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 and suggesting collusion between the parties to misuse the insolvency process. Emphasizing the importance of preventing misuse of the legal system, the tribunal ordered the case to be consigned to records without costs.

---

---

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.

---