Operational creditor's petition under Insolvency Code dismissed due to pre-existing dispute.

The petition filed by the operational creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016 was dismissed by the Tribunal due to a pre-existing dispute regarding the quality/quantity of goods supplied, making the petition not maintainable. The respondent had raised objections regarding a debit note issued for quality difference, which led to accounts being settled between the parties. The Tribunal emphasized that the Code should not be used prematurely for debt enforcement and dismissed the application on grounds of maintainability, with no order as to costs.

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Issues:
- Dispute over operational debt payment
- Pre-existing dispute regarding quality/quantity of goods supplied
- Lack of affidavit of no dispute
- Maintainability of the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016

Analysis:

Dispute over operational debt payment:
The operational creditor filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, claiming that the corporate debtor failed to make payment for coal supplied despite follow-ups. The outstanding amount claimed by the operational creditor was &8377; 9,39,730.14. The respondent raised objections, stating that a debit note for &8377; 11,12,721 was issued against the petitioner for quality difference, and accounts were settled after considering the debit note and rebate given later through a credit note.

Pre-existing dispute regarding quality/quantity of goods supplied:
The respondent contended that the debit note was raised before the demand notice, and accounts were reconciled after considering the debit note. The respondent reiterated the issue of the debit note and credit note in their reply to the demand notice. The Tribunal found that there was a pre-existing dispute regarding the quality/quantity of goods supplied, which led to the settlement of accounts between the parties.

Lack of affidavit of no dispute:
The Tribunal noted that the petitioner did not file an affidavit of no dispute as required under Section 9(3)(b) of the Insolvency and Bankruptcy Code, 2016. This failure to provide the necessary affidavit contributed to the dismissal of the petition.

Maintainability of the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016:
After reviewing the documents and arguments presented by both parties, the Tribunal concluded that there was a pre-existing dispute regarding the supply of goods, making the petition not maintainable under Section 9 of the Code. The Tribunal emphasized that the Insolvency Code should not be used prematurely or for extraneous considerations as a substitute for debt enforcement procedures. Therefore, the application was dismissed on the grounds of maintainability, with no order as to costs.

Conclusion:
The dismissal of the petition does not prevent the petitioner from seeking to enforce its claim through the appropriate forum. The Tribunal clarified that the observations made in the judgment do not constitute an opinion on the merit of the underlying controversy, as the dismissal was based on the issue of maintainability under the Insolvency and Bankruptcy Code, 2016.

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