Appeal dismissed in operational debt claim dispute over product specification agreement. Upholding need to prove debt and default.

The Tribunal dismissed the appeal in a case involving an operational debt claim under Section 9 of the Insolvency and Bankruptcy Code. The dispute arose from a disagreement over the product specified in the Agreement for sales representation. The Appellant failed to establish the operational debt and default required under the IBC, as the products referenced differed and the supply order predated the Agreement. The Tribunal upheld the Adjudicating Authority's decision, emphasizing the necessity of proving operational debt and default to initiate insolvency proceedings.

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Issues:
Operational debt claim under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) based on an Agreement for sales representation of Polypipes in Telangana.

Detailed Analysis:
1. The Appellant, an Operational Creditor, filed a petition under Section 9 of the IBC claiming an outstanding operational debt against the Corporate Debtor for services provided as a sales representative for PLP Duct Pipes in Telangana. Despite orders procured by the Corporate Debtor, the Appellant alleged non-payment of dues, leading to the initiation of insolvency proceedings.

2. The Adjudicating Authority dismissed the petition, citing an existing dispute regarding the interpretation of the product mentioned in the Agreement. The Authority found that the claim was not sustainable due to the disagreement between the parties over the type of product involved.

3. During the appeal, the Counsel for the Appellant argued that the Agreement referred to PLB HDPE Duct Pipes, not PLP Duct Pipes, and should be construed accordingly. The Respondent contended that the products were distinct and the Appellant cannot claim commission for a different product not specified in the Agreement.

4. To trigger IBC provisions under Section 9, the Operational Creditor must establish the existence of operational debt and default. The Appellant relied on the Agreement mentioning "PLP Duct Pipe" and a supply order for "PLB HDPE Duct" to support the claim. However, the Tribunal found the Appellant failed to demonstrate the debt due, as the products differed, and the supply order predated the Agreement.

5. Additionally, the supply order referenced in the appeal was based on an agreement predating the one relied upon by the Appellant. The Tribunal concluded that the Appellant did not substantiate the operational debt claim, leading to the rejection of the appeal and upholding the Adjudicating Authority's decision.

In conclusion, the Tribunal rejected the appeal, emphasizing the importance of establishing the existence of operational debt and default under the IBC for initiating insolvency proceedings. The disagreement over the product type specified in the Agreement and the supply order timeline were crucial factors leading to the dismissal of the claim.

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