2018 (7) TMI 392 - Tri - Insolvency and Bankruptcy

Corporate insolvency process - dispute existing - Held that - In the present case, the discussion made in the preceding paragraphs clearly shows that there is dispute existing in fact and it is not spurious, hypothetical or illusory. Therefore, the petition is to be rejected under Section 9(5)(ii) of the Code. It is also to be stated that in view of the discussion made in the preceding paragraphs, there is a merit in the contention of the learned counsel for the respondent that the amount involved in default is less than ₹1.00 lac and consequently in view of Section 4(1) of the Code, the pre-requisite condition for insolvency resolution process is not satisfied. The petition is therefore, rejected.

Summary

Issues Involved:
1. Territorial Jurisdiction
2. Debt and Default Amount
3. Dispute Regarding Amount and Interest
4. Validity of Demand Notice and Response
5. Definition and Existence of Dispute

Issue-wise Detailed Analysis:

1. Territorial Jurisdiction:
The Tribunal confirmed that the matter falls within its territorial jurisdiction as the respondent's registered office is located in Gurgaon, Haryana.

2. Debt and Default Amount:
The petitioner claimed that the respondent owed ?100,118 for pharmaceutical products purchased, with an additional interest of ?13,179.93, totaling ?113,297.93. The respondent disputed this, asserting that the actual outstanding amount was ?45,313 due to a discrepancy in the opening balance and the exclusion of certain debit notes.

3. Dispute Regarding Amount and Interest:
The respondent argued that the petitioner's claim included ?32,000 for product approvals, which were unilateral and unjustified. The Tribunal noted that the petitioner failed to provide evidence for these charges. Consequently, the Tribunal reduced the claimed amount by ?32,000, resulting in a balance of ?68,118. Additionally, the Tribunal rejected the petitioner's claim for interest, as the invoices did not stipulate any interest terms. The Tribunal emphasized that the minimum default amount under the Code is ?1 lakh, and since the adjusted claim was less than ?1 lakh, the petition was not maintainable.

4. Validity of Demand Notice and Response:
The petitioner served a demand notice on 01.08.2017, which the respondent claimed contained blank papers. The respondent later replied, disputing the liability. The Tribunal found that the respondent had previously disputed the amount in response to an earlier demand notice dated 08.06.2017, thus establishing a pre-existing dispute.

5. Definition and Existence of Dispute:
The Tribunal referred to the Supreme Court's ruling in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited, which held that a dispute need not be limited to ongoing suits or arbitration proceedings. The Tribunal concluded that a genuine dispute existed between the parties, which was neither spurious nor illusory. Therefore, the petition was rejected under Section 9(5)(ii) of the Code.

Conclusion:
The Tribunal found that the petitioner's claim did not meet the minimum default threshold of ?1 lakh and that a genuine dispute existed regarding the debt. Consequently, the petition for initiating the corporate insolvency resolution process was rejected. The order was to be communicated to both parties.