2020 (10) TMI 917 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - time limitation - whether the party supposedly supplying the polymer granules is an operational creditor and the amount of invoice which is within limitation is an operational debt as defined in the IBC? - HELD THAT - Section 5 (21) of the IBC defines operational debt to mean a claim in respect of the provision of goods or services including employment or a debt in respect of the repayment of dues. Quite obviously provision of goods or services is a pre-requisite for the existence of operational debt. In the present appeal the corporate debtor M/s N.R. Commercials Pvt. Ltd. has not only vehemently and flatly denied giving any purchase order for the said supply of polymer granules as claimed by the operational creditor or receiving any supply from her, he has in his reply to Demand Notice challenged the operational creditor to provide proof to substantiate her claim. The only evidence that the operational creditor has produced in support of her claim are a total of fourteen invoices (out of which only one is found under limitation for the purposes of IBC) which she has not been able to corroborate through any other document such as way bill, transportation document, tax invoice or tax remittance receipts - Thus the operational creditor has not been able to prove any purchase order being given by the Respondent for supply of polymer granules by her and rebut the averment and argument of corporate debtor calling the claim false and fabricated. Since the supply of goods is not established as required under Section 5(21) of the IBC, the existence of any payment towards such purchase is not established. The appellant has not been able to establish that she is an operational creditor in the case and a relationship of corporate debtor and operational creditor exists between the Appellant and the Respondent as required in the IBC. Therefore, she cannot claim any relief under Section 9 of the IBC - Appeal dismissed.

Issues Involved:
1. Existence of a dispute between the Operational Creditor and Corporate Debtor.
2. Validity of the invoices and supporting documents.
3. Limitation period for the claim.
4. Establishment of a seller-buyer relationship.
5. Definition and proof of operational debt under the Insolvency and Bankruptcy Code (IBC).

Detailed Analysis:

1. Existence of a Dispute:
The Adjudicating Authority dismissed the application by M/s. Shruti Impex under Section 9 of the IBC due to the existence of a dispute between the Operational Creditor (M/s. Shruti Impex) and the Corporate Debtor (M/s. N.R. Commercials Pvt. Ltd.). The Corporate Debtor denied any business relationship and labeled the claim as based on false and fabricated documents. The Authority noted discrepancies in the documents submitted by the Operational Creditor, leading to the conclusion that the claim was disputed.

2. Validity of Invoices and Supporting Documents:
The Operational Creditor submitted fourteen invoices dated between 24.08.2015 and 21.11.2016. However, the Adjudicating Authority found discrepancies in these documents. The invoices contained only a stamp of N.R. Commercials Pvt. Ltd. without any signatures or clear identification of the person receiving the supplies. The Operational Creditor failed to provide supporting documents like purchase orders, way bills, transport documents, or tax remittance receipts to substantiate the claim.

3. Limitation Period for the Claim:
Out of the fourteen invoices, only one invoice dated 21.11.2016 for ?16,76,194 was within the limitation period, as the petition was filed on 27.09.2019, within three years from the date of the invoice. The remaining thirteen invoices were beyond the three-year limitation period required under the IBC.

4. Establishment of a Seller-Buyer Relationship:
The Corporate Debtor denied placing any orders or making any payments for the claimed supplies. The Operational Creditor could not establish a seller-buyer relationship due to the lack of corroborating documents. The Adjudicating Authority noted that the appellant failed to prove the existence of a relationship of Corporate Debtor and Operational Creditor.

5. Definition and Proof of Operational Debt:
The IBC defines operational debt as a claim in respect of the provision of goods or services. The Corporate Debtor challenged the Operational Creditor to provide proof of the alleged supply of polymer granules. The Operational Creditor could not provide adequate evidence to support the claim, such as way bills, transportation documents, or tax invoices. Consequently, the existence of operational debt was not established.

Conclusion:
The Adjudicating Authority concluded that the Operational Creditor failed to prove her case, leading to the dismissal of the application under Section 9 of the IBC. The Authority did not preclude the Operational Creditor from initiating recovery proceedings before the appropriate legal forum, provided she could establish her case. The appeal was dismissed, and no order as to costs was made.

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