Tribunal rejects Company Petition citing unresolved disputes between Operational Creditor and Corporate Debtor

The Tribunal rejected the Company Petition under section 9 of the Insolvency & Bankruptcy Code, 2016, citing unresolved disputes between the Operational Creditor and Corporate Debtor regarding the quality of goods supplied and service delivery delays. The decision emphasized that the rejection did not assess the merit of the claim, allowing the Operational Creditor to pursue legal remedies. The order clarified that it would not impact other proceedings except under the Insolvency & Bankruptcy Code, with the Registry instructed to promptly inform the Operational Creditor of the rejection based on ongoing disputes despite prior agreements.

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Issues:
Company petition under section 9 of Insolvency & Bankruptcy Code, 2016 for default in payment of invoices from 2011 to 2013.

Analysis:
1. The petitioner, an Operational Creditor, filed a Company Petition under section 9 of the Insolvency & Bankruptcy Code, 2016 against the Corporate Debtor for defaulting on payment totaling &8377;1,15,50,712, including interest, for invoices raised between 2011 and 2013. The petition was filed on 16.07.2018, citing non-payment as the grounds for initiating Corporate Insolvency Resolution Process (CIRP).

2. The petitioner's case revolved around the Corporate Debtor's issuance of a Letter of Intent (LoI) for the supply of Belt conveyors for projects with Hindalco Industries Ltd. The Operational Creditor supplied goods under Purchase Orders (PO) from 2010 to 2013 and issued invoices accordingly. Despite acknowledgments and agreements for payments in meetings held in 2014 and 2015, disputes arose regarding the quality of goods supplied, as evidenced by various emails exchanged between the parties.

3. The Operational Creditor submitted various documents, including LOI, Purchase Orders, invoices, confirmation of accounts, emails, and demand notices, to support the claim of operational debt. However, disputes regarding the quality of goods supplied and unresolved issues persisted, as indicated by emails exchanged even after the agreements made in meetings.

4. The Corporate Debtor, in response to demand notices, raised concerns about the quality of goods supplied and delays in service delivery. The Operational Creditor's contention that disputes were pre-existing and resolved before the agreements was refuted by an email dated 03.09.2015, where quality issues were raised post-agreement, indicating ongoing disputes.

5. The Tribunal, considering the pre-existing disputes and the persistence of issues even after agreements, rejected the petition at the moment. It clarified that the decision did not reflect on the merit of the Operational Creditor's claim, allowing them to pursue their claim through appropriate legal channels. The order was specified to have no impact on other proceedings except under the Insolvency & Bankruptcy Code.

6. The Registry was directed to promptly communicate the order to the Operational Creditor, emphasizing the rejection of the petition based on unresolved disputes despite previous agreements.

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