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2021 (5) TMI 498 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational creditors - pre-existing dispute or not - HELD THAT - The Operational Creditor has established the existence of debt and default on the part of the Corporate Debtor. The Corporate Debtor's plea of Consultancy agreement being void ab initio and error in computation of default amount does not stand any merit along with that, no documentary evidence substantiating the Corporate Debtor's plea regarding pre-existence of dispute in relation to non-performance of agreement was annexed in the reply. Furthermore, the Corporate Debtor's plea that a civil or Criminal litigation against Operational Creditor has already been initiated has not been substantiated with any relevant document. Hence, the Corporate Debtor fails to establish any pre-existence of dispute and in view of the above situation, this Tribunal admits this petition and initiates CIRP on the Respondent with immediate effect. Application admitted - moratorium declared.
Issues:
1. Application for corporate insolvency resolution process under Section 9 of the Insolvency and Bankruptcy Code 2016. 2. Dispute over alleged default in payment for consultancy services provided. 3. Respondent's objections to the validity of the consultancy agreement. 4. Calculation errors and counterclaims raised by the Respondent. 5. Tribunal's decision to admit the petition and initiate CIRP. Issue 1: Application for Corporate Insolvency Resolution Process The Applicant, a partnership firm, sought to initiate the corporate insolvency resolution process against the Respondent for an alleged default in clearing a debt related to consultancy services provided. The Applicant detailed the transactions leading to the application, including consultancy agreements and payments made by the Respondent. Issue 2: Dispute Over Alleged Default The Applicant claimed an amount due from the Respondent for services rendered, with invoices raised and partial payments made. Meetings were held where the Respondent assured payment, but the debt remained unpaid. A statutory demand notice was sent under the IBC, 2016, followed by objections raised by the Respondent regarding the alleged debt. Issue 3: Respondent's Objections to Consultancy Agreement The Respondent objected to the validity of the consultancy agreement, alleging that the Applicant had not fulfilled its obligations under the agreement. The Respondent claimed that the agreement was void ab initio, citing clauses related to performance and impossibility of services promised by the Applicant. Issue 4: Calculation Errors and Counterclaims The Respondent disputed the calculation of the debt amount and raised counterclaims against the Applicant. Allegations were made regarding the Applicant's failure to perform obligations under the consultancy agreement, leading to irreparable loss and injury to the Respondent. Issue 5: Tribunal's Decision After hearing arguments from both parties and examining the documents, the Tribunal found that the Operational Creditor had established the existence of debt and default by the Corporate Debtor. The Tribunal dismissed the Corporate Debtor's objections, noting the lack of documentary evidence to support their claims. Consequently, the Tribunal admitted the petition and initiated the corporate insolvency resolution process against the Respondent. This comprehensive analysis covers the key issues involved in the legal judgment, highlighting the arguments presented by both parties and the Tribunal's decision to admit the petition and impose a moratorium under Section 14 of the Insolvency and Bankruptcy Code 2016.
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