Tribunal Dismisses CIRP Petition Due to Disputes & Procedural Shortcomings

The Tribunal rejected the petition for Corporate Insolvency Resolution Process initiation under Section 9 of the Insolvency and Bankruptcy Code, 2016. The respondent, a company in Haryana, raised valid disputes regarding delivery delays and non-compliance, constituting a bona fide dispute under the Code. The petitioner, a German company, failed to provide complete information and lacked the required certificate confirming non-payment. The Tribunal emphasized the arbitration clause in the agreement for dispute resolution. The petition was dismissed due to unresolved disputes and procedural shortcomings.

---

---

Issues Involved:
1. Jurisdiction and authority to institute proceedings.
2. Existence and validity of the debt.
3. Compliance with procedural requirements.
4. Validity of the dispute raised by the corporate debtor.
5. Arbitration clause and its implications.

Issue-wise Detailed Analysis:

1. Jurisdiction and authority to institute proceedings:
The petition was filed by the Operational Creditor to initiate the Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016. The respondent, a company incorporated with a registered office in Haryana, falls within the territorial jurisdiction of the Chandigarh Bench of NCLT. The petitioner, a company incorporated in Germany, authorized Mr. Pankaj Sachdeva to institute the proceedings through a power of attorney.

2. Existence and validity of the debt:
The petitioner claimed that the respondent approached them for the purchase of a hot rolling mill, leading to a sale and purchase agreement dated 23.12.2014. The total debt claimed was Euro 4,472,638.99, with invoices dated between 02.06.2015 and 23.06.2016. The petitioner sent statutory notices under Sections 433 and 434 of the Companies Act, 1956, and a demand notice under Section 8 of the Code, to which the respondent did not reply within the stipulated 10 days.

3. Compliance with procedural requirements:
The application was initially incomplete as it did not include the statement of the bank account of the operational creditor. The petitioner later complied by submitting a bank certificate, packing list, and bill of lading. Despite these submissions, the Tribunal observed that the information was still incomplete, particularly regarding the last payment made by the respondent.

4. Validity of the dispute raised by the corporate debtor:
The respondent raised several issues in their reply dated 28.03.2017, including delays in delivery, non-compliance with pre-inspection requirements, and routing of the consignment through Germany. The Tribunal found these issues to constitute a valid dispute under Section 5(6) of the Code, which includes disputes related to the existence of debt, quality of goods, or breach of representation or warranty.

5. Arbitration clause and its implications:
The sale and purchase agreement included an arbitration clause stating that disputes should be settled by arbitration under the Rules of Arbitration of the International Chamber of Commerce in Paris. The Tribunal noted that the petitioner could seek remedy through arbitration, but the respondent had not invoked this clause despite the expiry of about one year since the last delivery.

Conclusion:
The Tribunal concluded that the respondent had raised a bona fide dispute regarding the delay in delivery and non-compliance with pre-inspection requirements. Additionally, the petitioner failed to comply with the mandatory requirement of submitting a certificate from the financial institution confirming non-payment of the debt. Consequently, the petition was rejected, and the order was communicated to both parties.

---