rs. 38,14,200/- were raised, out of which Rs. 34,90,318/- remained unpaid after adjustments. Despite repeated demands, the Corporate Debtor failed to clear the outstanding amount, leading to the filing of the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016. 2. Pre-existing Disputes: The Corporate Debtor contended that there were pre-existing disputes regarding the quality, quantity, and price of the goods supplied. However, the Tribunal found that these disputes were not raised at the time of delivery or soon thereafter. The Corporate Debtor's claims of disputes were considered frivolous as they were raised only after the demand notice under Section 8 of the Code was served. The Tribunal noted that previous complaints or disputes, which were settled, cannot be used to contest future transactions. 3. Solvency of the Corporate Debtor: The Corporate Debtor argued that it is a solvent and profitable company, citing its financial performance over the preceding three years. However, the Tribunal emphasized that solvency alone does not preclude the initiation of CIRP if there is a default in payment of an operational debt. The Tribunal referred to legal precedents asserting that the IBC is not a forum for recovery of disputed claims but for resolution of insolvency. 4. Appropriateness of Initiating CIRP: The Tribunal concluded that the Corporate Debtor failed to prove any pre-existing dispute that would prevent the initiation of CIRP. The Operational Creditor successfully demonstrated the existence of an outstanding debt and default. Consequently, the Tribunal admitted the petition for initiating CIRP against the Corporate Debtor. Orders: i) The application under Section 9 of the IBC for initiating CIRP against the Corporate Debtor was admitted. ii) A moratorium was declared in accordance with Sections 13 and 15 of the IBC. iii) The moratorium prohibits the institution or continuation of suits, transferring or disposing of assets, and recovery actions against the Corporate Debtor. iv) Essential goods or services to the Corporate Debtor shall not be terminated during the moratorium. v) Mr. Rajesh Kumar Agrawal was appointed as the Interim Resolution Professional (IRP). vi) The IRP was directed to convene a meeting of the Committee of Creditors and submit a resolution plan within 105 days. vii) The Operational Creditor was directed to deposit Rs. 2,00,000/- with the IRP for preliminary expenses and fees. viii) The Registry was directed to communicate the order to all concerned parties and list the matter for filing of the Progress Report on 22/08/2022. The order was signed on the 5th day of July, 2022.
|
