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TMI Blog2024 (9) TMI 1091X X X X Extracts X X X X X X X X Extracts X X X X ..... ad raised concerns regarding the adequacy of services provided by the Appellant, including manpower shortages and security lapses. These communications occurred prior to the issuance of the demand notice, which was issued on 14.01.2020, and provides sufficient evidence of a pre-existing dispute. The main ground basis which the Appeal cannot be accepted is existence of pre-existing dispute, which is noted in series of email exchange of emails. In such situations of pre-existing disputes, Hon ble Supreme Court in Mobilox Innovation Pvt. Ltd. Vs. Kirusa Software Private Limited [ 2017 (9) TMI 1270 - SUPREME COURT ] had held ' It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the existence of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties.' The Corporate Debtor had r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal had set aside the Order of Adjudicating Authority Order dated 21.12.2020. Consequently, the CIRP proceedings against the Respondent were quashed. 5. Thereafter, the Appellant preferred an Application being Rest. A No 81/2022 under the provisions of Rule 11 of National Company Law Tribunal Rules, 2016 for restoration of application, filed earlier under the provisions of Section 9 of IBC being CP (IB) No 531/ND/2020. The said Restoration Application was dismissed by the Adjudicating Authority vide Order dated 10.11.2022 for non-prosecution. 6. To pursue its case yet again, the Appellant filed RA 101/2022 in Company Petition (IB) No 531/ND/2020, inter alia, seeking the restoration of Rest. A No 81/2022. This was finally heard at length and the Adjudicating Authority vide Order dated 21.04.2023 dismissed the said Application being Rest. A 101/2022. 7. The Appellant preferred an Appeal against the Order dated 21.04.2023 passed by the Adjudicating Authority in Rest. A 101/2022 being Company Appeal No. 1270 of 2023 and this Hon'ble Appellate Authority vide Order dated 16.10.2023 was pleased to allow the Appeal and, inter alia, directed to restore the Application being IA No. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rior to the issuance of demand notice under the provisions of Section 8 of IBC, 2016. 13. With respect to the alleged pending disputes considered by the Adjudicating Authority while arriving at decision, four emails dated 18.12.2018, 22.05.2019, 30.07.2019 and 02.01.2020, have been read and mentioned incorrectly. The Adjudicating Authority failed to appreciate that the first email dated 18.12.2018 sent to the Appellant by the Corporate Debtor was about theft and issuance of debit notes and claimed to be dispute is concerning some other site at Sector 115, Noida. In response to the email of 18.12.2018, the Appellant had responded and stated its position, which was ignored by the Adjudicating Authority. Further, the alleged issue of theft stood resolved as stated by the Appellant in its email of 26.09.2019. Also the petition under Section 9 is filed for the Respondent s site at Sector 50, Noida. 14. While in the email of 18.12.2018 (which is totally irrelevant to the subject matter at hand) the Corporate Debtor raised the issue of deputing lesser number of guards at site, the due payments for the services already given by the Appellant as on that date stood at Rs. 70 lakhs approx. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, it is pertinent to mention that the Operational Creditor has raised the invoices only with respect to the manpower supplied by it and the Corporate Debtor has never raised any dispute on the invoices raised by the Operational Creditor. Further as far as the concern qua leaving the work site is concerned, since the parties are not bound with any contract, the same was discussed and decided by the parties orally. It is pertinent to mention that the Corporate Debtor has not paid a large sum of money to the Operational Creditor and it has to bear all the expenses of manpower supplied by them, hence it was not possible for the Operational Creditor to continue with the service provided to Corporate Debtor. Further, requests for increasing the manpower were entertained and ignored at times solely due to the non-payment by the Corporate Debtor of the pending dues of the Appellant for which undisputed services were already received. The Adjudicating Authority failed to appreciate the said facts and separate the grain from chaff that as on the date of the invoice, there was no dispute whatsoever concerning any particular invoice which otherwise was acknowledged. The emails raising f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l provide the staff with the following strength (i) Security Guards 20 in number (ii) Security Gunmen 1 in number and (iii) Security Supervisor 1 in number at the Respondent's said under construction housing project site i.e. Ambience Tiverton, Sector-50, Noida, Uttar Pradesh. It was agreed in the said security service agreement that the Applicant and its staff shall take proper and due care and reasonable precautions to preserve life, property and goods of the Respondent from loss, destruction, damage, waste, pilferage of the site and shall not lend anyone to effect the asset of the Respondent. It was agreed that the Applicant shall provide adequate required number of competent, trained and uniformed personnel and shall ensure to operate the services as per agreement. It was also agreed that in case of any theft/loss and it is proved that the theft/loss occurred due to negligence of the security staff of the Applicant/Appellant, the Applicant shall compensate the Respondent for the loss caused. 