2021 (1) TMI 900 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute or not - time limitation - Whether there is an operational debt exceeding ₹ 1 lac as defined under Section 4 of the I B Code? - HELD THAT - In the application under Section 9 of the I B Code, it is mentioned that appellant has supplied ready-mix concrete material to respondent for their various construction sites from 30/09/2012 to 20/10/2014 for which various invoices were issued from time to time as against the total outstanding payment of ₹ 02,29,94,288/-. The respondent (Corporate Debtor) has paid a sum of ₹ 02,09,30,948/- and balance of ₹ 20,63,340/- is outstanding as on 11/11/2015 - The respondent denied this fact and according to him as per the ledger, the outstanding amount is only ₹ 70,165/-. In support of this contention, the respondent filed ledger account of appellant maintained by the respondent for period of 01/04/2012 to 20/03/2018. (See Page 97-102 of Appeal Paper Book) The respondent has produced its statement of accounts which clearly shows that the total amount outstanding against the appellant is ₹ 70,165/- which is less than ₹ 1 lac. The appellant has not pointed out any error in the statement of account filed by the respondent. Also, it is established that as on 31/03/2017, operational debt ₹ 19,89,130/- was due and payable and has not yet been paid - Hon ble Supreme Court, in the case of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED 2017 (9) TMI 1270 - SUPREME COURT held that what is the scope of ascertaining the existence of a dispute at the time of admitting the Application, which is as follows - it is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the existence of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the dispute is not a patently feeble legal argument or an assertion of fact unsupported by evidence. Pre-existing dispute or not - HELD THAT - As per the respondent, the appellant has delivered goods to Mayfair Corporate Park but erroneously sent invoices dated 15/07/2013 and 18/10/2013 bearing nos. 661 and 360 amounting to ₹ 05,33,120/- and 05,16,460/-. The respondent has no connection with Mayfair Corporate Park, therefore they have returned the invoices to the appellant. According to the appellant, the Mayfair Corporate Park is a construction project developed by Mayfair Spaces Ltd. (respondent) and thus they are associated entities. Therefore, the disputed invoices were rightly sent to the respondent - the appellant is relying on the ledger account maintained by the respondent. In this ledger account the amount of disputed invoices are not shown. Therefore, we hold that there is no dispute between the parties in regard to the aforesaid invoices. Thus, the finding of ld. Adjudicating Authority that there is a pre-existing dispute between the parties, cannot be agreed upon. Time Limitation - HELD THAT - The ledger account is a running account which shows that on 05/11/2015, the respondent has made payment of ₹ 12 lacs to appellant and from this date of acknowledgment within three years, that is on 15/01/2018 the application is filed. Thus, the application is within period of limitation. We agree with the finding of the Adjudicating Authority that the application is filed within the period of limitation. As the respondent has failed to pay more than ₹ 1 lac and in absence of any pre-existing dispute and the record being complete, we hold that the application under section 9 of I B Code preferred by the appellant was fit to be admitted - the impugned order is set aside and the case remitted to the Adjudicating Authority for admitting the application under Section 9 of I B Code after notice to the Corporate Debtor to enable the Corporate Debtor to settle the matter prior to admission - appeal allowed by way of remand.

Summary

Issues:
1. Rejection of application under Section 9 of the Insolvency and Bankruptcy Code by the Adjudicating Authority.
2. Existence of a pre-existing dispute between the parties.
3. Barred by limitation claim.
4. Consideration of ledger accounts in determining operational debt exceeding &8377; 1 lakh.

Analysis:
1. The Appellant, an Operational Creditor, filed an appeal against the rejection of their application under Section 9 of the Insolvency and Bankruptcy Code by the Adjudicating Authority. The dispute arose from the non-payment of a balance amount by the Corporate Debtor despite several communications and a demand notice sent by the Appellant.

2. The Corporate Debtor contested the application, claiming that certain invoices were erroneously issued and that there was a pre-existing dispute regarding the goods supplied. However, the Appellant argued that the disputed invoices were rightly sent as the Corporate Debtor and Mayfair Corporate Park were associated entities.

3. The Adjudicating Authority found that the application was within the limitation period and that there was no pre-existing dispute based on the ledger accounts provided by both parties. The Appellant's ledger showed an outstanding amount due, while the Corporate Debtor's ledger indicated a lesser amount. The Authority considered the reliability of the ledger accounts and concluded that the application was fit for admission.

4. The National Company Law Appellate Tribunal reviewed the ledger accounts and discrepancies between them. It was noted that certain items were missing in the Corporate Debtor's ledger, leading to a determination that an operational debt exceeding &8377; 1 lakh was due and payable. The Tribunal also emphasized the importance of considering the existence of a dispute at the time of admitting the application under Section 9 of the I&B Code.

5. Ultimately, the Tribunal set aside the earlier order, remitting the case to the Adjudicating Authority for admission of the application under Section 9 of the I&B Code. The decision was based on the finding that the Corporate Debtor had failed to pay the outstanding amount exceeding &8377; 1 lakh, and there was no substantial pre-existing dispute between the parties.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Tribunal's decision-making process in addressing each matter raised in the appeal.