2022 (6) TMI 989 - AT - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT - In view of the existence of dispute prior to the demand notice dated 27.11.2017 the Adjudicating Authority rightly dismissed the Application filed by the Appellant. Appeal dismissed.

Summary

Issues Involved:
- Application for initiation of Corporate Insolvency Resolution Process under Section 9(1) of the I&B Code, 2016.
- Dismissal of the Application by the Adjudicating Authority based on pre-existing disputes between the parties.
- Review of the Adjudicating Authority's decision by the National Company Law Appellate Tribunal, Chennai Bench.

Analysis:
1. The Appellant, engaged in water proofing and structural work, filed an application under Section 9(1) of the I&B Code, 2016, claiming default in payment of operational debt by the Respondent. The debt was due with interest, as recommended by a project management consultant appointed by the Respondent.

2. The Respondent made partial payments towards the debt but later raised disputes regarding the work done by the Appellant, citing defects and pending tasks. The Respondent's letter highlighted specific issues and requested rectification within a specified timeframe, indicating pre-existing disputes.

3. The Adjudicating Authority dismissed the Appellant's application, noting the existence of disputes before the demand notice was issued. The Tribunal reviewed the case and found that the disputes raised by the Respondent predated the demand notice, justifying the Authority's decision to dismiss the application.

4. The Tribunal concluded that the Adjudicating Authority's decision was lawful, considering the pre-existing disputes between the parties. Therefore, the appeal was dismissed, and no costs were awarded. The Tribunal upheld the Authority's decision, emphasizing the importance of addressing disputes before initiating insolvency proceedings.

Conclusion:
The National Company Law Appellate Tribunal, Chennai Bench, upheld the dismissal of the application for Corporate Insolvency Resolution Process due to pre-existing disputes between the parties, as identified by the Adjudicating Authority. The Tribunal found no legal flaws in the Authority's decision and dismissed the appeal accordingly, without awarding costs.