Operational Creditor's Claim Dismissed for Lack of Evidence

The Tribunal dismissed the operational creditor's application under Section 9 of the Insolvency and Bankruptcy Code, ruling that the claimed debt did not exist. The Debtor's evidence of payments post-2011 contradicted the creditor's assertions of outstanding dues, leading to the rejection of the application due to lack of concrete evidence and failure to establish non-payment. The importance of substantiating claims with irrefutable proof was highlighted, emphasizing the necessity for operational creditors to provide solid evidence to seek relief under the Code.

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Issues Involved:
Claim of operational debt under Section 9 of the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:

1. Claim of Operational Debt:
The Petitioner, an operational creditor, filed an application invoking Section 9 of the Code, claiming an operational debt of Rs. 9,36,375 against the Debtor, a Limited Company. The debt comprised a principal amount of Rs. 5,00,000 and interest of Rs. 4,36,375 at the rate of 24% per annum. The Petitioner had provided legal services to the Debtor, and the debt was overdue from 2011 to 2016. The Petitioner issued demand notices in accordance with the Code before filing the application.

2. Submissions by the Operational Creditor:
The Operational Creditor submitted that services were rendered to the Debtor from 2011 onwards, and invoices were raised for the same. Despite multiple notices, the Debtor failed to make payments, leading to the application. The Operational Creditor contended that the raised invoice and non-payment established the existence of the debt and default by the Debtor.

3. Submissions by the Debtor:
The Debtor countered the claim, stating that payments were made for services rendered up to 2011. It was highlighted that a cheque was issued in 2014 as full and final settlement for services rendered post-2011. The Debtor provided evidence of the cheque and receipt, asserting that no outstanding amount was owed to the Operational Creditor.

4. Findings and Decision:
Upon reviewing the submissions and evidence, the Tribunal found discrepancies in the Operational Creditor's claims. The Debtor's evidence of payments made post-2011 contradicted the Operational Creditor's assertions of outstanding dues. The Tribunal noted the lack of acknowledgment of the invoice by the Debtor and absence of substantial proof of non-payment. Consequently, the Tribunal dismissed the application, ruling that the claimed debt did not exist as per the Code's definition. The application was rejected, and no costs were awarded.

5. Conclusion:
The Tribunal's decision emphasized the importance of substantiating claims of operational debt with concrete evidence. In this case, the lack of acknowledgment, contradictory evidence of payments, and failure to establish non-payment led to the dismissal of the application. The judgment underscores the necessity for operational creditors to provide irrefutable proof of debts to seek relief under the Insolvency and Bankruptcy Code.

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