Tribunal upholds decision on pre-existing dispute in insolvency application. Appeal dismissed.

The Tribunal upheld the decision of the Adjudicating Authority, determining the existence of a pre-existing serious dispute between the parties, which rendered the application under Section 9 of the Insolvency and Bankruptcy Code inadmissible. The appeal was dismissed, with no costs awarded.

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Issues Involved:
1. Existence of pre-existing dispute between the Appellant and the Respondent.
2. Non-payment of operational debt by the Respondent.
3. Admissibility of the application under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016.

Detailed Analysis:

1. Existence of Pre-Existing Dispute:
The primary issue for consideration was whether there was a pre-existing dispute between the Appellant and the Respondent. The Adjudicating Authority (NCLT) and the Appellate Tribunal (NCLAT) both determined that a serious dispute existed between the parties. The Appellant had lodged an FIR against the Respondent's directors on 07-09-2016, alleging cheating and non-payment of the amount Rs. 1,10,23,403.63. This FIR was lodged before the issuance of the Section 8 Notice on 31-03-2018. The Respondent, in their reply to the Demand Notice dated 13-04-2018, categorically stated that there was no debt payable and that they had paid an excess amount of Rs. 5,56,889/- during the period from June 2014 to October 2016. The existence of this dispute was further supported by the Appellant's own admission in their rejoinder, where they denied and disputed the Respondent's claim of having paid an excess amount. The Tribunal emphasized that the IBC is a summary procedure and cannot adjudicate serious disputes requiring evidence, as held by the Supreme Court in "Mobilox Innovations Private Limited v. Kirusa Software Private Limited" (2018) 1 SCC 353.

2. Non-Payment of Operational Debt:
The Appellant, acting as an Operational Creditor, claimed that the Respondent defaulted in paying the operational debt of Rs. 1,45,74,133/-, which included 12% interest per annum. The Appellant had issued two Demand Notices on 17-06-2016 and 13-07-2016, and later served a notice under Section 8 of IBC on 31-03-2018, demanding Rs. 1,10,23,431.38 and Rs. 35,50,701.95. However, the Respondent, in their reply dated 13-04-2018, denied the existence of any debt payable. The Respondent claimed to have paid Rs. 86,30,000/- and an excess amount of Rs. 5,56,889/- which was not adjusted by the Appellant. The Tribunal found that the Respondent's contention of having paid an excess amount further supported the existence of a dispute.

3. Admissibility of the Application under Section 9 of IBC:
The Tribunal referred to Section 9(5)(ii)(d) of IBC, which mandates the rejection of an application if a notice of dispute has been received by the Operational Creditor or if there is a record of dispute in the information utility. The Tribunal also referenced Section 8(2)(a) of IBC, which requires the Corporate Debtor to bring to the notice of the Operational Creditor the existence of a dispute within ten days of receiving the demand notice. Given the serious nature of the dispute and the prior FIR lodged by the Appellant, the Tribunal concluded that the application under Section 9 could not be admitted. The Tribunal reiterated that the existence of a dispute, as defined under Section 5(6) of IBC, was sufficient to reject the application.

Conclusion:
The Tribunal upheld the decision of the Adjudicating Authority, concluding that there was a pre-existing dispute between the parties, which could not be adjudicated in a summary proceeding. The appeal was dismissed, and no orders as to cost were made.

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