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2022 (11) TMI 163 - AT - Insolvency and BankruptcyMaintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - whether payment to the Operational Creditor/Respondent No.1 was due from the Corporate Debtor giving rise to an operational debt? - whether a default has been committed by the Corporate Debtor/Appellant in respect of payment of such operational debt having already become due and payable? - whether the said operational debt exceeds an amount of Rs. 1 lakh and is an undisputed debt? HELD THAT - Having failed to make the requisite payments, it is noticed that the Operational Creditor sent a notice under Section 8 of IBC to the Corporate Debtor. It has been contested by the Corporate Debtor that the notices were not received as they were not delivered as per prescribed procedure. On this aspect, it is found that the Adjudicating Authority has dwelled upon the issue of service of Demand Notice in details. Having perused the speed post tracking report, the Adjudicating Authority found that the notice which was sent to the Corporate Office of the Corporate Debtor at Gurgaon was duly delivered - After taking note of rules relating to service of Demand Notice, the Adjudicating Authority has rightly found no force in the contention raised by the Corporate Debtor that the Demand Notice was not delivered. Whether there was any pre-existing dispute raised during the stage of notice or whether there was any dispute on the date of filing the application under Section 9 of the IBC? - HELD THAT - From material on record it is clear that notice under section 8(1) was sent to the Corporate Debtor by the Operational Creditor - It is also an admitted fact that the Corporate Debtor did not reply to the Section 8(1) notice and it follows therefore that the existence of dispute was not raised by the Corporate Debtor at the stage which it was obligated to do under section 8(2) of IBC on receipt of notice under Section 8(1) of the IBC - When no mention of existence of dispute was made by the Corporate Debtor, the statutory scheme of IBC entitled the Operational Creditor to file an application under Section 9 and this is exactly the course of action followed by the Operational Creditor. From the papers on record and submissions made, no reasons are found to disagree with the Adjudicating Authority that the Corporate Debtor has failed to show any correspondence to establish that the Corporate Debtor had ever raised any dispute regarding defective goods prior to the issuance of Demand Notice. Even when the goods were supplied to Air India on the instructions of the Corporate Debtor, Air India before accepting delivery at their site inspected the complete consignment of HRC and noted that they were accepted in apparent good order and condition as clearly indicated in Airways Bill, illustrative examples of which are at pages 172-173 and onwards in the Appeal Paper Book. No evidence to the contrary has been submitted by the Appellant. The Adjudicating Authority in the present case has carefully considered the reply and submissions made by the Corporate Debtor and has correctly come to the conclusion that there is no ground to establish any real and substantial pre-existing dispute which can thwart the admission of section 9 application against the Corporate Debtor - all the requisite conditions necessary to trigger the Corporate Insolvency Resolution Process under Section 9 of the IBC stand fulfilled in the present case. No error has been committed by the Adjudicating Authority in admitting the application under Section 9 of the IBC and initiating CIRP - Appeal dismissed.
Issues Involved:
1. Whether payment to the Operational Creditor was due from the Corporate Debtor, giving rise to an operational debt. 2. Whether a default has been committed by the Corporate Debtor in respect of payment of such operational debt. 3. Whether the operational debt exceeds an amount of Rs. 1 lakh and is an undisputed debt. 4. Whether the Demand Notice was effectively served upon the Corporate Debtor. 5. Whether there was any pre-existing dispute raised by the Corporate Debtor. Issue-Wise Detailed Analysis: 1. Operational Debt Due: The Corporate Debtor/Appellant entered into an agreement on 08.04.2019 with the Operational Creditor/Respondent No.1 for creative outdoor advertisements. The Corporate Debtor had received an order from Air India Ltd. for printing and supply of disposable Head Rest Covers (HRC) for two years, which were to carry third-party advertisement. The Operational Creditor started supplying the HRC directly to Air India Cargo from August-November 2019. The Corporate Debtor made substantial advance payments totaling Rs.50,72,800/- to the Operational Creditor till 18.11.2019. The Corporate Debtor argued that no default in payments was made, and the Section 9 application was premature. However, the Adjudicating Authority found that the Corporate Debtor admitted that out of Rs. 65,30,168/-, only Rs. 50,72,800/- was paid, and the remaining balance was unpaid, establishing an operational debt due and payable. 2. Default in Payment: The Operational Creditor contended that the Corporate Debtor failed to make further payments despite reminders through emails and chat communications. The Corporate Debtor did not reply to the Demand Notice nor made any payments, compelling the Operational Creditor to file the Section 9 petition. The Adjudicating Authority found ample evidence that the Operational Creditor sent reminders, and the Corporate Debtor sought time to make payments, implying an admission of the debt. 3. Amount Exceeding Rs. 1 Lakh and Undisputed Debt: The Adjudicating Authority examined whether the operational debt exceeded Rs. 1 lakh and was undisputed. The Corporate Debtor admitted the outstanding amount, and there was no substantial evidence of a pre-existing dispute. The Mobilox judgment criteria were applied, confirming the operational debt exceeded Rs. 1 lakh, was due and payable, and no dispute existed. 4. Effective Service of Demand Notice: The Corporate Debtor contested the effective delivery of the Demand Notice. The Adjudicating Authority found that the notice was sent to the Corporate Office of the Corporate Debtor at Gurgaon, the email ID of the Corporate Debtor, and the Director's email ID, confirming effective service. The Adjudicating Authority referred to Rule 5 of IBBI (Application to Adjudicating Authority Rules, 2016) and relevant case law, affirming the notice was duly delivered. 5. Pre-Existing Dispute: The Corporate Debtor raised the issue of defective and sub-standard goods supplied by the Operational Creditor. However, no evidence of a pre-existing dispute was provided. The Adjudicating Authority found that the Corporate Debtor did not raise any dispute before the issuance of the Demand Notice. The Mobilox judgment criteria were applied, and it was determined that no real and substantial pre-existing dispute existed. Conclusion: The Adjudicating Authority concluded that all conditions necessary to trigger the Corporate Insolvency Resolution Process under Section 9 of the IBC were fulfilled: - Existence of a debt due and its default by the Corporate Debtor. - Delivery of a demand notice of an unpaid and undisputed debt. - No payment of the unpaid and undisputed debt within 10 days of receipt of the demand notice. - No real pre-existing dispute discernible. The appeal was dismissed, and the application under Section 9 of the IBC was admitted, initiating the CIRP. No costs were awarded.
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