23. But due to the security staff/personnel deputed by the Applicant/Appellant, the Respondent suffered loss of goods and theft, mental tension, agony, and loss of reputation and goodwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of the desired numbers. Regarding the deficiency in service several complaints were made by the Respondent to the Applicant, which were never resolved the Applicant/Appellant. 25. The Applicant/Appellant has filed the above-mentioned Application on wholly wrongful and frivolous grounds. As on date, there is no debt or liability existing against the Corporate Debtor/Respondent. The Application is wholly malafide and has been filed for ulterior motives and oblique purposes. The Applicant/Appellant is scandalously trying to abuse the IBC procedure for ulterior motives. The Corporate Debtor/Respondent Company is commercially solvent. Financial Creditor cannot be allowed to use the Insolvency and Bankruptcy Code procedure as a tool to blackmail and harass the Corporate Debtor. 26. Also, there is a dispute in existence between the parties and the Operational Creditor cannot trigger the insolvency process under the IBC. The deficiencies in the services and abandonment of service, incidents of theft and issuing debit notes have been duly communicated to the Operational Creditor. There is an existence of dispute relating to service provided and abandonment of service. The Corporate Debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue statement of account and/or ledger. There was no valid notice issued under Section 8 of IBC, 2016, and the same is false and frivolous, without following the due procedure, having no merit. An appropriate reply dated 22.01.2020 was duly sent to the said frivolous notice within limitation stating that there is a dispute regarding the alleged claim made by the Applicant as well, regarding the deficiency in the service. There is no existing debt/liability or due payment against the Corporate Debtor. 28. The alleged claim of the Operational Creditor is time-barred. The Application under reply is not maintainable under the provisions of IBC, 2016, and Insolvency and Bankruptcy Rules, 2016. The Operational Creditor has received notice of dispute vide Corporate Debtor's Reply/Communication dated 22.01.2020 and despite that it has filed the above-mentioned Application, which is not maintainable. Analysis and Findings : 29. The Appellant Armour Security had sought the initiation of the Corporate Insolvency Resolution Process against Ambience Private Limited (Respondent) due to alleged non-payment of dues arising from the provision of manpower services. However, the Adjudicating Autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice. The Respondent highlighted several instances of service failures, including theft at the site, the absence of security personnel, and the Appellant's abandonment of the project without prior notice. These issues, according to the Respondent, constituted a pre-existing dispute within the meaning of Section 9 of the IBC, 2016, thus barring the initiation of CIRP. The Respondent further argued that a significant portion of the invoices had already been paid, and the outstanding amount claimed by the Appellant was either disputed or unsupported by documentation. 35. We have carefully examined the facts of the case, the contentions of both parties, and the Impugned Order of the Adjudicating Authority. 36. It is well-settled law that for an Application under Section 9 of the IBC to be admitted, the Operational Creditor must demonstrate that there is a debt and a default as defined under the IBC. However, if the Corporate Debtor can prove the existence of a bonafide dispute regarding the debt prior to the issuance of the demand notice under Section 8, the Application must be dismissed. 37. In the present case, the emails dated 18.12.2018, 22.05.2019, 26.05.2019 and 25.08.2019 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to Amour Security [Appeal/ pg. 279): There was continuous shortage of manpower at Noida Sector-50 site. Despite earlier notice there were only 12 guards during the day and 7 guards in night. There is risk of theft of valuable items and materials at the project site. e) Email dated 30.07.2019 at 01:19 PM from Ambience to Armour Security (Appeal/ pg. 280] Armour Security was warned that abandonment of site with 2 days' notice is not acceptable. A minimum of 30 days notice was required before withdrawal of services. Armour Security cannot abandon the site at its own sweet will. Armour Security has been paid for Noida and also payment was released for other sites. It is shocking that Armour Security would threaten to abandon site after receiving complete payments up to 30.07.2019. It was reiterated that Armour Security has failed to provide up to date muster roll and was also not taking responsibility to the various thefts that took place at various site on account of lack/quality of services provided by Armour Security. Therefore, a debit (penalty) has been imposed on Armour Security which is sought to be avoided. 40. It is to be noted that Armour Security issued demand notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity. It is clear that such notice must bring to the notice of the operational creditor the existence of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the dispute is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application 43. The Corporate Debtor had raised a plausible contention about a pre- existing dispute, which in the instant case is not a moonshine or feeble legal argument. Therefore, the Adjudicating Authority was not incorrect to reject the Application filed under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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