2022 (11) TMI 703 - 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 - service of demand notice - Demand notice also not replied - non-speaking order - violation of principles of natural justice - HELD THAT - It is an admitted fact that the genesis of their relationship as a developer and consultant is the agreement dated 09.03.2016 as per which the Respondent was liable to pay consultation charges to the Appellant for the booking of the unit(s) in terms of the clauses of the agreement much less clause 6 and 10. The Appellant has claimed separate amount in separate applications on the basis of number of units booked in the separate projects and also claimed their dues by way of a demand notice before filing the application under Section 9 of the Code. Not only that the demand notice in the case of Xrbia Eiffel City II i.e. CA (AT) (Ins) No. 1029 of 2021 is not replied by the Respondent but also reply to the other demand notices were filed much after the period prescribed under the Code. Be that as it may, the Adjudicating Authority has dismissed the application, filed under Section 9 of the Code by the Appellant, on the ground that there was a pre-existing dispute which was raised before filing the petition and was clearly intimated in the email dated 01.03.2017. The perusal of the said email dated 01.03.2017 does not make out any head or tail and there is no specific finding recorded by the Adjudicating Authority explaining as to how it has reached to the conclusion that the said email raised a dispute already existing between the parties. The impugned order is in violation of the principle of natural justice because the impugned order is a non-speaking order - the matter is remanded back to the Adjudicating Authority to decide them afresh by giving reasons and passing a speaking order - appeal allowed.

Summary

Issues Involved:
1. Dismissal of applications under Section 9 of the Insolvency and Bankruptcy Code, 2016 due to alleged pre-existing disputes.
2. Validity of demand notices served under Section 8 of the Insolvency and Bankruptcy Code, 2016.
3. Interpretation and implications of the email dated 01.03.2017 as evidence of pre-existing disputes.
4. Requirement for a speaking order by the Adjudicating Authority.

Issue-wise Detailed Analysis:

1. Dismissal of Applications under Section 9 of the Insolvency and Bankruptcy Code, 2016 due to Alleged Pre-existing Disputes:
The appeals concern five applications dismissed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench) on 13.08.2021. The applications were filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by the Appellant (Indiabulls Distribution Services Ltd.) against various Respondents (Xrbia Developers). The dismissal was based on the ground of a pre-existing dispute, purportedly highlighted by an email dated 01.03.2017. The Tribunal observed that the relationship between the parties was governed by similar agreements dated 09.03.2016, which stipulated the conditions under which the Appellant would be entitled to brokerage.

2. Validity of Demand Notices Served under Section 8 of the Insolvency and Bankruptcy Code, 2016:
In each case, the Appellant served a demand notice dated 19.02.2019 in compliance with Section 8 of the Code. In the case of Xrbia Eiffel City II, no reply was filed by the Respondent to the demand notice, whereas in other cases, replies were filed after a period of six months. The Appellant argued that the demand notices were valid and the delayed replies (or lack thereof) indicated no pre-existing dispute.

3. Interpretation and Implications of the Email Dated 01.03.2017 as Evidence of Pre-existing Disputes:
The Adjudicating Authority dismissed the applications based on an email dated 01.03.2017, which was claimed to indicate a pre-existing dispute. The email, included as Annexure A-7 in the appeal, contained data regarding customer interactions and outstanding commissions. However, the Tribunal found that the email did not clearly establish any pre-existing dispute. The Respondent's counsel failed to provide a satisfactory explanation of how the email constituted a pre-existing dispute.

4. Requirement for a Speaking Order by the Adjudicating Authority:
The Tribunal noted that the impugned order by the Adjudicating Authority was non-speaking, lacking clear reasoning or specific findings on how the email dated 01.03.2017 indicated a pre-existing dispute. The Tribunal emphasized the necessity for a speaking order, which should detail the rationale behind the decision, ensuring compliance with the principles of natural justice.

Conclusion:
The Tribunal concluded that the impugned orders were in violation of the principles of natural justice due to their non-speaking nature. Consequently, all five appeals were allowed, and the impugned orders were set aside. The matters were remanded back to the Adjudicating Authority for fresh consideration, directing it to provide detailed reasons and pass a speaking order. The applications were restored to their original numbers, and the parties were directed to appear before the Adjudicating Authority on 01st December 2022. The registry was instructed to send a copy of the order to the concerned Adjudicating Authority for compliance.