2022 (9) TMI 949 - Tri - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Service of demand notice - HELD THAT - A perusal of Part IV of the Form V, reveals that the Operational Creditor has submitted that the Corporate Debtor has made payments for invoices ranging from 05.01.2018 till 03.04.2019. However, the amount claimed by the Operational Creditor is for 11 invoices ranging from 27.02.2018 to 23.04.2018. Further, the date of default mentioned by the Operational Creditor on page 9 of the petition is 05.03.2018 which is for default relating to an invoice dated 26.02.2019 i.e. a future date. Further, the said invoice dated 26.02.2019 has not been put on record. Therefore, the instant petition is an incomplete one. Also, keeping in mind that the date of default is 05.03.2018, a perusal of Annexure E of the Reply Affidavit shows that various payments have been made by the Corporate Debtor to the Operational Creditor on 27.03.2018, 06.04.2018, 07.04.2018, 20.04.2018 and so on. As such, the date being 05.03.2018 cannot be considered as date of default and therefore the instant petition is defective in nature. Service of demand notice by email - HELD THAT - This Adjudicating Authority is satisfied that since the mentioned email id is registered with the ROC as the email-id of the company, the service of the demand notice to the said email id is valid. As such, the demand notice was successfully delivered to the Corporate Debtor and no reply was given by it. Pre-existing dispute or not - HELD THAT - The fact that no reply to the demand notice was issued by the Corporate Debtor, would not prevent the Corporate Debtor from bringing on record facts to establish pre-existing disputes relating to the instant petition - it can be seen that the dispute relating to the weight of the reels supplied was first raised by the Corporate Debtor vide letter dated 01.10.2018 i.e. much prior to the issuance of the demand letter by the Operational Creditor on 02.09.2019. the said dispute has also been acknowledged by the Operational Creditor vide email dated 01.10.2018. Without going into the merits of the said disputes, this adjudicating authority is satisfied that there are pre-existing disputes in the instant petition. The pre-existing disputes in the instant case are not mere feeble arguments, instead they are backed by evidence. As such, in presence of pre-existing disputes, the instant petition is not maintainable - this Adjudicating Authority is satisfied that the instant petition is liable to be rejected - Petition dismissed.

Summary

Issues Involved:
1. Validity of the Demand Notice.
2. Existence of Pre-existing Disputes.
3. Maintainability of the Petition under Section 9 of the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:

1. Validity of the Demand Notice:

The Operational Creditor issued a demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016, on 13.11.2019. The Corporate Debtor contended that the demand notice was sent to incorrect email addresses, specifically to the statutory auditor's email and an unrelated email. However, the tribunal noted that the email address used by the Operational Creditor was registered with the Registrar of Companies (ROC) as the email of the Corporate Debtor. Thus, the tribunal concluded that the service of the demand notice to the said email was valid. The tribunal stated, "the service of the demand notice to the said email id is valid."

2. Existence of Pre-existing Disputes:

The Corporate Debtor argued that there were pre-existing disputes regarding the quantity and quality of the goods supplied. The tribunal found that the Corporate Debtor had raised issues about the weight and quantity of the paper reels supplied as early as 01.10.2018, well before the demand notice was issued. The Operational Creditor had acknowledged these disputes in an email dated 01.10.2018. The tribunal stated, "the dispute relating to the weight of the reels supplied was first raised by the Corporate Debtor vide letter dated 01.10.2018." The tribunal further noted that several correspondences between the parties indicated ongoing disputes, including issues about short supply, excess rates, and non-furnishing of original challans and reel charts. Consequently, the tribunal concluded that there were genuine pre-existing disputes, stating, "this adjudicating authority is satisfied that there are pre-existing disputes in the instant petition."

3. Maintainability of the Petition:

Given the pre-existing disputes, the tribunal referred to the Supreme Court's decision in Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited, which held that the existence of a dispute prior to the receipt of the demand notice would render the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, not maintainable. The tribunal emphasized that the disputes in this case were not "mere feeble arguments" but were backed by evidence. The tribunal concluded, "the pre-existing disputes in the instant case are not mere feeble arguments, instead they are backed by evidence." Therefore, the petition was deemed not maintainable and was dismissed.

Conclusion:

The tribunal dismissed the petition, stating, "C.P.(IB) No. 140/KB/2020 shall stand dismissed." The Operational Creditor was advised that the dismissal does not preclude pursuing other legal remedies, and the registry was directed to send e-mail copies of the order to all parties involved. The order was signed on 19th September 2022.