2017 (11) TMI 1045 - Tri - Insolvency and Bankruptcy

Debtor disputes unpaid debt petition, Tribunal dismisses based on non-compliance and genuine dispute

The Tribunal dismissed the Creditor's Petition for unpaid debt under the Insolvency and Bankruptcy Code, 2016 due to the Creditor's failure to produce the ... Non-production of Banker’s Certificate - section 9(5) of IBC, 2016 - Held that: - failure to abide by the statutory mandate would result in rejection of the Application as filed by the Petitioner/Creditor by virtue of provision 9(5) of IBC, 2016 - denial of liability and raising a dispute coupled with inaction on the part of Operational Creditor in diligently prosecuting for the recovery of amounts alleged to be due to it since 2012 - petition dismissed - decided against petitioner. Issues:Application by Creditor for unpaid debt under IBC, 2016 - Compliance with Section 9(3)(c) - Rejection of Application based on failure to produce Banker's Certificate - Denial of liability and dispute raised by Debtor - Plausible dispute raised by Debtor to avoid claim - Dismissal of Petition by Tribunal.Analysis:The Application filed by the Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016 pertained to an unpaid debt by the Debtor. The Creditor alleged that despite supplying goods and raising invoices, a significant amount remained unpaid by the Debtor. The Creditor issued statutory notices under the Companies Act, 1956 and later under IBC, 2016, demanding payment. The matter was transferred to the Tribunal due to the promulgation of IBC, 2016. However, the Creditor failed to comply with the requirement of producing a Banker's Certificate as mandated under Section 9(3)(c) of IBC, 2016.The Tribunal considered the statutory mandate under Section 9(3)(c) and the provisions of Section 9(5) of IBC, 2016. The Creditor's inability to produce the Banker's Certificate was a crucial factor leading to the rejection of the Application. The Tribunal cited a judgment by the NCLAT emphasizing that failure to abide by statutory mandates would result in rejection of the Application. The Debtor had denied the liability and raised a dispute regarding the transactions, including dealing directly with an end user without their knowledge. The Tribunal noted that the Debtor's denial of liability and raising a dispute, coupled with the Creditor's inaction since 2012, indicated a plausible dispute raised by the Debtor to avoid the insolvency claim.In light of the above aspects and the principles established in relevant judgments, the Tribunal was constrained to dismiss the Petition filed by the Creditor. The dismissal was based on the failure to produce the Banker's Certificate as required by law, the denial of liability and dispute raised by the Debtor, and the plausible dispute projected to avoid the insolvency claim. The Tribunal's decision to dismiss the Petition was made without imposing any costs on either party.