2021 (2) TMI 824 - AT - 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 - whether there is any Existence of a Dispute and whether the Appellant has raised a plausible contention requiring further investigation which is not a patently feeble legal argument or an assertion of facts unsupported by evidence and whether the Dispute is Pre-Existing ? HELD THAT - It is clear that the existence of Dispute must be pre-existing i.e. it must exist before the receipt of the demand notice or invoice. If it comes to the notice of the Adjudicating Authority that the operational debt is exceeding rupees one lakh and the Application shows that the aforesaid debt is due and payable and has not been paid in such case in absence of any existence of a Dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt the Application under Section 9 cannot be rejected and is required to be admitted. This Tribunal without going into the merits of the Dispute holds that the documentary evidence furnished with the Application read with the email communication shows that the debt is due and payable and has not been paid and there is no plausible contention which requires further investigation and that the Dispute raised is only a patently feeble argument unsupported by evidence. Hence this Tribunal is of the considered view that the ratio of the Hon ble Supreme Court in M/s. Mobilox Innovations Pvt. Ltd. 2017 (9) TMI 1270 - SUPREME COURT squarely applies to the facts of this case as the Hon ble Apex Court has laid down that the Dispute if any should be Pre-Existing and also that it cannot be a feeble argument. Merely contending that accounts were not reconciled for almost a year in our considered opinion can be construed as a feeble and spurious argument . A perusal of the contents of the reply to the Demand Notice this Tribunal is unable to find any Dispute . It is seen from the record that at the earliest point of time the Corporate Debtor did not raise any dispute that existed between the parties. For all the reasons assigned in this instant Appeal we do not find any illegality or infirmity in the Order passed by the Learned Adjudicating Authority warranting our interference - Appeal dismissed.

Summary

Issues Involved:
1. Existence of a dispute under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016.
2. Interpretation of 'banked energy' under the Solar Power Purchase Agreement (SPPA).
3. Validity of invoices raised by the Operational Creditor.
4. Procedural compliance by the Corporate Debtor.
5. Intervention application under Rule 31 read with Rule 11 of the NCLAT Rules, 2016.

Detailed Analysis:

1. Existence of a Dispute:
The main point for consideration was whether there was any 'Existence of a Dispute' and whether the Appellant had raised a plausible contention requiring further investigation. The Tribunal examined whether the dispute was 'Pre-Existing'. The Appellant contended that the Learned Adjudicating Authority overlooked the technical nature of the dispute related to the interpretation of 'banked energy'. The Respondent argued that the dispute was not 'Pre-Existing' and was raised only after the filing of the Petition under Section 9 of IBC. The Tribunal found that the Corporate Debtor did not raise any dispute regarding the 'rate' prior to the issuance of the Demand Notice and the filing of the Petition, and thus, there was no 'Pre-Existing Dispute'.

2. Interpretation of 'Banked Energy':
The Appellant argued that the issue was with respect to the interpretation of 'banked energy'. They contended that the energy banked was consumed by the consumers of APSDCL and adjusted against their electricity bills. The Respondent countered that the SPPA provided only for a single unit rate of electricity and that the whole of the electricity generated fell under banked units. The Tribunal observed that the term 'banked units' was used extensively in the Renewable Energy Industry and had a specific meaning. The Tribunal concluded that the Operational Creditor had not breached any terms of the 'Billing Procedure' as the invoices were raised for electricity actually consumed.

3. Validity of Invoices:
The Appellant contended that the Operational Creditor raised invoices at escalating rates despite the agreed tariff being ?3.70 per unit for banked units. The Respondent argued that the invoices covered under the Demand Notice were issued only for actual electricity consumed by the end consumer. The Tribunal found that the invoices and Settlement Abstracts corresponded to the particulars of 'Operational Debt' and that the Operational Creditor had not violated the 'Billing Procedure'.

4. Procedural Compliance:
The Appellant argued that the Corporate Debtor could not reconcile its accounts due to data corruption and continued to make ad hoc payments. The Tribunal noted that the Corporate Debtor had repeatedly stated that there was a software breakdown and loss of financial data, but there was no mention of any dispute regarding the 'rate' in the email communications. The Tribunal held that the Corporate Debtor's argument of non-reconciliation of accounts was a 'feeble and spurious argument'.

5. Intervention Application:
An application was filed by an intervenor seeking to be impleaded as a party for the purposes of the reliefs prayed for in the present application. The Tribunal rejected the intervention application, stating that the intervenor was not a Necessary or a Proper Party for adjudication of the controversies centering around the Appeal.

Conclusion:
The Tribunal dismissed the Appeal and affirmed the Impugned Order dated 02.12.2019, passed by the Learned Adjudicating Authority, admitting the Petition under Section 9 of IBC. The Tribunal held that there was no 'Pre-Existing Dispute' and that the Operational Creditor's invoices were valid and in compliance with the SPPA. The Tribunal also rejected the intervention application filed by the intervenor.