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2022 (6) TMI 491 - Tri - Insolvency and BankruptcyMaintainability 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 - A conjoint reading of the definition of the terms 'claim' (Section 3(6)); 'debt' (Section 3(11)); 'default' (Section 3(12)) and 'operational debt' (Section 5(21)) make it clear that there is an unpaid operational debt in the instant case and the claim is maintainable before this Tribunal as it arises from a contract in relation to provision of goods though it did not materialize in actual supply of goods. The Corporate Debtor is well aware of its liability to pay the same and its failure to do so is a 'default' in terms of Section 3(12) of the Code. The Petitioner issued Annexure - 11(F) Quotation dated 12.09.2018 to the Respondent-Corporate Debtor where under it was mentioned that out of the total cost of the products, the total advance payment required was Rs. 2,28,62,374.63/-. It was further mentioned therein under the payment terms, 'sixty days from the date of Invoice'. However, the Respondent-Corporate Debtor issued the Annexure - 11(G) Purchase Order dated 25.09.2018 for a total amount of Rs. 9,52,83,286/- out of which the NRE Costs are Rs. 6,21,055/- and under the payment term 'sixty days from the date of Invoice'. It is not in dispute that since the products were not supplied to the Respondent-Corporate Debtor, no Invoice was issued by the Petitioner and hence the payment term of 60 days from the date of Invoice has no relevance. The Petitioner-Operational Creditor failed to prove the debt and default on the part of the Respondent-Corporate Debtor - Petition dismissed.
Issues Involved:
1. Existence of Operational Debt 2. Payment Obligations and Terms 3. Pre-existing Dispute 4. Maintainability of the Petition Detailed Analysis: Existence of Operational Debt: The Petitioner, M/s. SFO Technologies Private Limited, filed a petition under section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Vanu India Private Limited. The Petitioner claimed that the Corporate Debtor defaulted on its obligations by failing to make the advance payment of Rs. 2,28,62,374.63, which was required for the procurement of materials specific to the contract. The Petitioner argued that the Corporate Debtor's failure to honor its commitments resulted in a significant financial loss and damage to its reputation. Payment Obligations and Terms: The Corporate Debtor contended that it was only required to pay an advance amount towards the Non-Recurring Engineering (NRE) charges and that the remaining amounts were payable only against invoices raised after the delivery of products. The Corporate Debtor argued that no invoices were raised by the Petitioner, and hence, no payment was due. The Petitioner, on the other hand, argued that the Quotation dated 12.09.2018 stipulated an advance payment, and the Corporate Debtor's failure to provide specific delivery instructions prevented the issuance of invoices. Pre-existing Dispute: The Corporate Debtor raised the issue of a pre-existing dispute, citing email communications and the reduction in the amount claimed by the Petitioner from USD 8,02,883.53 to USD 5,96,003.90. The Corporate Debtor argued that this reduction indicated that the amount due was not crystallized and was subject to reconciliation. The Petitioner countered that the reduction was due to the adjustment of materials that could be used in other projects or returned to suppliers. Maintainability of the Petition: The Corporate Debtor argued that since the NRE cost of Rs. 6,21,055/- was below the threshold limit of Rs. 1 Crore, the petition was not maintainable. The Tribunal noted that the Petitioner failed to show any document where the Corporate Debtor agreed to pay the advance amount of Rs. 2,28,62,374.63. The Tribunal emphasized that the claim regarding the procurement of materials could not be examined in a summary proceeding under section 9 of the IBC. Judgment: The Tribunal concluded that the Petitioner-Operational Creditor failed to prove the debt and default on the part of the Corporate Debtor. Accordingly, the petition was dismissed. However, the Tribunal clarified that this order would not preclude the Petitioner from availing any other remedy in accordance with the law for the redressal of its grievances against the Respondent. Relevant Legal References: - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd. (2018) 1 SCC 353 - Consolidated Construction Consortium Ltd. vs. Hitro Energy Solutions Pvt. Ltd.; (2022 SCC Online SC 142) The Tribunal's decision was based on the lack of documentary evidence supporting the Petitioner's claim for the advance payment and the existence of a pre-existing dispute, rendering the petition under section 9 of the IBC untenable.
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