Dismissal of CIRP Petition for Genuine Pre-Existing Dispute

The Tribunal dismissed the petition seeking Corporate Insolvency Resolution Process against the Corporate Debtor due to the existence of a genuine pre-existing dispute between the parties, supported by evidence predating the demand notice. The decision was based on the principles outlined in the Mobilox Innovations case, emphasizing the necessity of a credible contention warranting further examination to decline an application under Section 9 of the Insolvency and Bankruptcy Code.

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Issues:
- Corporate Insolvency Resolution Process sought against Corporate Debtor for default in repayment.
- Maintainability of the petition under Section 9 of the Insolvency and Bankruptcy Code.
- Existence of a pre-existing dispute between the parties.

Analysis:

Corporate Insolvency Resolution Process:
The Petitioner, a company undergoing liquidation, sought Corporate Insolvency Resolution Process against the Corporate Debtor for defaulting on repayment amount due for services provided under a Service Order. The Petitioner claimed an outstanding sum of Rs. 61,49,771, supported by various documents. The Corporate Debtor had partially paid the invoice but ceased payments, leading to a Demand Notice and subsequent petition under Section 9 of the Code.

Maintainability of the Petition:
The Corporate Debtor contended that the Petitioner, being under CIRP itself, was ineligible to file under Section 9. Additionally, they argued a pre-existing dispute, citing various correspondences and a Supreme Court judgment. The Tribunal referred to the Mobilox Innovations case, emphasizing the need for operational debt exceeding Rs. 1,00,000, due and payable debt, and the existence of a dispute before the demand notice.

Existence of a Pre-existing Dispute:
Upon review, the Tribunal found that the Corporate Debtor had raised disputes regarding the Petitioner's conduct and the amount claimed, supported by evidence predating the demand notice. The correspondence and documents indicated a genuine dispute, meeting the standards set by the Supreme Court. Consequently, the Tribunal rejected the petition under Section 9(5)(2)(d) due to the notice of dispute received by the Operational Creditor.

In conclusion, the Tribunal dismissed the petition based on the existence of a genuine dispute between the parties, supported by evidence predating the demand notice. The decision aligned with the principles outlined in the Mobilox Innovations case, emphasizing the need for a plausible contention requiring further investigation to reject an application under Section 9.

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