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

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

K.K Capital Services Limited Versus Sristi Hospitality Private Limited

K.K Capital Services Limited Versus Sristi Hospitality Private Limited - TMI 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.