2022 (10) TMI 636 - 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 - proper service of Form-3 notice on Corporate Debtor or not - HELD THAT - In the first instance the Corporate Debtor was set ex-parte and an application was moved by the Corporate Debtor for setting aside the ex-parte order and the same was allowed by virtue of the order dated 14.03.2022. Observing that the notice was booked on 17.07.2021 and not on 16.07.2021 and was delivered on 27.07.2021 but not on 20.07.2021 as mentioned in the counter and the notice sent by the Tribunal on 22.11.2021 is after the Applicant has shifted his office to Vijayawada and Form No. INC 22 shows that the office was shifted to Vijayawada on 03.08.2021 itself this Tribunal allowed the application filed seeking to set aside the ex-parte order - Even according to the Counsel for the Corporate Debtor the office was shifted to Vijayawada on 03.08.2021 and the notice was delivered before 03.08.2021 which may be either on 27.07.2021 or 20.07.2021. The track record clearly shows that the item is delivered. Hence, when the office was functioning at Vishakhapatnam by 20.07.2021 and 27.07.2021 it has to be assumed that the notice was delivered. Due to the said fact not being brought to the notice of the Court during the hearing of the Interlocutory Application filed seeking to set aside the ex-parte order, the Tribunal relied on the dates mentioned in the application and observed as such. But considering the track record, it has to be held that the notice was duly served on the Corporate Debtor - this point is answered by holding that Form-3 notice was duly served on the Corporate Debtor. However the same might have lost sight of the concerned due to the work of shifting the office having been going on. Whether the Operational Creditor could prove the debt and whether the same is acknowledged by the Corporate Debtor? - HELD THAT - Since the burden of proving the debt is on the OC, he fails due to non filing of any supporting documents to the invoices. Failure to reply to the demand notice, has an assumed reason. Moreover mere failure to reply, does not entitle the OC for the prayed reliefs - The admitted liability is Rs. 18 Lakhs and odd. The argument of the Counsel for the Corporate Debtor with regard to the said debt due is that it is below the threshold limit of Rs. 1 Crore and hence, an application under IBC is not maintainable even if it is considered that the said amount is due and is defaulted. The said argument is cogent since, the threshold limit of Rs. 1 Lakh is done away with by virtue of the Notification No. 1205(E), dated 24-3-2020. Petition dismissed.

Summary

Issues:
1. Whether Form-3 notice was duly served on the Corporate Debtor.
2. Whether the Operational Creditor could prove the debt and whether the same is acknowledged by the Corporate Debtor.

Analysis:

Point No. I:
The Corporate Debtor contested the service of Form-3 notice, claiming it was not served due to changes in management. However, the Operational Creditor argued that despite typographical errors in dates, the notice was served on time as evidenced by the track record. The Tribunal found that the notice was indeed served, considering the track record and the office location during the relevant period.

Point No. II:
The Operational Creditor filed the application based on invoices without purchase orders, not acknowledged by the Corporate Debtor. Discrepancies in ledger accounts regarding cash payments were highlighted. The burden of proof lay on the Operational Creditor, who failed to provide substantial evidence beyond invoices and unsupported ledger accounts. The Tribunal noted the lack of admissible documents supporting the claim amount, leading to the dismissal of the application. The argument regarding the debt being below the threshold limit for IBC applicability was also considered, further contributing to the dismissal.

Point No. III:
As a result of the analysis, the Company Petition was dismissed (CP(IB) No. 52/9/AMR/2021).

This detailed analysis of the judgment showcases the examination of issues related to the service of notice, debt proof, acknowledgment, burden of proof, and applicability of IBC threshold limits, leading to the ultimate dismissal of the Company Petition.