2022 (4) TMI 653 - 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 - HELD THAT - The contention of the Learned Counsel for the Operational Creditor is that the Corporate Debtor has committed default in the payment of the sum which is due and payable by the Corporate Debtor to the Operational Creditor. This Adjudicating Authority in order to come to the conclusion that the Corporate Debtor has committed default in paying the debt amount which is due to the Operational Creditor, as to the facts of the present case has to examine in detail the clauses contained in the O M Agreements dated 23.08.2013 entered into between the parties. It is seen that the Corporate Debtor has enclosed all communications which were exchanged between the parties. On the perusal of the said documents, it is sufficiently made clear that the Corporate Debtor has raised a 'dispute' in relation to the delay in procurement of MVRE bags, delay in completion of the work on the basis on which the work has been progressed in relation to the Operational Creditor - it is noted from the application that the Corporate Debtor has not replied to the demand notice sent by the Operational Creditor. However, it is seen that the Corporate Debtor has raised various disputes and deficiencies in the work carried out by the Operational Creditor and that the series of letters exchanged between the parties show that there is a dispute between the parties in relation to work done by the Operational Creditor. This Tribunal being an Adjudicating Authority under the IBC, 2016 and the proceedings before this Tribunal being summary in nature, this Tribunal unlike a Civil Court cannot indulge in the luxury of taking evidence and that the debt and default on the part of the Corporate Debtor is required to be proved by the Operational Creditor beyond reasonable doubt - there exists a dispute between the parties and the said dispute required further investigation and hence the Application filed by the Applicant/Operational Creditor under Section 9 of the IBC, 2016 stands dismissed. Application dismissed.

Summary

Issues:
- Application under Section 9 of the Insolvency & Bankruptcy Code 2016 to initiate Corporate Insolvency Resolution Process against the Corporate Debtor
- Dispute between the parties regarding the debt amount claimed by the Operational Creditor

Analysis:
1. The application was filed by the Operational Creditor against the Corporate Debtor under Section 9 of the Insolvency & Bankruptcy Code 2016 to initiate Corporate Insolvency Resolution Process. The Operational Creditor claimed a total amount of ?97,58,856, including principal and interest, as a debt owed by the Corporate Debtor. The Operational Creditor provided detailed documentation supporting the claim, including agreements, invoices, reminder letters, and a demand notice issued to the Corporate Debtor.

2. The Operational Creditor and the Corporate Debtor had entered into agreements for Project Management Agency (PMA) services and Operation and Maintenance (O&M) of a Common Effluent Treatment Plant (CETP). The Operational Creditor claimed that the Corporate Debtor failed to pay the dues on time as per the agreements, leading to the outstanding debt. The Corporate Debtor, on the other hand, raised concerns about discrepancies in the invoices and deficiencies in the services provided by the Operational Creditor.

3. The Corporate Debtor argued that there were pre-existing disputes with the Operational Creditor before the demand notice was received. The Corporate Debtor highlighted issues such as delays in project completion, reduced effluent inflow affecting invoicing, and deficiencies in the services rendered. The Corporate Debtor also communicated these concerns to relevant authorities and initiated negotiation proceedings to address the disputes.

4. The Adjudicating Authority examined the documents and communications between the parties. It noted that the Corporate Debtor had raised disputes regarding the delay in procurement of materials and completion of work, which indicated a genuine dispute between the parties. Citing a Supreme Court ruling, the Authority emphasized the need to consider plausible contentions requiring further investigation and not dismiss disputes based on unsupported legal arguments or facts.

5. As a summary proceeding, the Authority clarified that it could not delve into detailed evidence collection like a Civil Court. It highlighted the Operational Creditor's burden to prove the debt and default beyond reasonable doubt. Ultimately, the Authority concluded that a genuine dispute existed between the parties, requiring further investigation. Consequently, the application under Section 9 of the IBC, 2016 was dismissed, with no costs imposed on either party.