2022 (1) TMI 1236 - Tri - Insolvency and Bankruptcy

Tribunal dismisses insolvency application due to lack of evidence and potential collusion

The tribunal dismissed the application under section 9 of the Insolvency and Bankruptcy Code, citing lack of evidence to support the claim of unpaid debt ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - failure on the part of petitioner that he supplied the building material to the respondent - existence of debt and dispute or not - HELD THAT:- From the bare perusal of the file it can be inferred that admittedly there is no agreement entered into between parties submitted for supply of building material despite the fact both the applicant is alleged to have been dealing in supply of building material, whereas, the respondent is builder. Moreover, only one bill had been put on record, but the same was never endorsed by any authorized representative of the respondent - There is nothing on record to establish the fact that the respondent ever made any demand of supply of the bricks etc. to the applicant herein. These all facts shows that the bill raised is forged and fabricated to make out false ground to put the respondent under CIRP. These all act and omissions on the part of the applicant and respondent clearly shows that there is an active collusion between them to defraud the other creditors and to facilitate the respondent to enjoy the rigors of the IBC Code. Further, had there been any genuine admission on the part of the respondent, respondent might have paid the disputed amount despite the fact the said petition is pending before this Tribunal year and alleged amount is only of one lac. It is a well settled principle of law that NCLT can’t be allowed to be played at the hands of the unscrupulous parties. This tribunal is of affirm view that the present petitioner failed to establish on record that he actually supplied the building material to the respondents and an amount of rupees one lac was due rather the petition is collusive in nature - Petition dismissed. Issues:- Application under section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.- Claim of operational creditor for unpaid debt.- Dispute over supply of building materials and civil works.- Allegations of collusion between the parties.Analysis:1. Application under section 9 of the Insolvency and Bankruptcy Code: The applicant, an operational creditor, filed a petition seeking initiation of Corporate Insolvency Resolution Process against the respondent company for unpaid operational debt. The applicant claimed to have supplied materials and carried out civil works for the respondent, who allegedly failed to release the outstanding payment of Rs. 1,86,900.8. A demand notice was sent, but the respondent disputed the claim, stating intentions to pay once the project resumed.2. Dispute over supply of building materials and civil works: The respondent contended that the work assigned was for digging earth and raising a boundary wall, but due to delays in preparing and approving building plans, the project stalled, causing financial constraints. The respondent denied endorsing the invoice raised by the applicant and expressed willingness to pay once the project recommenced. The tribunal noted the absence of a formal agreement and lack of correspondence regarding the supply of materials, raising doubts about the authenticity of the claim.3. Allegations of collusion between the parties: The tribunal observed discrepancies in the evidence presented by both parties, highlighting the lack of genuine admission or demand for materials. It concluded that the bill raised by the applicant appeared fabricated to support a false claim for initiating insolvency proceedings. The tribunal emphasized the importance of preventing misuse of the insolvency process and dismissed the petition, stating that the applicant failed to establish the actual supply of materials and the debt owed, suggesting collusion between the parties to defraud other creditors.4. Judgment: The tribunal dismissed the petition, emphasizing the lack of evidence supporting the claim of unpaid debt and suggesting collusion between the parties to misuse the insolvency process. The tribunal highlighted the need to prevent unscrupulous parties from exploiting the legal system for personal gain and ordered the case to be consigned to records without costs.