2021 (12) TMI 1155 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - respondent's case is that the cheque was issued as a security, which clearly indicates that the respondent/corporate debtor had agreed to pay GST additionally over the amount of consideration - HELD THAT - There is nothing on record to show that the corporate debtor raised dispute over use of said Trademark sold by the applicant. The corporate debtor has failed to demonstrate that the GST was not payable by it, when a cheque for the same purpose was issued. The defense of corporate debtor regarding pre-existing dispute regarding payment of remaining amount is not supported by any documentary proof. Since the corporate debtor already-issued a cheque in order to clear its liability towards payment of GST, the claim of applicant deserves to be allowed. Application admitted - moratorium declared.

Summary

Issues:
- Petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process initiation.
- Dispute over payment of GST amount in an assignment deed.
- Allegations of fraud and criminal activities impacting the transaction.
- Defense raised regarding a pre-existing dispute and criminal complaints.
- Interpretation of the assignment agreement regarding GST payment.
- Appointment of Insolvency Resolution Professional and related procedures.

Analysis:
1. The petition was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of Corporate Insolvency Resolution Process against the Respondent, a Private Limited Company. The Applicant alleged non-payment of GST amount by the Respondent after an assignment deed transferring a trademark for a substantial consideration. The Respondent disputed the GST payment obligation, citing the assignment agreement's language and raised objections including criminal acts by the Applicant.

2. The Respondent contended that the consideration amount in the assignment deed included GST, and the issuance of a cheque for GST payment was a security measure, not an additional liability. They also claimed the transaction was null and void due to alleged fraud and cheating by the Applicant, leading to criminal proceedings. The Respondent further argued that all transactions related to the assignment were reversed due to the Applicant's actions.

3. The Tribunal analyzed the documents and submissions from both parties. It noted that the assignment agreement was silent on GST payment, but the Respondent issued a cheque for GST separately. The Tribunal found no evidence of a dispute raised by the Respondent over the trademark use or the GST payment obligation. The defense of a pre-existing dispute lacked documentary support.

4. Referring to the definition of "dispute" in the Insolvency and Bankruptcy Code, the Tribunal emphasized the need for a plausible contention requiring further investigation. Citing a Supreme Court case, the Tribunal highlighted the importance of separating genuine disputes from spurious defenses. Given the Respondent's issuance of a cheque for GST payment, the Tribunal ruled in favor of the Applicant.

5. Consequently, the Tribunal allowed the Applicant's claim, appointed an Insolvency Resolution Professional, and directed the Applicant to deposit a sum for the Professional's expenses. The order triggered a moratorium period under the Code, and various procedural steps were outlined for communication and compliance with regulatory bodies.

This comprehensive analysis covers the legal intricacies and key points of the judgment delivered by the National Company Law Tribunal, New Delhi Bench.