2019 (11) TMI 289 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor committed default in making payment - existence of dispute or not - Section 9 of I B Code read with Rule 6 of Insolvency Bankruptcy (AAA) Rules, 2016 - HELD THAT - The dispute raised by the Corporate Debtor that they are not liable to pay interest as claimed by the Petitioner, which was categorically informed to the petitioner when reply was given to the first Demand Notice, as early as on 10.01.2019, whereas the second Demand Notice based on which this petition is filed was sent only on 15.01.2019, this is a clear dispute in existence as defined under Section 5(6)(a) of the Code. Petition dismissed.

Summary

Issues:
1. Alleged default in payment by Corporate Debtor leading to the filing of a Company Petition for initiating Corporate Insolvency Resolution Process (CIRP).
2. Dispute regarding outstanding dues and interest claimed by the Petitioner.
3. Jurisdiction of the Tribunal to entertain the Petition.
4. Validity of interest claim by the Petitioner.
5. Interpretation of invoices and absence of interest provision.
6. Dispute resolution under the Insolvency and Bankruptcy Code.
7. Impact of TDS deduction on interest component.
8. Examination of financial statements for evidence of interest payment.

Analysis:

1. The Company Petition was filed by the Petitioner against the Corporate Debtor, alleging default in payment of dues amounting to ?22,64,054, invoking Section 9 of the Insolvency and Bankruptcy Code (I&B Code) to initiate the Corporate Insolvency Resolution Process (CIRP).

2. The Petitioner provided evidence of invoices and email communications to support the claim of outstanding dues and interest, emphasizing the agreement terms for interest accrual on delayed payments.

3. The Corporate Debtor raised objections to the Petition, denying the claims and asserting that the matter was not maintainable, questioning the jurisdiction of the Tribunal, and alleging ulterior motives on the part of the Petitioner.

4. The Tribunal examined the validity of the interest claim, finding that the invoices lacked any provision for interest, thereby questioning the basis of the interest amount demanded by the Petitioner.

5. The Tribunal considered the contentions of both parties regarding the dispute over interest payment, highlighting the importance of clear documentation and agreement between the parties for enforcing interest claims under the I&B Code.

6. The Tribunal scrutinized the TDS deduction on the interest component and the financial statements provided as evidence, concluding that the dispute regarding interest payment existed before the filing of the Petition, as communicated by the Corporate Debtor in response to the initial Demand Notice.

7. Ultimately, the Tribunal dismissed the Petition based on the existence of a clear dispute between the parties regarding the interest claim, as per the provisions of the I&B Code, emphasizing the importance of resolving disputes before resorting to insolvency proceedings for debt recovery.