2023 (5) TMI 15 - AT - Insolvency and Bankruptcy

Rejection of section 9 application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - time limitation - Respondent sent reply to the demand notice much beyond the statutory period of 10 days prescribed by the IBC - pre-existing debt and dispute or not - issue of credit notes in the context of outstanding dues. Issue of credit notes in the context of outstanding dues - HELD THAT - It has been held by the Adjudicating Authority that the credit notes sent via the email are genuine and the issuance of the said letters further confirms the Corporate Debtor s contention that the instant petition has pre-existing disputes. That apart it is noticed that at pages 309 and 310 of APB, two letters dated 02.05.2019 and 04.06.2019 have been sent by the Corporate Debtor requesting the Operational Creditor to issue credit notes for a balance sum of Rs. 2,11,52,579/- on the ground that material worth of Rs. 2.25 crore had been rejected by them - the finding of the Adjudicating Authority is agreed upon that the balance amount claimed as operational debt has been unequivocally disputed by the Corporate Debtor and no liability admitted on this count. The present is therefore not a case where there is an undisputed debt for which Corporate Debtor can be brought under the rigours of CIRP. Three communications purportedly issued by the Corporate Debtor - HELD THAT - The Adjudicating Authority in the impugned order has duly considered this aspect and relied on the decision taken by this Tribunal in the matter of Shelendra Kumar Sharma v. DSC Limited 2019 (12) TMI 1643 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI wherein it has been held that the question as to whether documents are forged or not cannot be decided by the Adjudicating Authority. The authenticity of the postal stamps on the postage receipts are not the subject matter which can be decided by the Adjudicating Authority or this Tribunal in view of summary jurisdiction having been conferred on them by the IBC. Enquiry into such allegations and counter-allegations would entail detailed investigation and the legislative intent of the IBC does not clothe the Adjudicating Authority with such powers of investigation. Thus the Adjudicating Authority has not committed any error by restraining itself from entering into any sort of roving enquiry on this issue. Whether these three letters had raised a semblance of dispute and if so whether the dispute is patently feeble? - HELD THAT - Looking conjointly at the three communications issued by the Corporate Debtor regarding supply of defective goods and other related issues on 01.07.2017, 03.10.2017 and 25.04.2019 as also the credit notes issued on 31.01.2018, 02.05.2019 and 04.06.2019 questioning the existence of any operational debt, we have no hesitation in concurring in the findings recorded by the Adjudicating Authority in that there was sufficient foundation of genuine disputes between the two parties. The Adjudicating Authority has also not erred by not getting into the allegations and counter-allegations regarding forgery and fabrication of documents/postage receipts as such conduct of such enquiries/ investigations is beyond the remit of summary proceedings. The Adjudicating Authority did not commit any error in rejecting the Section 9 application on the ground of pre-existing dispute - Appeal dismissed.

Summary

Issues Involved:
1. Whether operational debt above the statutorily prescribed threshold limit had become due and payable.
2. Whether there has been any default in respect of such payment on the part of the Corporate Debtor.
3. Whether the debt has been disputed.

Summary:

Issue 1: Operational Debt and Default
The Appellant (Operational Creditor) argued that the Corporate Debtor owed Rs.3,01,89,141/- for unpaid invoices, including interest. The Appellant sent a Section 8 demand notice on 28.06.2019, to which the Respondent replied beyond the statutory period. The Appellant contended that the Corporate Debtor created a "moonshine defence" of pre-existing disputes to evade payment. The Respondent had allegedly raised disputes through three communications regarding defective goods. The Appellant argued these disputes were fabricated and never received, as confirmed by an RTI application showing the letters were issued from a non-existent post office. The Appellant also pointed out that the Respondent had acknowledged a liability of Rs.2,20,00,724/- on 01.04.2019, but raised a defence about two credit notes amounting to Rs.14,03,472/-.

Issue 2: Pre-existing Disputes
The Respondent argued that disputes about the quality of goods were raised before the Section 8 demand notice, citing communications from 01.07.2017, 03.10.2017, and 25.04.2019. The Respondent claimed these communications were bona fide and supported by postage receipts. The Appellant countered that these communications were fabricated and not delivered, as the post office mentioned had closed before the letters were purportedly sent. The Adjudicating Authority found that the authenticity of postal receipts cannot be decided under the summary jurisdiction of the IBC.

Issue 3: Examination of Dispute
The Tribunal referred to the Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Private Limited case, emphasizing that the adjudicating authority must reject a Section 9 application if there is a "plausible contention" of a dispute. The Tribunal found that the Respondent's communications consistently raised concerns about the quality of goods, fulfilling the requirements of Section 8(2)(1)(a) of IBC. The Tribunal agreed with the Adjudicating Authority that there was a genuine dispute and that allegations of forgery and fabrication were beyond the remit of summary proceedings.

Conclusion:
The Tribunal concluded that the Adjudicating Authority did not err in rejecting the Section 9 application on the ground of pre-existing dispute. The appeal was dismissed, but the Appellant was granted the liberty to resort to other legal remedies.