2021 (6) TMI 49 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - There has been no admission of operational debt by the respondent. In fact, there has been a dispute regarding the approval of rates and bill as issued by the operational creditor against the Corporate Debtor. Further the corporate debtor on 14.12.2019 vide an email already intimated the applicant regarding the approval of the rates which are not matching with those as originally approved which clearly shows that the invoices were not acknowledge by the Corporate Debtor. There was existence of dispute much prior to the issuance of notice under Section 8 of the Code. Respondent has raised dispute with sufficient particulars. The amount of claim raised by the applicant clearly falls within the ambit of disputed claim. The claim of dispute suggests the need of elaborate investigation. In the facts it is reiterated that existence of genuine dispute in the present case cannot be ruled out. As per Section 9 (5) (ii) (d) of the Code provides that adjudicating authority shall reject the application if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility - petition fails and the same is rejected.

Summary

Issues:
Petition for initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of IBC 2016 due to alleged default in settling outstanding amount for goods supplied.

Detailed Analysis:
1. The petitioner, an operational creditor, filed a petition seeking CIRP against the respondent company for defaulting on payments totaling to a significant amount for work done on 2nd and 5th floors of a building.

2. The petitioner claimed that the work on both floors was satisfactorily completed, supported by completion certificates counter-signed by the appointed Architect. Despite demand notices and replies exchanged, the respondent failed to settle the outstanding dues, leading to the petition.

3. The respondent raised objections, including non-compliance with serving a demand notice for a specific invoice, different causes of action for the work orders, disputes regarding the alleged claim, and lack of supporting documentation for the invoices.

4. The respondent also disputed the authenticity of completion certificates, alleging fabrication and lack of proper documentation supporting the invoices. They claimed that the petitioner had received substantial payments, not reflected in the accounts.

5. The petitioner's rejoinder emphasized the lack of dispute notices from the respondent prior to the demand notice issuance, highlighting the need for adjudication on the disputed claims and the respondent's failure to admit the operational debt.

6. The Tribunal analyzed the evidence, including emails indicating disputes over rates and bills, and concluded that a genuine dispute existed before the demand notice. As per the Supreme Court's guidance, the Tribunal emphasized the need to reject spurious disputes and ruled in favor of the respondent due to the existence of a genuine dispute.

7. Citing Section 9(5)(ii)(d) of the Code, the Tribunal rejected the petition, emphasizing the need for a notice of dispute for such applications. The order clarified that the dismissal did not prejudice the petitioner's rights to seek remedies in other forums.

8. The detailed analysis considered the contentions, evidence, and legal requirements, ultimately leading to the rejection of the petition due to the existence of a genuine dispute between the parties.