Insolvency application denied due to pre-existing disputes. Consider criminal proceedings for dishonored cheque.

The Tribunal dismissed the application for corporate insolvency resolution process under Section 9 of the Insolvency and Bankruptcy Code, 2016 due to pre-existing disputes between the parties. The operational creditor was advised to explore alternative legal avenues, such as pursuing criminal proceedings for the dishonored cheque.

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Issues:
Application for corporate insolvency resolution process under Section 9 of the Insolvency and Bankruptcy Code 2016 due to alleged default in debt payment.

Detailed Analysis:
1. Alleged Default and Application Details:
- Applicant filed for CIRP against the Respondent for non-payment of a debt of Rs. 32,08,640.
- Applicant claimed the Respondent failed to clear the debt for material supplied as per agreement.

2. Applicant's Contentions:
- Applicant stated the material was supplied as per the purchase order and invoices raised.
- Applicant highlighted the dishonored cheque and the subsequent criminal case lodged against the Respondent.
- Applicant sent a statutory demand notice under IBC, 2016, which was allegedly not responded to by the Respondent.

3. Respondent's Defense:
- Respondent claimed the material supply was incomplete, leading to additional costs and losses.
- Respondent mentioned communication and disputes regarding the supply and invoices raised.
- Respondent disputed the debit notes and highlighted issues with the lost cheque.

4. Legal Submissions:
- Applicant emphasized Respondent's admission of the invoices and the amount owed.
- Respondent cited legal judgments to support the existence of disputes and requirements for initiating CIRP.

5. Tribunal's Decision:
- Tribunal analyzed the email communications and meeting records to establish pre-existing disputes.
- Citing Supreme Court precedents, the Tribunal emphasized the need for disputes to exist before demand notices.
- The Tribunal rejected the application due to the presence of disputes prior to the demand notice issuance.

6. Conclusion:
- The Tribunal dismissed the application for CIRP initiation under Section 9 of IBC, 2016 due to the pre-existing disputes between the parties.
- The operational creditor was advised to pursue other legal avenues, such as criminal proceedings for the dishonored cheque.

This detailed analysis showcases the legal intricacies surrounding the alleged default, disputes, and the Tribunal's decision to reject the application based on the presence of pre-existing disputes between the parties.

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