2020 (10) TMI 221 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - time limitation - HELD THAT - It manifests that the corporate debtor has tried to create and establish a preexisting dispute by asserting the substandard quality of goods. However, no documentary evidence or correspondence is placed on record by the corporate debtor to support the contentions, that there is a pre-existing dispute but the said dispute was raised for the first time only after notice under Section 8 of IBC was issued. In reply only statements are made by Corporate Debtor which has not been substantiated with any proof. The corporate debtor has not placed on record any document which exhibits the plausible dispute between the parties. There is no merit in the so-called dispute raised by the corporate debtor as mere reply filed by the corporate debtor to the present application, is unable to establish any pre-existing dispute of genuine nature. On the contrary the issuance of various cheques by the corporate debtor belies its story of dispute and confirms the admission of liability. This leaves no doubt that the default has occurred for the payment of the operational debt for which the invoices were raised by the applicant and the so called dispute raised by the corporate debtor is merely a moonshine dispute - thus, it can be concluded that the dispute raised by the corporate debtor, is spurious, plainly frivolous and unable to categorize as genuine dispute as reproduced above. Hence, contention of the corporate debtor, of a pre existing dispute without any evidence and merit is a clear after thought to defeat the claim of the applicant. Time Limitation - HELD THAT - The date of default is 25.01.2018 and the present application is filed on 29.01.2019. Hence the application is not time barred and filed within the period of limitation. Application admitted - moratorium declared.

Summary

Issues:
1. Application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency process.
2. Dispute regarding non-payment of operational debt by the Corporate Debtor.
3. Jurisdiction of the Tribunal to entertain the application.
4. Appointment of Interim Resolution Professional and initiation of moratorium period.

Analysis:
1. The Applicant, a private limited company engaged in the business of marbles and stones, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor, a limited liability partnership, for non-payment of dues amounting to ?14,12,342 along with interest. The Applicant provided evidence of the debt and the default by the Corporate Debtor, including dishonored cheques and a demand notice served under Section 8 of the Code.

2. The Corporate Debtor raised a defense claiming that the goods supplied were of substandard quality and delayed, resulting in project delays. However, the Tribunal found that the Corporate Debtor failed to substantiate these claims with any documentary evidence or correspondence. The Tribunal cited the case law "Mobilox Innovative Private Limited vs. Kirusa Software Private Limited" to emphasize that a genuine dispute must be supported by evidence and not just unsubstantiated statements. The Tribunal concluded that the Corporate Debtor's dispute was spurious and an afterthought to avoid payment.

3. The Tribunal determined that the application was not time-barred and fell within the period of limitation. Additionally, since the registered office of the Corporate Debtor was in Delhi, the Tribunal had jurisdiction to entertain the application. The Applicant complied with the procedural requirements under Section 9(3)(b) and filed the application correctly as per the prescribed format.

4. Upon admitting the application, the Tribunal appointed an Interim Resolution Professional and initiated a moratorium period as per the provisions of the Insolvency and Bankruptcy Code, 2016. The Interim Resolution Professional was directed to file necessary forms and disclosures within a week. The Operational Creditor was instructed to deposit a sum of ?2 lakhs with the Interim Resolution Professional to cover expenses, subject to adjustment by the Committee of Creditors. The Tribunal also issued directions for communication of the order to all relevant parties and regulatory bodies for compliance and record-keeping purposes.

This detailed analysis of the judgment highlights the legal proceedings, evidence presented, Tribunal's findings, and consequential orders related to the application filed under the Insolvency and Bankruptcy Code, 2016.