2021 (4) TMI 589 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - service of notice - Operational Creditors - pre-existing dispute or not - HELD THAT - The notice under Section 8 was sent on 22nd May, 2019. Before that on 7th November, 2017 there is email (Annexure A31) dated 09th November, 2017 at page 216 which is stated to have been sent by CEO of the Corporate Debtor to the Operational Creditor - There are notices at Annexure A33 and A34 which according to the Appeal were sent by Advocate of Corporate Debtor in March and April, 2018 in which notices, the Corporate Debtor raised various issues including that Operational Creditor failed to complete the project in time and whatever Operational Creditor worked-the project was found not working. Thus there is already pre-existing dispute between the parties with regard to services rendered. This being so, the submissions of the Learned Counsel for the Appellant that these disputes raised were concocted or that they were irrelevant cannot be decided in summary proceeding under Section 9 of IBC. There is no substance in the Appeal - appeal dismissed.

Summary

Issues:
- Appeal against Impugned Order dated 29th May, 2020 rejecting Application under Section 9 of Insolvency and Bankruptcy Code, 2016 (IBC).
- Claim of debt outstanding of &8377; 88,37,700/- and dismissal of application under Section 7 of IBC.
- Existence of pre-existing disputes between the parties regarding services rendered.

Analysis:
1. Impugned Order Rejection:
The Appellant filed an Appeal against the Impugned Order rejecting the Application under Section 9 of IBC. The Appellant argued that services were provided to the Corporate Debtor, but payments were irregular, leading to discontinuation of services due to non-payment of pending bills and breach of trust. The Appellant claimed that despite efforts to resolve issues and sending demand notices, the Respondent raised irrelevant issues and failed to make payments. The Adjudicating Authority considered the reply to the demand notice and found pre-existing disputes raised by the Corporate Debtor, leading to the rejection of the Application under Section 9.

2. Debt Outstanding and Dismissal of Application:
The Appellant claimed a debt outstanding of &8377; 88,37,700/- and argued that the Application under Section 7 of IBC was wrongly dismissed. The Learned Counsel for the Appellant presented various documents, emails, and notices to demonstrate that the disputes raised by the Respondent were false and irrelevant. However, the Adjudicating Authority referred to the Judgment in Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd. and observed the existence of disputes prior to the demand notice, leading to the dismissal of the Application.

3. Pre-Existing Disputes:
The record revealed pre-existing disputes between the parties regarding services rendered. The CEO of the Corporate Debtor sent an email highlighting damages caused by the Appellant's actions, threatening legal involvement. Additionally, notices sent by the Corporate Debtor's Advocate raised issues of incomplete projects and non-functional work by the Operational Creditor. These disputes indicated a lack of agreement and unresolved issues between the parties, justifying the rejection of the Application under Section 9 of IBC.

In conclusion, the Tribunal found no merit in the Appeal and dismissed it, citing the existence of pre-existing disputes that could not be resolved summarily under Section 9 of IBC. The decision was based on the acknowledgment of disputes raised by the Corporate Debtor prior to the demand notice, leading to the rejection of the Application.