2020 (10) TMI 867 - 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 - HELD THAT - It is clearly seen from the material on record that the operational creditor raised invoice for a sum of ₹ 9,26,600/-. The operational debt itself is disputed by the corporate debtor. The corporate debtor also showed as to why and as to how the amount claimed towards professional charges is exorbitant. It has pointed out that the amount payable by it towards submission to West Bengal Labour Welfare Board is just ₹ 324/- page 27 (affidavit-in-reply) but the operational creditor in his invoice has claimed sum of ₹ 7,000/- towards labour welfare fees (page 19 of the application) - It is not necessary for us to go through all entries in detail. Suffice to say is that there appears genuine dispute in between the parties regarding the amount claimed towards operational debt. In the complaint, it is alleged that the operational creditor has withheld some of very vital and important documents of the corporate debtor, say as books of accounts, daily account files, IT files, VAT file, GST file, 2001 onwards, Bank statement files, TDS files, Digital signature files, etc. It appears that due to intervention of police, the operational creditor returned some of documents only. Hence, the corporate debtor filed the complaint against operational creditor in the Court ofCJM. Ld. CJM directed the police to register FIR and investigate the matter. We are not entering into that controversy as to whose claim is genuine. We only hold that there appears preexisting dispute pending in between the operational creditor and the corporate debtor about the amount of operational debt claimed and also about the deficiency of service rendered by the operational creditor. That dispute required thorough enquiry, which we cannot undertake in this proceeding of summary enquiry nature. Hence, we hold that this application is not maintainable. Application rejected.

Summary

Issues:
Application under section 9 of the Insolvency & Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process due to default in paying operational debt.

Analysis:
The operational creditor filed an application against the corporate debtor for defaulting on payment of legal services rendered. The operational creditor invoiced ?9,26,600 for services provided from 01/10/2018 to 31/01/2019. Despite sending a demand notice under section 8 of IBC, the corporate debtor did not pay, citing false disputes. The corporate debtor alleged deficiency in services, excessive fees, and wrongful retention of important documents by the operational creditor, leading to police complaints and ongoing investigations.

The corporate debtor claimed a pre-existing dispute regarding the amount owed and service quality. The Tribunal referred to the Mobilox case, emphasizing the need for a genuine dispute to reject an application under Section 9. The operational creditor's invoice was challenged by the corporate debtor, highlighting discrepancies in the amount claimed for services. The corporate debtor also accused the operational creditor of withholding vital documents, leading to legal actions and police involvement.

After reviewing the facts, the Tribunal found a genuine dispute between the parties concerning the operational debt amount and service quality. The corporate debtor had filed a police complaint before the demand notice was sent, indicating a pre-existing conflict. Due to the complexity of the dispute requiring further investigation, the Tribunal deemed the application not maintainable and rejected it. The order directed the registry to inform both parties and disposed of the case.

In conclusion, the Tribunal dismissed the application for Corporate Insolvency Resolution Process due to the existence of a pre-existing dispute regarding the operational debt and service quality, requiring a detailed investigation beyond the scope of summary proceedings.