2022 (11) TMI 564 - 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 - time limitation - HELD THAT - The Respondent claimed that the application is barred by limitation since certain invoices were of the year 2013. In the present case the Operational Creditor has relied on multiple invoices to arrive at the amount of Rs. 1,92,93,421. The last payment was made on 31.10.2016. In the ledger maintained by the Corporate Debtor an amount of Rupees 1,54,21,882 is due and payable against the service of the Operational Creditor. For the aforesaid amount the Respondent has already settled the claim of Rs. 1,54,21,882 with the Operational Creditor which was the liability as admitted by the Corporate Debtor. The Respondent has also filed an affidavit in respect to settlement of dues with the Operational Creditor - the dispute with respect to the remaining amount is disputed and it is evident from the documents placed on record by the Corporate Debtor that there exists a pre-existing dispute between the parties and it is the mandate of law that if there exists a pre-existing dispute between the parties the Adjudicating Authority must reject the application under section 9(5)(ii)(d). On hearing the arguments of the learned counsel for the Operational Creditor as well as the reply filed by the Corporate Debtor and upon appreciation of the documents placed on record to substantiate their respective claims, this Adjudicating Authority dismisses this application filed by the Operational Creditor under Section 9 of Insolvency and Bankruptcy Code, 2016 as there is a pre-existing dispute between the parties and IBC is not a substitute for a recovery forum. However, the claim under any other law, if permissible, can be pursued by the Petitioner as prescribed under that law. Application dismissed.

Summary

Issues:
Company Petition under section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process against a Corporate Debtor.

Analysis & Findings:
The Operational Creditor filed a Company Petition seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor, claiming an amount of 1,92,93,421/- as on 18.03.2019, with interest. The Operational Creditor alleged non-payment and accumulation of dues since 2013, with the last payment made on 31.10.2016. The Operational Creditor sent a demand notice in February 2019, but no payment was received. The Operational Creditor argued for initiation of CIRP based on the outstanding amount.

The Corporate Debtor contended that there were pre-existing disputes, and the petition was filed with malicious intent to coerce payment. The Corporate Debtor claimed unsatisfactory services by the Operational Creditor, leading to termination of services in 2016. The Corporate Debtor disputed the claim amount, citing issues with service quality and contractual obligations.

The Tribunal analyzed the submissions and evidence presented by both parties. It noted that the Operational Creditor's claim was within the limitation period based on the last payment date. The Tribunal referred to a relevant NCLAT judgment regarding consideration of all invoices to determine the debt amount. The Tribunal found that a pre-existing dispute existed between the parties, as evidenced by email correspondences and settlement of a portion of the claimed amount by the Corporate Debtor.

Relying on the Supreme Court's judgment, the Tribunal emphasized the importance of rejecting an application under Section 9 if a pre-existing dispute exists. The Tribunal concluded that the Operational Creditor's application was dismissed as there was a genuine dispute between the parties, and the IBC was not to be used as a recovery mechanism. The Tribunal suggested pursuing the claim under other applicable laws. A certified copy of the order was to be issued upon request.

In summary, the Tribunal dismissed the Company Petition for initiation of CIRP against the Corporate Debtor due to the presence of a pre-existing dispute, highlighting the need to address such disputes outside the scope of the Insolvency and Bankruptcy Code.