2023 (4) TMI 55 - AT - Insolvency and Bankruptcy

Initiation of CIRP - existing of pre-existing dispute or not - NCLT admitted the dmitted an application filed u/s 9 - HELD THAT - It is true that under the provisions of Code if Adjudicating Authority is satisfied with pre existing dispute at the time of entertaining an application filed under Section 9 of the Code there is no reason to initiate the same or admit the application. However, law is settled on the point that there must be pure pre-existing dispute. Meaning thereby that genuine pre-existing dispute must exist in rejecting an application Section 9 of the code. In the present case it is reflected from inspection report of SGB Infra Ltd dated 16.12.2019 which is at page 147 that the Corporate Debtor was asked by the SGB Infra Ltd to remove the flooring. This fact is itself enough to draw an inference that the Corporate Debtor had accepted the delivery of granite slabs made by the Operational Creditor without raising any dispute or objection. Otherwise the Corporation Debtor would have rejected the entire materials at the time of unloading of the same. However, it is clear that the granite slabs supplied by the Operational Creditor were utilised by the Corporate Debtor and had placed the same in the premises of Airport Authority of Jaipur. There may be plausible reasons for SGB Infra Ltd to ask the Corporate Debtor to remove the flooring but fact remains that the Corporate Debtor had accepted the granite slabs supplied by the Operational Creditor without raising any dispute or objection. There is no reason to accept as if there was pre-existing dispute in between the Operational Creditor and Corporate Debtor. Besides this the Operational Creditor before the Adjudicating Authority has already taken a plea that he has filed an application under section 340 of Cr PC in respect of placing and using a document by committing forgery and interpolation and as such there are no ground to interfere with the impugned order nor there are any defect in the said impugned order. Appeal dismissed.

Summary

Issues Involved:
1. Admission of application under Section 9 of the Insolvency & Bankruptcy Code, 2016.
2. Allegation of pre-existing dispute between Corporate Debtor and Operational Creditor.
3. Allegations of forgery and fabrication of documents by the Corporate Debtor.

Summary:

1. Admission of Application under Section 9 of the Code:
The appeal was filed under Section 61 of the Insolvency & Bankruptcy Code, 2016, against the order dated 16.08.2022 by the National Company Law Tribunal (NCLT), Jaipur Bench, which admitted the application under Section 9 of the Code filed by the Operational Creditor (Respondent No.2) and initiated the Corporate Insolvency Resolution Process (CIRP) against Respondent No.1 (Corporate Debtor).

2. Allegation of Pre-existing Dispute:
The Corporate Debtor argued that there was a pre-existing dispute regarding the quality of granite slabs supplied by the Operational Creditor, which were allegedly not as per the specified thickness. The Corporate Debtor claimed that this issue was communicated to the Operational Creditor and that payments were stopped due to these quality concerns. However, the Adjudicating Authority found that the dispute regarding the quality of goods was raised only after the inspection report dated 16.12.2019 and that the goods were consumed by the Corporate Debtor without any prior complaint. The Adjudicating Authority concluded that there was no genuine pre-existing dispute and that the Corporate Debtor had defaulted on its payment obligations.

3. Allegations of Forgery and Fabrication:
The Operational Creditor alleged that the Corporate Debtor had submitted forged documents to create a false dispute regarding the quality of goods. An application under Section 340 of the Code of Criminal Procedure, 1973, was filed by the Operational Creditor, alleging forgery and fabrication of diary pages by the Corporate Debtor. The Adjudicating Authority found that the Corporate Debtor had accepted the delivery of goods without raising any dispute and that the plea of pre-existing dispute was not credible.

Conclusion:
The Appellate Tribunal upheld the decision of the Adjudicating Authority, dismissing the appeal and confirming the initiation of CIRP against the Corporate Debtor. The Tribunal found no merit in the Corporate Debtor's arguments regarding pre-existing disputes and forgery, concluding that the Corporate Debtor had defaulted on its payment obligations and that the Operational Creditor's application under Section 9 of the Code was rightly admitted.