2019 (11) TMI 1536 - Tri - Insolvency and Bankruptcy

Tribunal dismisses CIRP petition due to legitimate dispute on MDR charges. Genuine disputes crucial for CIRP initiation.

The Tribunal dismissed the Petition seeking initiation of the Corporate Insolvency Resolution Process (CIRP) under Sections 8 and 9 of the Insolvency ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - deduction of MDR charges - existence of debt and dispute or not - HELD THAT:- Admittedly the Petitioner sent the demand notice to the Corporate debtor on 19.12.2018 but the Corporate Debtor submits that there is a pre-existing dispute in terms of Section 5(6)(a) of the Code. In view of the fact that the Corporate Debtor had deducted MDR charges which the Petitioner is liable to pay as per the agreement, there is no debt payable by the Corporate Debtor and the same being a dispute covered under Section 5(6)(a) of the code, this bench is of the view that there is a plausible dispute raised by the Corporate Debtor and the petition is liable to be dismissed. It is established that there is a clear dispute as to the amount claimed by the Corporate Debtor as provided u/s 5(6)(a) of the Code - In the case on hand the contentions raised by the Corporate Debtor are neither spurious nor hypothetical nor illusory and in fact there is a dispute as to existence of the debt payable by the Corporate Debtor. The petition is dismissed with liberty to the Petitioner to proceed accordance with law. Issues Involved:1. Default in payment by the Corporate Debtor.2. Deduction of Merchant Discount Rate (MDR) by the Corporate Debtor.3. Pre-existing dispute between the parties.4. Validity and enforceability of the terms of the agreement.5. Applicability of Section 5(6) of the Insolvency & Bankruptcy Code (IBC).Issue-wise Analysis:1. Default in Payment by the Corporate Debtor:The Petitioner, HP Teleservices, alleged that the Corporate Debtor, Mswipe Technologies Private Limited, committed a default on 26.09.2018 by deducting Rs. 19,06,191/- without prior notice. The Petitioner sought to initiate the Corporate Insolvency Resolution Process (CIRP) under Sections 8 and 9 of the Insolvency & Bankruptcy Code (IBC).2. Deduction of Merchant Discount Rate (MDR) by the Corporate Debtor:The Petitioner claimed that the Corporate Debtor had not been deducting MDR from the beginning until 23.09.2018 but suddenly deducted Rs. 19,06,191/- on 26.09.2018. The Corporate Debtor contended that due to a technical error, MDR was not deducted from July 2018 to September 2018, and the amount was deducted upon discovery of the glitch. The Corporate Debtor argued that the deduction was legitimate and in accordance with the agreement terms.3. Pre-existing Dispute Between the Parties:The Corporate Debtor maintained that there was a pre-existing dispute regarding the amount claimed by the Petitioner. This was supported by email communications between the parties before the statutory demand notice was issued on 19.12.2018. The Tribunal noted that these communications indicated a dispute over the amount deducted, which falls under Section 5(6) of the IBC.4. Validity and Enforceability of the Terms of the Agreement:The Petitioner argued that the Corporate Debtor could not deduct MDR charges without prior notice and that the agreement terms were not signed. The Corporate Debtor countered that the agreement was executed online by the Petitioner clicking 'YES' to the terms and conditions. An email from the Petitioner on 29.09.2018 confirmed the existence of the agreement, thus invalidating the Petitioner’s claim of no agreement.5. Applicability of Section 5(6) of the Insolvency & Bankruptcy Code (IBC):The Tribunal referred to the definition of 'dispute' under Section 5(6) of the IBC, which includes disputes related to the existence of the amount of debt. The Tribunal found that the Corporate Debtor had raised a plausible dispute regarding the MDR charges, which was neither spurious nor illusory. Citing the Supreme Court's decision in Mobilox Innovations Pvt. Ltd. v. Kirusa Software (P) Limited, the Tribunal emphasized that as long as a genuine dispute exists, the application for CIRP must be rejected.Conclusion:The Tribunal concluded that the Corporate Debtor had raised a legitimate dispute regarding the MDR charges. Consequently, the Petition was dismissed, allowing the Petitioner to seek redressal through appropriate legal channels. The Tribunal's decision was guided by the principles laid down by the Supreme Court in Mobilox Innovations Pvt. Ltd. v. Kirusa Software (P) Limited, ensuring that only genuine disputes are considered for CIRP initiation.