Tribunal dismisses insolvency petition over pre-existing dispute

The Tribunal rejected the operational creditor's application to trigger Corporate Insolvency Resolution Process against the respondent company based on a pre-existing dispute regarding services provided and bills raised, as detailed by the respondent. The Tribunal emphasized that it was not the appropriate forum to determine the merits of the dispute, citing the need to reject the application if a plausible contention requiring further investigation exists. The claim was deemed a disputed claim under Section 9(5)(ii)(d) of the Insolvency and Bankruptcy Code, leading to the dismissal of the petition without prejudice to the applicant's rights in other forums.

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Issues:
Claim by operational creditor under section 9 of the Insolvency and Bankruptcy Code, 2016 for triggering Corporate Insolvency Resolution Process against the corporate debtor.

Analysis:
The operational creditor, M/S. Chandra Agencies, filed an application under section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process against the respondent company, M/S. Supertech Limited. The applicant claimed that the respondent failed to pay the outstanding amount, leading to the invocation of Section 8 of the Code by the operational creditor. The respondent raised objections, citing deficiencies in services and breach of obligations by the applicant. The respondent pointed out specific disputes in the services provided, including defective flexes and boards, leading to negative branding. The respondent disputed the operational debt with sufficient particulars, indicating the existence of a pre-existing dispute.

The Tribunal noted that the respondent raised disputes regarding the services provided by the applicant, which were not admitted by the respondent but were disputed with details. The Tribunal clarified that it was not the forum to determine the admissibility of claims or the relative merits of the dispute. Referring to the definition of "dispute" in the Code as per the Supreme Court's decision, the Tribunal emphasized the need to reject the application if a plausible contention requiring further investigation exists. The Tribunal found that there was a pre-existing dispute regarding bills raised and services provided, necessitating a detailed investigation.

Considering the existence of a dispute with specific particulars raised by the respondent, the Tribunal concluded that the claim fell within the ambit of a disputed claim. As per Section 9(5)(ii)(d) of the Code, the adjudicating authority must reject the application if a notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. Therefore, the Tribunal rejected the petition, clarifying that the dismissal should not prejudice the applicant's rights before any other forum. The order was served to the parties, and the case records were consigned to the record room.

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