2020 (10) TMI 770 - 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 - time limitation - HELD THAT - The corporate debtor has tried to create and establish a preexisting dispute by asserting that the materials were neither delivered nor received. However, no documentary evidence or correspondence is placed on record by the corporate debtor to support the contentions. No documentary evidence is placed on record to manifest 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. 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 - it can be concluded that the dispute raised by the corporate debtor, is spurious, plainly frivolous, unable to categorize as genuine dispute as reproduced above and the 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 15.12.2017 and the present application is filed on 30.04.2019. Hence the application is not time barred and filed within the period of limitation. The present application is filed on the Performa prescribed under Rule 6 of the Insolvency and Bankruptcy Code, 2016 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 r/w Section 9 of the code and is complete. The applicant is entitled to claim its dues, establishing the default in payment of the operational debt. Hence, the application is admitted - application admitted - moratorium declared.

Summary

Issues:
- Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency process against a company.
- Dispute regarding outstanding payment between the applicant and the corporate debtor.
- Jurisdiction of the National Company Law Tribunal to entertain the application.
- Appointment of Interim Resolution Professional and initiation of moratorium period.

Analysis:
1. The application was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by the Applicant, a partnership firm, against the Corporate Debtor, a company limited by shares. The Applicant claimed that the Corporate Debtor owed them a total outstanding amount along with interest, as per invoices raised between Jan 2015 to Feb 2016. The Corporate Debtor disputed the claim, alleging incorrect and repeated invoices and asserting that some materials were neither delivered nor received, while also claiming an excess payment made to the Applicant for safety items procured. The Tribunal noted that the Corporate Debtor failed to provide any documentary evidence or correspondence to support their contentions, and the alleged dispute seemed to be an afterthought to avoid payment obligations.

2. The Tribunal found that the Corporate Debtor's dispute lacked merit and evidence, and the default in payment of operational debt was established by the Applicant's invoices. Citing the Supreme Court's ruling in "Mobilox Innovative Private Limited vs. Kirusa Software Private Limited," the Tribunal emphasized the need for a genuine dispute supported by evidence. As the Corporate Debtor failed to substantiate their contentions, the Tribunal concluded that the dispute raised was spurious and frivolous, aimed at defeating the Applicant's claim. The Tribunal also confirmed that the application was not time-barred and fell within the period of limitation.

3. Regarding jurisdiction, the Tribunal established its authority to entertain the application due to the Corporate Debtor's registered office being in Delhi. The application was found to be complete and in compliance with the relevant rules and sections of the Insolvency and Bankruptcy Code, 2016, leading to its admission. Consequently, an Interim Resolution Professional was appointed, and a moratorium period was initiated as per the provisions of the Code. The Operational Creditor was directed to deposit a specified sum with the IRP to cover expenses, and various notifications and compliance reports were ordered to be sent to relevant parties and authorities.

This detailed analysis covers the issues of the application, the dispute over outstanding payment, jurisdiction of the Tribunal, and the subsequent actions taken in the legal judgment delivered by the National Company Law Tribunal, New Delhi Bench.