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2020 (9) TMI 993 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Time Limitation - also allegation that application filed without proper authorization - debt as well as quality of service under dispute. Time Limitation - HELD THAT - It is observed that the Operational Creditor has approached this Adjudicating Authority pursuant to orders of the then Hon'ble High Court of Andhra Pradesh wherein it was directed to transfer the winding up proceedings vide I.A. No. 5/2018 in C.P. No. 34/2011 dated 18.07.2018 to the NCLT Hyderabad Bench and that pursuant to the said order, the Operational Creditor has approached this Adjudicating Authority by issuing Demand Notice U/s. 8 of IBC. The series of events being continuous in nature and approach of the Applicant before this Adjudicating Authority by virtue of the order of Hon'ble High Court of Andhra Pradesh covers the plea of Limitation and therefore the Application is within Limitation. Pre-existing dispute or not - HELD THAT - The Applicant had preferred a Civil Suit bearing O.S. No. 778 of 2013 before the City Civil Court, Hyderabad against the Corporate Debtor wherein the Corporate Debtor herein has raised certain disputes by way of filing a counter-affidavit. However, the said matter was dismissed for default due to non-prosecution by the applicant herein - It is observed that though the Civil Suit bearing O.S. No. 778 of 2013 before the City Civil Court, Hyderabad was dismissed for default but there were many disputes raised by the Corporate Debtor therein and a counter claim of ' 41,00,000/- was also made. Further the Corporate Debtor duly replied to the Demand Notice issued U/s. 8 of IBC by the operational creditor which reflects and highlights that there is existence of dispute between the parties. On consideration of the above said email correspondence as well as disputes raised by the Corporate Debtor by way of Counter affidavit filed in the Civil Suit referred to hereinbefore, this Adjudicating Authority observes that there is evidence on record which indicates that there was pre-existence of dispute between the Applicant and Respondent in respect of the claims made by the Applicants - Since there exists a real dispute between the Applicant and Respondents in respect of claims made vide invoices raised in the month of May, 2010, we are not inclined to admit this Application. Application dismissed.
Issues Involved:
1. Existence of pre-existing dispute 2. Limitation 3. Proper authorization for filing the application Detailed Analysis: 1. Existence of pre-existing dispute: The Operational Creditor, M/s. M+R Logistics India Pvt. Ltd., filed a petition against the Corporate Debtor, M/s. AGA Publications Ltd., under section 9 of the Insolvency and Bankruptcy Code, 2016. The Corporate Debtor contended that there was a pre-existing dispute regarding the quality of services provided by the Operational Creditor. This was evidenced by email exchanges dated 08.07.2010 and 16.07.2010, where the Operational Creditor acknowledged delays in service and agreed to bear certain costs due to these delays. The Corporate Debtor also raised a counterclaim for losses amounting to ?41,00,000/- in a civil suit (O.S. No. 778 of 2013) filed by the Operational Creditor, which was later dismissed for default. The Tribunal observed that the existence of these disputes was substantiated by the counter-affidavit filed by the Corporate Debtor in the civil suit and the reply to the Demand Notice issued under section 8 of the IBC. The Tribunal cited the Supreme Court's judgment in Transmission Corporation of Andhra Pradesh Limited vs. Equipment Conductors and Cables Limited, emphasizing that the IBC is not a substitute for a recovery forum and should not be invoked in the presence of a real dispute. 2. Limitation: The Corporate Debtor argued that the application was barred by limitation, as the invoices were raised in 2010 and the application was filed in 2019. The Tribunal noted that the Operational Creditor had approached the Adjudicating Authority pursuant to an order from the High Court of Andhra Pradesh, which directed the transfer of winding up proceedings to the NCLT, Hyderabad. The Tribunal held that the series of events, being continuous in nature, and the approach of the Operational Creditor to the Adjudicating Authority by virtue of the High Court's order, covered the plea of limitation. Therefore, the application was deemed to be within the limitation period. 3. Proper authorization for filing the application: The Corporate Debtor contended that the application was filed without proper authorization, as the resolution authorizing the CFO to file the petition before the NCLT, Chennai Bench, was not found in the company's resolution dated 28.03.2019. The Tribunal did not provide a detailed analysis on this issue but focused on the pre-existing dispute and limitation aspects. Conclusion: The Tribunal concluded that there was a pre-existing dispute between the parties regarding the claims made by the Operational Creditor. Given the evidence of disputes and the Supreme Court's guidance on the matter, the Tribunal was not inclined to admit the application. Consequently, CP (IB) No. 636/9/HDB/2019 was rejected with no order as to costs.
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