Tribunal dismisses application under Insolvency and Bankruptcy Code due to contractual breaches

The Tribunal dismissed the Operational Creditor's application under section 9 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor. The dispute arose from non-payment of operational debt by the Corporate Debtor for machinery supplied. Both parties failed to fulfill contractual obligations, leading to a pre-existing dispute. The Tribunal found deviations in contractual obligations by both parties, particularly regarding the Factory Acceptance Test. As a result, the Petition was dismissed, allowing the parties to seek remedies in the appropriate forum without costs.

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Issues:
Application under section 9 of the Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process.

Analysis:
1. The Operational Creditor filed an application under section 9 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor seeking to initiate the Corporate Insolvency Resolution Process, declare moratorium, and appoint an Interim Resolution Professional.
2. The Application detailed the Operational Creditor and Corporate Debtor's particulars, including their CIN, authorized and paid-up capital, and registered office address.
3. The Operational Creditor claimed an operational debt of Rs. 27,43,184/- towards the principal amount, which fell due on 01-12-2016, supported by invoices and a chronology of events.
4. Documents, records, and evidence of default were provided by the Operational Creditor, including copies of invoices, bank statements, and ledger accounts.
5. The Corporate Debtor, engaged in pharmaceutical formulations, failed to pay the outstanding dues for machinery supplied by the Operational Creditor, leading to the dispute.
6. The Corporate Debtor acknowledged the debt but cited delays and requested time for payment, leading to a demand notice from the Operational Creditor.
7. The Corporate Debtor disputed the operational debt, claiming the Petition was not maintainable and citing a Purchase Order with payment terms and delays in supply.
8. The Corporate Debtor alleged non-compliance with the Purchase Order terms by the Operational Creditor, leading to losses and a dead investment.
9. Both parties presented their perspectives on delays, payments, and contractual obligations, highlighting lapses and failures in fulfilling the Purchase Order conditions.
10. The Tribunal found deviations in contractual obligations from both parties, especially regarding the completion of the Factory Acceptance Test, leading to a pre-existing dispute.
11. Due to the existence of a dispute and failure to fulfill contractual obligations, the Tribunal dismissed the Petition, emphasizing the parties' rights to pursue remedies in the appropriate forum without costs.

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