Tribunal Rejects Insolvency Petition Due to Dispute

The Tribunal rejected the applicant's petition under section 9 of the Insolvency and Bankruptcy Code, 2016, citing the existence of a pre-existing dispute raised by the respondent. The Tribunal found that the respondent's objections and disputes regarding the contractual obligations and performance were substantial, leading to the conclusion that the operational debt claimed was not free from dispute. Consequently, the application was deemed not maintainable under section 9(5)(ii)(d) of the Code. The Tribunal clarified that its decision did not imply a judgment on the underlying merits of the dispute and ensured that the applicant's rights were preserved for resolution in other forums.

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Issues Involved:
1. Jurisdiction of the Tribunal
2. Contractual Obligations and Performance
3. Existence of Operational Debt
4. Existence of Dispute
5. Application of Section 9(5)(ii)(d) of the Insolvency and Bankruptcy Code, 2016

Issue-wise Detailed Analysis:

1. Jurisdiction of the Tribunal:
The Tribunal has territorial jurisdiction over the NCT of Delhi, as the registered office of the respondent, M/s. Indure P. Ltd., is situated in New Delhi. This makes the Tribunal the Adjudicating Authority under sub-section (1) of section 60 of the Insolvency and Bankruptcy Code, 2016 (the "Code").

2. Contractual Obligations and Performance:
The applicant, M/s. Sandvik Asia P. Ltd., entered into two contracts with the respondent on May 24, 2012. The total consideration for the supply contract was Rs. 32,42,78,970, and for the service contract, it was Rs. 2,15,00,000. The applicant claimed to have fulfilled its obligations and raised 73 invoices totaling Rs. 34,72,35,271, out of which 16 invoices amounting to Rs. 2,25,82,259 remained unpaid, along with interest of Rs. 97,86,723.

3. Existence of Operational Debt:
The applicant issued a demand notice under section 8 of the Code on July 28, 2018, claiming a total outstanding debt of Rs. 3,23,68,982. The respondent, however, raised objections, alleging breaches and delays by the applicant, resulting in substantial losses and damages. The respondent also claimed that the applicant failed to complete the work within the stipulated schedule and did not fulfill various contractual obligations.

4. Existence of Dispute:
The respondent contended that there was a pre-existing dispute regarding the claims made by the applicant. The Tribunal referred to the case of Mobilox Innovations P. Ltd. v. Kirusa Software P. Ltd., where the Supreme Court held that the adjudicating authority must reject the application under section 9(5)(ii)(d) if a notice of dispute has been received by the operational creditor. The Tribunal noted that the respondent had raised a dispute in its letter dated March 31, 2018, and various correspondences showed subsistence of disputes on issues like extension and revalidation of bank guarantees and untimely invocation of the guarantee.

5. Application of Section 9(5)(ii)(d) of the Insolvency and Bankruptcy Code, 2016:
The Tribunal emphasized that under section 9(5)(ii)(d) of the Code, the application must be rejected if a notice of dispute has been received by the operational creditor. The Tribunal found that the respondent had raised a dispute with sufficient particulars to qualify as a dispute under sub-section (6) of section 5 of the Code. The Tribunal concluded that the claim of operational debt was not free from dispute and that the dispute pre-existed prior to the issuance of the notice under section 8 of the Code.

Conclusion:
The Tribunal rejected the application filed by the applicant, stating that the existence of a dispute prior to the issuance of the notice under section 8 of the Code made the petition under section 9 not maintainable. The Tribunal clarified that any observations made in the order should not be construed as an expression of opinion on the merits of the controversy and that the rights of the applicant before any other forum would not be prejudiced by the dismissal of the application.

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