2020 (10) TMI 587 - Tri - Insolvency and Bankruptcy

Maintainability of application- initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - concealment of substantial facts - HELD THAT - It is clear that the petitioner with malafide intention along with suppression of material facts has not come with clean hands and concealed substantial material facts. Hence this petition deserves to be dismissed. Petition dismissed.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016; Existence of dispute prior to filing the petition by the Operational Creditor.

Analysis:
1. The petition was filed by the Operational Creditor seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor, Specific Ceramics Limited, for an outstanding amount of INR 45,03,095.00 for goods supplied.

2. The Operational Creditor, a registered company, supplied goods to the Corporate Debtor, a manufacturing tiles business, in 2016-2017, and despite repeated reminders and assurances of payment, the outstanding dues were not cleared.

3. The Respondent disputed the claim, alleging substandard goods supplied by the Petitioner and failure to take back the rejected goods. The Respondent also highlighted discrepancies in the sales tax returns filed by the Petitioner.

4. The Respondent further claimed that the Petitioner filed a false criminal complaint and fabricated invoices to harass the Respondent, leading to a dispute prior to the petition filing.

5. The Tribunal observed that there was a pre-existing dispute before the demand notice was issued, as evidenced by the High Court order and serious allegations of document fabrication and misrepresentation.

6. Referring to the Supreme Court's definition of "dispute," the Tribunal emphasized the need to reject applications where a plausible contention requiring further investigation exists, and the dispute is not spurious.

7. Based on the evidence and arguments presented, the Tribunal concluded that the existence of a dispute prior to the demand notice was established, leading to the rejection of the petition without admission.

8. The Tribunal clarified that the dismissal of the application does not prejudice the rights of the applicant to pursue the matter in other forums, and the order was communicated to the parties accordingly.