2020 (8) TMI 642 - AT - Insolvency and Bankruptcy

Tribunal remits case for Section 9 application, directs settlement notice to debtor.

The tribunal set aside the judgment and remitted the case to the adjudicating authority for admitting the application under Section 9 of the I&B Code. ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute or not - Scope of disputed claim - HELD THAT:- The Appellant has actively rendered his services in availing the loan facility from Indiabulls. It is also clear that emails on record are between Appellant and Indiabulls, therefore the contention of the Corporate Debtor is not acceptable that Appellant has not played any role in availing the loan facility from Indiabulls. Going to the mandate agreement dated 9.3.2016 which is an admitted document and the terms and conditions of services rendered by the Appellant is explicitly written. In this agreement in clause 4 break up of services and the scope of services provided by the Appellant is mentioned in detail. Clause 4 (f) provides that obtaining appropriate sanction from bank/NBFC. In this agreement it is nowhere mentioned that the Appellant will organise funding from Nationalised or scheduled bank at low rate of interest. Thus the dispute is not supported by any document.Therefore, we find no basis for such dispute - it is to be seen that in the clause 7 of mandate agreement total fees payable to the Operational Creditor and schedule for all payments are described. It is mentioned in clause 7(d) that on signing of the mandate for assigning the contracts ₹ 2 lakhs out of the total fee will be payable with the condition that the advance amount of ₹ 2 lakhs are subject to success of the assignment otherwise; it is fully refundable. There are no substance in the dispute raised by the Corporate Debtor that the invoices were issued much prior to the actual sanction of loan by Indiabulls. It is also pertinent to note that when the Appellant has raised invoices then Corporate Debtor has asked the Appellant about the Tan Number and Pan Numbers - In the mandate agreement there is no such clause that the Appellant will organise unsecured loan for the Corporate Debtor and for the same the Corporate Debtor will hand over post-dated cheques as security.Such dispute was first time raised in reply to notice and not supported by any documentary evidence. The Appellant has explained that Corporate Debtor has handed over ten cheques out of these, at the request of Corporate Debtor the Appellant has not presented three cheques in Bank for encashment.These cheques were issued after TDS amounting of ₹ 4,30,000/-, 4,50,000/- and 4,50,000/-. Subsequently, the Corporate Debtor has made payment in cash on 08.06.2016, 13.07.2016 and 25.08.2016 total 15 lakhs. The Appellant has explained that the Corporate Debtor has not sufficient funds in the Bank and therefore, at his request Appellant has not presented these three cheques and received the cash amount, this fact is mentioned in the Cashbook of the Appellant, Copy of which filedalongwith the Application. In such circumstances, no one can believe that without getting 15 lakhs the Appellant has wrongly, mentioned in the Cashbook that they received payment of ₹ 15 Lakhs from the Corporate Debtor - the disputes raised by the Corporate Debtor in the reply to the notice, not supported by any documentary evidence, are spurious, Hypothetical and illusory. Therefore, we are unable to convince that there is any pre-existing dispute. The Learned Adjudicating Authority has erroneously, rejected the Application at the time of admitting the Application the Adjudicating Authority has only to see whether there is an Operational Debt exceeding ₹ 1 lakh as defined in Section 4 of the I&B Code, and whether the documentary evidence furnished with the Application shows that the aforesaid debt is due and payable and has not yet been paid - The Adjudicating Authority wrongly rejected the claim on the ground that the claim raised by the Appellant falls within the ambit of disputed claim.Merely disputing the claim cannot be ground. The Corporate Debtor has defaulted to pay more than ₹ 1 lakh and in absence of any pre-existing dispute, and the record being completed, we hold that the application under Section 9 preferred by the appellant was fit to be admitted - Case remitted to the Adjudicating Authority for admitting the application under Section 9 of I&B Code - appeal allowed. Issues Involved:1. Pre-existing dispute between the parties.2. Operational debt exceeding Rs. 1 lakh.3. Documentary evidence supporting the debt.4. Adjudicating Authority's examination of the application under Section 9 of I&B Code.Issue-wise Detailed Analysis:1. Pre-existing dispute between the parties:The primary issue was whether there was a pre-existing dispute between the appellant and the corporate debtor before the receipt of the demand notice. The corporate debtor raised several disputes in response to the demand notice, including claims that the appellant did not assist in securing the loan, the emails were between Indiabulls and the corporate debtor, and the appellant did not approach nationalized banks as promised. The tribunal examined the emails exchanged between the parties and found that the appellant actively rendered services in securing the loan from Indiabulls. The tribunal concluded that the disputes raised by the corporate debtor were spurious, hypothetical, and illusory, as they were not supported by any documentary evidence.2. Operational debt exceeding Rs. 1 lakh:The tribunal referred to the Supreme Court's decision in Mobilox Innovative Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd., which outlined the criteria for examining an application under Section 9 of the I&B Code. The tribunal determined that there was an operational debt exceeding Rs. 1 lakh, which was due and payable, and had not been paid by the corporate debtor. The tribunal noted that the corporate debtor had issued ten post-dated cheques to the appellant, out of which three were taken back and paid in cash, two became stale, and five were dishonored.3. Documentary evidence supporting the debt:The tribunal reviewed the documentary evidence provided by the appellant, including the mandate agreement, emails exchanged between the parties, and the invoices raised by the appellant. The tribunal found that the appellant had provided sufficient documentary evidence to support the claim of operational debt. The tribunal also noted that the corporate debtor did not dispute the issuance of ten cheques in favor of the appellant and had made cash payments against three of the cheques.4. Adjudicating Authority's examination of the application under Section 9 of I&B Code:The tribunal criticized the adjudicating authority for rejecting the application based on discrepancies that were not disputed by the corporate debtor. The tribunal emphasized that the adjudicating authority should have sought clarification from the appellant instead of rejecting the application. The tribunal pointed out that the adjudicating authority failed to consider the disputes raised by the corporate debtor in light of the documents annexed with the application. The tribunal concluded that the adjudicating authority erroneously rejected the application and failed to appreciate the documents placed on record.Conclusion:The tribunal set aside the impugned judgment dated 31.01.2019 and remitted the case to the adjudicating authority for admitting the application under Section 9 of the I&B Code. The tribunal directed the adjudicating authority to issue a notice to the corporate debtor to enable them to settle the matter prior to admission. The appeal was allowed with no order as to costs.