2023 (11) TMI 111 - AT - Insolvency and Bankruptcy

Admission of Section 9 application - existence of pre-existing dispute or not - time limitation - HELD THAT - Along with the Demand Notice, Annexure statement of showing calculation of total debt has been mentioned. On looking into the invoices and the due date, Demand Notice was issued after expiry of due date in all the invoices. The statement filed along with the Demand Notice clearly indicates that most of the invoices were of June 2019; one was of 04.07.2019 and one was of 08.07.2019. Thus, 45 days of credit period came to an end with regard to all invoices which are part of the Demand Notice. Thus, the submission of the Appellant that no amount became due cannot be accepted. Insofar as the submission that the cheques which were submitted in the Bank by the Operational Creditor were security cheques, these are the issues which need not be adverted to the present proceedings. Section 138 proceedings have already been initiated and that can be looked into in the said proceedings. There are no error in the order of the Adjudicating Authority admitting Section 9 Application. There is no merit in the Appeal - appeal dismissed.

Summary

Issues involved:
The judgment involves the admission of a Section 9 Application filed by an Operational Creditor against a Corporate Debtor for non-payment of dues, with the main contention being the existence of a pre-existing dispute and the validity of the debt claimed.

Details of the Judgment:

Admission of Section 9 Application:
The Operational Creditor, engaged in various freight and logistics services, filed a Section 9 Application against the Corporate Debtor for non-payment of dues amounting to Rs.1,72,65,837.38. The Adjudicating Authority admitted the application after considering the lack of response from the Corporate Debtor despite ample opportunity.

Contentions of the Appellant:
The Appellant challenged the order, arguing that the reply to the Demand Notice raised significant issues indicating a pre-existing dispute. They also highlighted the provision of a 45-day credit period and the submission of security cheques before the due date, which they claimed prevented the debt from becoming due.

Observations of the Adjudicating Authority:
The Adjudicating Authority noted that despite the reply to the Demand Notice, no substantive pre-existing dispute was raised by the Corporate Debtor. The Authority found no error in admitting the Section 9 Application, as the issues raised were considered and addressed in the judgment.

Validity of Debt and Due Date:
The Demand Notice specified the amount claimed to be in default, including the principal amount and contractual interest calculated after the 45-day credit period. The Authority determined that the debt became due after the expiry of the credit period, as indicated by the due dates on the invoices.

Security Cheques and Section 138 Proceedings:
The submission regarding security cheques and Section 138 proceedings initiated by the Operational Creditor was deemed irrelevant to the current proceedings. The Adjudicating Authority maintained that the validity of the debt and the admission of the Section 9 Application were justified based on the facts presented.

Conclusion:
After considering all submissions and evidence, the Appellate Tribunal upheld the decision of the Adjudicating Authority to admit the Section 9 Application, dismissing the appeal for lack of merit.