2019 (7) TMI 282 - AT - Insolvency and Bankruptcy

Admissibility of petition - Initiation of Corporate Insolvency Resolution Process - existence of Debt - HELD THAT - The cheque issued by the corporate debtor on 9th February, 2018 shows that the comparison chart by the appellant is merely an eyewash to mislead that there was no debt payable. It is not clear as to why the corporate debtor issued cheques if there was no debt . The bank receipt of ₹ 8 Lakhs was shown on 9th February, 2018 and the bank receipt for Rs. Five Lakhs on 23rd February, 2018. The other cheques were dishonoured. In view of such facts, we do not accept the stand taken by the appellant-shareholder that there was no debt due and payable. We accordingly dismiss the appeal. No cost. - Appeal dismissed.

Summary

Issues:
- Appeal against admission of application under Section 9 of the Insolvency and Bankruptcy Code
- Dispute regarding the existence of debt and default
- Examination of evidence including comparison ledger account and communication records
- Analysis of the application under Section 9 and related documents
- Decision on the dismissal of the appeal

Analysis:
The judgment pertains to an appeal filed by the shareholder of a Corporate Debtor against the order passed by the Adjudicating Authority admitting an application under Section 9 of the Insolvency and Bankruptcy Code. The Appellant argued that all claims by the Operational Creditor had been settled, and there was no outstanding debt, thus denying any default. Conversely, the Operational Creditor contended that despite reminders and a pre-existing dispute, the debt remained unpaid. The Appellant presented a comparison ledger account to support their claim of full payment, while the Operational Creditor emphasized the lack of dispute acknowledgment by the Corporate Debtor.

The Court examined Form 5, the application under Section 9, which detailed the operational debt amounting to a specific sum outstanding on a certain date. The Operational Creditor provided evidence of communication and efforts to reconcile the outstanding amount, including sending reconciled statements and reminders. Notably, the Corporate Debtor issued cheques and bank receipts, indicating acknowledgment of the debt, despite the Appellant's assertion of full payment. The Court found discrepancies between the evidence presented and the Appellant's claims, leading to the dismissal of the appeal.

In conclusion, the Court dismissed the appeal, emphasizing the Operational Creditor's efforts to reconcile the debt and the Corporate Debtor's actions acknowledging the outstanding amount. The judgment underscores the importance of substantiating claims with concrete evidence and upholding the principles of insolvency proceedings.