Successful Proof of Goods Delivery Leads to Insolvency Admission under Section 9

The Operational Creditor (OC) successfully proved delivery of goods to the Corporate Debtor (CD) through transport challans and way bills, leading to the admission of the petition under Section 9 of the Insolvency and Bankruptcy Code. The CD's claim of a pre-existing dispute was rejected for lack of evidence, with the tribunal declaring the dispute as frivolous. The tribunal initiated the Corporate Insolvency Resolution Process, declared a moratorium, appointed an Interim Resolution Professional (IRP), and directed the OC to deposit funds for IRP fees and costs. The matter was listed for a progress report, and certified copies of the order were to be issued to all concerned parties.

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Issues Involved:
1. Whether the Operational Creditor (OC) succeeded in proving delivery of the goods as per the invoices under dispute.
2. Whether the Corporate Debtor (CD) succeeded in proving pre-existing dispute as per Section 5(6) of the Insolvency and Bankruptcy Code (I&B Code).
3. Relief and cost.

Issue-Wise Detailed Analysis:

1. Proving Delivery of Goods:
The OC claimed that goods were delivered to the CD as per the invoices and provided supporting documents such as transport challans and way bills. The CD contended that the goods were never supplied and that the invoices did not bear their stamp or signatures. However, the tribunal found that the OC had complied with all requirements under Section 8 of the I&B Code and Rule 5 of the Adjudicating Authority Rules. The tribunal noted that the transport challans and way bills, some bearing the CD's stamp, sufficiently proved the delivery of goods. The CD's argument that the documents were not stamped or signed was deemed unconvincing. Additionally, the tribunal observed that the CD's inconsistent contentions further weakened their case.

2. Proving Pre-Existing Dispute:
The CD argued that the goods were sub-standard and unusable, and that there was a pre-existing dispute. However, the tribunal found no evidence that the CD had raised any dispute before receiving the demand notice. The contention of defective goods was raised only in the reply notice and was considered an afterthought to stage-manage evidence. The tribunal also noted that the CD's claim of a fabricated reconciliation letter was unsupported by any complaint or evidence. The tribunal concluded that the CD failed to prove a pre-existing dispute and that the dispute raised was frivolous and ill-motivated to avoid repayment.

3. Relief and Cost:
The tribunal found that the OC had complied with all requirements to initiate the Corporate Insolvency Resolution Process (CIRP) and that the application was complete. The operational debt claimed by the OC was found payable by the CD, who had not paid despite receiving the demand notice. Consequently, the tribunal admitted the petition under Section 9 of the I&B Code and declared a moratorium in accordance with Sections 13 and 15 of the I&B Code. The tribunal appointed an Interim Resolution Professional (IRP) and directed the OC to deposit a sum of Rs. 3 lakh for meeting the IRP fees and cost. The registry was directed to communicate the order to all concerned parties.

Orders:
1. The petition filed by the OC under Section 9 of the I&B Code is admitted for initiating CIRP against the CD.
2. A moratorium is declared in accordance with Sections 13 and 15 of the I&B Code.
3. The IRP is appointed to conduct the CIRP as per the prescribed timeline.
4. The OC is directed to deposit Rs. 3 lakh for IRP fees and cost.
5. The registry is directed to communicate the order to all concerned parties by Speed Post and e-mail.
6. The matter is listed for filing a progress report on 20/09/2019.
7. Certified copies of the order may be issued to all concerned parties upon compliance with requisite formalities.

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