2022 (7) TMI 769 - Tri - 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 - There is ample evidence on record to show that prior to the demand notice under Section 8 of the IBC, 2016, both parties have made correspondence putting forth their perspective about the hire charges, mobilization charges and demobilization charges of the Rig. Perusal of those correspondences show that there is a serious dispute already pending in between them about the hire charges and other charges of the Rig - the dispute had cropped up in between the parties prior to demand notice under Section 8 of the IBC, 2016 about the amount claimed in this application. This dispute cannot be decided and resolved by this Adjudicating Authority within its limited jurisdiction. The parties are free to approach the appropriate forum for the same. Thus, there is a pre-existing dispute pending in between the Operational Creditor and the Corporate Debtor relating to the claim of Operational Debt herein. Whether the Operational Creditor tried to initiate the CIRP of the Corporate Debtor fraudulently? - HELD THAT - The documents on which Corporate Debtor relying on may be relevant to establish its defence of a pre-existing dispute but only because Operational Creditor did not produce that letter is not a sufficient ground to hold that the Operational Creditor initiated CIRP fraudulently. In order to hold that the CIRP is fraudulently initiated there requires substantial evidence to establish that the Operational Creditor had filed out and out false claim against the Corporate Debtor. Such facts are not available on record in this case. Hence, it is held that it was not fraudulently initiation of CIRP by the Operational Creditor - the application filed by the Corporate Debtor is rejected. Application dismissed.

Summary

Issues:
1. Initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Existence of a pre-existing dispute between Operational Creditor and Corporate Debtor relating to Operational Debt.

Analysis:

Issue 1: Initiation of Corporate Insolvency Resolution Process
The case involved a petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by an Operational Creditor against the Corporate Debtor for defaulting on operational debt. The Operational Creditor claimed that despite sending a demand notice under Section 8 of the IBC, the Corporate Debtor failed to pay the outstanding operational debt of Rs. 53,52,336. The dispute arose from the hire charges of a Hydraulic Rig provided by the Operational Creditor to the Corporate Debtor, as per the terms of their agreement. The Operational Creditor alleged non-payment of hire charges and initiated the Corporate Insolvency Resolution Process.

Issue 2: Existence of a Pre-existing Dispute
The key question before the tribunal was whether there existed a pre-existing dispute between the Operational Creditor and the Corporate Debtor regarding the operational debt claimed. The Corporate Debtor contended that it had already paid the hire charges in full and raised a dispute over demobilization charges of the Rig. Both parties had exchanged correspondence prior to the demand notice under the IBC, highlighting discrepancies in accounts and charges related to the Rig. The tribunal found substantial evidence of a pre-existing dispute between the parties, particularly regarding hire charges and demobilization costs. The tribunal held that the dispute was genuine and required further resolution beyond its jurisdiction, allowing the parties to seek appropriate forums for resolution.

In conclusion, the tribunal rejected the application filed under Section 9 of the IBC by the Operational Creditor, as the existence of a pre-existing dispute rendered the application not maintainable. Additionally, the tribunal dismissed the Corporate Debtor's application alleging fraudulent initiation of the CIRP by the Operational Creditor, citing insufficient evidence to support such claims. The judgment emphasized the importance of resolving genuine disputes and highlighted the need for parties to seek appropriate forums for dispute resolution beyond the scope of the insolvency proceedings.