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TMI Blog2024 (10) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... f a pre-existing dispute, regardless of its merit, disqualifies an Operational Creditor from initiating CIRP under Section 9 of the Code. Upon careful examination of the materials on record and submissions, it is evident that there was indeed a pre-existing dispute between the Appellant (Operational Creditor) and the Respondent (Corporate Debtor) regarding the lease agreement and the outstanding dues. The Respondent provided documentary evidence, including communications and police complaints before the Adjudicating Authority that demonstrated ongoing disputes related to possession of the leased premises and the payment obligations under the lease. Since it is a clear case of pre-existing dispute and the Appeal can be dismissed on this ground alone, therefore we are not looking into other issues in this Petition. But without going into the merit of each of them, they are just noted for record as like it could fail on the ground of not meeting the threshold of Rs. 1 crore as prescribed under Section 4 of the Code. Also likely to fail on the grounds that there are discrepancies in the amounts claimed by the Appellant, which when adjusted for prior payments, advance rent, and security ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asuring apprохimately 300 sq. ft. on the first floor. The lease was subsisting since October 2016 and the Corporate Debtor made regular payments of rent till July 2018 and thereafter, started making defaults in the payment. The Corporate Debtor stopped making any payments from October 2020 onwards. 5. The total amount of debt against the Corporate Debtor is Rs.1,45,77,438 (rupees one crore, forty-five lakhs, seventy-seven thousand, four-hundred and thirty-eight only) plus interest at the rate of 24% per annum (applicable post 90 days from the date of invoice) till June 2021 as per the rent agreement dated 11.09.2016 and against the invoices raised by Sh. Surinder Kohli, Sh. Preet Mohinder Kohli and Smt. Neeru Kohli. Since the said dues were not being repaid, the Operational Creditor issued a demand notice under Section 8 of IBC read with Clause (a) of Sub-rule 5 of The Insolvency Bankruptcy (Application to Adjudication Authority), Rules, 2016 on 10.06.2021. The notice was duly served on the Corporate Debtor and Director on 14.06.2021. In response to the notice under Section 8, the reply dated 22.06.2021 was received, in which the Corporate Debtor did not raise any point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt reflecting the various bank entries and the ledger from January 2016 till July 2020 were annexed as Annexure R-1 of the reply, which reflects that the Respondent/Corporate Debtor is to receive an amount of Rs. 21,67,966/- (rupees twenty-one lakhs, sixty-seven thousand, nine-hundred and sixty-six only) from the Operational Creditor. The amount of Rs. 24 lakhs were credited to the account of the Operational Creditor as advance rent vide cheque no. 43593 dated 26.09.2016 and another amount of Rs. 27,90,000/- (rupees twenty-seven lakhs and ninety- thousand only) was paid as advance rent in the month of August 2017 vide various cheques, which has been concealed. Not only the advance payments are ignored, but the security amount and the payments made towards TDS have also been deliberately concealed. The total amount of Rs. 34,56,900/- (rupees thirty-four lakhs, fifty-six thousand and nine hundred only) stands paid as TDS, which are duly reflected in Form 26AS. 7. The Corporate Debtor also mentioned in its reply that they had also entered into an addendum to the agreement dated 11.09.2016 vide which the amount of rent was reduced to Rs. 6 lakhs + GST @18% w.e.f. 01.12.2018 and continu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 4,24,44,134/- (rupees four crores, twenty-four lakhs, forty-four thousand, one-hundred and thirty-four only), inclusive of TDS till July, 2020 against total invoices raised of Rs. 4,07,00,416/- (rupees four crores, seven lakhs, four-hundred and sixteen only) inclusive of GST. 12. The Applicant/Operational Creditor filed its rejoinder to the reply filed by the Corporate Debtor before the Adjudicating Authority, denying the contentions raised by the Corporate Debtor. In addition, it was also submitted that the rent agreement was with Harbir Automobile Pvt. Ltd. through Mr. Harbir Singh, who had signed the agreement in the capacity of director of Harbir Automobile Pvt. Ltd. Further, all invoices were raised in favour of Harbir Automobile Pvt. Ltd. and all payments since the beginning from 11.09.2016 were made by the Corporate Debtor Company. The actual physical possession of the property was given by the Corporate Debtor to the Operational Creditor in the Office of Assistant Commissioner of Police, Sector 34, Chandigarh, vide compromise letter dated 24.08.2021 between the parties. Therefore, the amount of rent is due till the date of handing over of actual physical possession. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. The Petitioner/Operational Creditor filed a reply to the IA, wherein it has been submitted that: (i) The Operational Creditor had filed GST-3B returns up to June, 2018 and that too only in lumpsum in June, 2018 including the arrears thereof and GST registration of Operational Creditor was cancelled by GST authorities suo-moto on 21.10.2019, which came to the knowledge of Operational Creditor in the month of February, 2022. (ii) The Corporate Debtor paid the GST/arrears of GST along with GST interest up to the month of June 2018, which was duly and promptly deposited with the GST authorities. (iii) The possession of the premises was handed over to the Operational Creditor on 24.08.2021 before ASP (South), Chandigarh Police. Therefore, the Operational Creditor filed Application under Section 9 of Insolvency and Bankruptcy Code claiming rent up to the month of June, 2021 and the Corporate Debtor left the premises without clearing the outstanding dues towards the electricity and water consumption. (iv) The GST authorities have responded in the most callous manner by giving a finding of forgery without confirming from the Operational Creditor, as to whether the amounts due under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advance notice as per paragraph 15 of the lease deed, and also demanded rent and outstanding GST. In response, in a letter dated 08.12.2020, the Corporate Debtor asked the Operational Creditor to take possession and submit their GST returns. 22. Subsequently, on 03.03.2021, the Operational Creditor issued a legal notice to vacate the premises. In response, the Corporate Debtor replied via letter dated 06.04.2021, stating that neither rent nor GST was due, and that the premises had already been vacated. The Debtor also claimed that possession had been offered on multiple occasions, but the Operational Creditor had not taken over the premises. 23. The Operational Creditor filed complaints dated 04.12.2020 and 21.01.2021 with the police authorities, after which the possession of premises was given before the police authorities on 24.08.2021 and the statement of Operational Creditor was also recorded that the Operational Creditor and Corporate Debtor had arrived on a compromise and no further matter is pending, so he did not wish to pursue the proceedings. 24. A letter from the GST authorities, submitted by the Corporate Debtor, stated that the GST numbers of all three taxable persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a dispute is said to exist, so long as there is a real dispute as to payment between the parties that would fall within the inclusive definition contained in Section 5 (6). 45. Going by the aforesaid test of existence of a dispute , it is clear that without going into the merits of the dispute, the Appellant has raised a plausible contention requiring further investigation which is not a patently feeble legal argument or an assertion of facts unsupported by evidence. The defense is not spurious, mere bluster, plainly frivolous or vexatious. A dispute does truly exist in fact between the parties, which may or may not ultimately succeed, and the Appellate Tribunal was wholly incorrect in characterising the defense as vague, got-up and motivated to evade liability. 27. Upon careful examination of the materials on record and submissions, it is evident that there was indeed a pre-existing dispute between the Appellant (Operational Creditor) and the Respondent (Corporate Debtor) regarding the lease agreement and the outstanding dues. The Respondent provided documentary evidence, including communications and police complaints before the Adjudicating Authority that demonstrated ongoing di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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