Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + AT Insolvency and Bankruptcy - 2020 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (9) TMI 800 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute or not - HELD THAT - The Ld. Adjudicating Authority have failed to consider the facts that there was a pre-existing dispute between the parties much prior to filing of application under Section 9 of the IBC. The impugned order cannot be sustained in the eye of Law and in view of the Judgment of the Hon ble Supreme Court in MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED 2017 (9) TMI 1270 - SUPREME COURT and is hereby fit to be set aside and the Appeal is allowed. Corporate Debtor is released from the rigor of the Corporate Insolvency Resolution Process . All actions taken by the Interim Resolution Professional / Resolution Professional and Committee of Creditors , if any, are declared illegal and set-aside - matter remitted to the Ld. Adjudicating Authority to decide fees and costs of CIRP payable to IRP/RP, which shall be borne by the Operational Creditor / Respondent No. 1. Appeal allowed.
Issues:
- Admission of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 by the Ld. Adjudicating Authority against the Corporate Debtor. - Existence of a pre-existing dispute between the parties prior to the application under Section 9 of the IBC. Analysis: 1. The appeal was filed by the Corporate Debtor against the order passed by the Ld. Adjudicating Authority admitting an application under Section 9 of the IBC by an Operational Creditor for initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The Operational Creditor had claimed a principal amount along with interest as on the date of default. The Ld. Adjudicating Authority noted that the Corporate Debtor failed to appear despite multiple opportunities and issued the necessary notices. 2. The Appellant, who is one of the Promotors and Managing Director of the Company, raised two main grounds in challenging the impugned order. Firstly, it was contended that there existed a pre-existing dispute between the parties, which was not considered by the Ld. Adjudicating Authority. The Appellant highlighted discrepancies in the invoices submitted by the Operational Creditor and provided evidence of non-receipt of materials against certain invoices. 3. The Respondent No. 1, the Operational Creditor, argued that the Demand Notice was duly served on the Corporate Debtor, who failed to respond or appear before the Ld. Adjudicating Authority. The Respondent contended that the impugned order was in accordance with the law as the Corporate Debtor did not contest the case or reply to the Demand Notice. 4. The Appellate Tribunal, after hearing both parties and examining the records, referred to the Supreme Court's decision in Mobilox Innovations case. The Tribunal found that there was a pre-existing dispute between the parties, as evidenced by emails exchanged prior to the filing of the Demand Notice. The Tribunal noted that the Ld. Adjudicating Authority failed to consider these emails and set aside the impugned order, allowing the appeal. 5. Consequently, the impugned order admitting the application under Section 9 of the IBC was set aside. The Corporate Debtor was released from the CIRP, and actions taken by the Interim Resolution Professional and Committee of Creditors were declared illegal. The matter was remitted to the Ld. Adjudicating Authority to decide on fees and costs payable to the Interim Resolution Professional, to be borne by the Operational Creditor. The Appeal was allowed with specific directions and observations, with no costs imposed on either party. The Registry was instructed to communicate the Judgment to the Ld. Adjudicating Authority, and the Judgment was to be uploaded on the Tribunal's website.
|