2018 (8) TMI 2031 - AT - Insolvency and Bankruptcy

Appellate Tribunal Upholds Rejection of Insolvency Application

The Appellate Tribunal dismissed the appeal by 'Bhadreshwar Vidyut Pvt. Ltd.' against the rejection of their application under Section 9 of the Insolvency ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The fact that the Appellant has claimed approximately ₹ 6 crore and there is a separate claim made by the Corporate Debtor which was approximately ₹ 7 crore towards damages which was subsequently raised to approximately ₹ 14 crore, in such situation, question arises as to whether the Respondent is liable to pay any amount to the Appellant or if both demands are accepted then the Operational Creditor is required to pay certain amount to the Corporate Debtor?. In such case there being a dispute about the debt, the question of default does not arise - Appeal dismissed. Issues:1. Rejection of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 due to the existence of a dispute regarding the debt.Analysis:The Appellate Tribunal dealt with an appeal filed by 'Bhadreshwar Vidyut Pvt. Ltd.' against the order of the Adjudicating Authority rejecting their application under Section 9 of the Insolvency and Bankruptcy Code, 2016. The dispute arose from the claim made by the Respondent, the Corporate Debtor, which was distinct from the debt related to the supply of electricity by the Operational Creditor. The Appellant argued that there was no actual dispute regarding the supply of electricity, as the Corporate Debtor owed approximately Rs. 6 crore for electricity supply, which was not contested. However, the Respondent claimed damages of around Rs. 7 crore, later increased to Rs. 14 crore, unrelated to the electricity supply default. The Tribunal considered the conflicting claims and raised the question of liability between the parties. The Tribunal observed that in the presence of such conflicting claims, determining the party responsible for payment becomes crucial.The Tribunal, after hearing arguments from both parties, concluded that the existence of a dispute regarding the debt raised by the Corporate Debtor negated the question of default. As a result, the Tribunal declined to interfere with the impugned order of the Adjudicating Authority, thereby dismissing the appeal with the mentioned observations and without imposing any costs. The decision highlighted the significance of resolving disputes related to the debt before addressing the issue of default under the Insolvency and Bankruptcy Code, emphasizing the need for clarity and agreement between the parties involved in insolvency proceedings.