Tribunal Admits Creditor's Petition, Initiates Insolvency Proceedings under IBC

The Tribunal found in favor of the Operational Creditor, admitting the petition under section 9 of the IBC against the Corporate Debtor. This initiated the Corporate Insolvency Resolution Process (CIRP) and declared a moratorium under section 14 of the IBC. An Interim Resolution Professional (IRP) was appointed, and the Operational Creditor was ordered to deposit Rs. 3,00,000 with the IRP for expenses. The Corporate Debtor was found to have defaulted on the debt due and payable, leading to the initiation of insolvency proceedings.

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Issues Involved:
1. Invocation of the arbitration clause and whether it constitutes a "pre-existing dispute" under section 5(6) of the IBC.
2. Existence of a debt due and payable by the Corporate Debtor to the Operational Creditor.
3. Default of the Operational Debt due and payable by the Corporate Debtor.

Detailed Analysis:

Issue 1: Invocation of the Arbitration Clause and "Pre-existing Dispute"
The Operational Creditor argued that no dispute was raised before the first demand notice on 02.12.2017, with the first sign of dispute appearing in the Corporate Debtor's reply on 13.12.2017. The Corporate Debtor invoked the arbitration clause after the first petition was withdrawn on 13.03.2018 and before the second demand notice on 23.08.2018. The Tribunal referenced the NCLAT judgment in *Dinesh Gupta vs Hajura Singh Bhim Singh*, which held that disputes must be raised before the first demand notice to qualify as "pre-existing." Thus, the invocation of the arbitration clause did not constitute a "pre-existing dispute" under section 5(6) of the IBC.

Issue 2: Existence of Debt Due and Payable
The Corporate Debtor contended that claims for additional work were invalid as per Clause 20.02 of the Work Order, arguing no deviations in drawings or mutual agreements on costs. The Tribunal found that the Corporate Debtor's own documents and actions, including repeated changes in drawings and certifications by their architect, contradicted their claims. The Corporate Debtor's argument of incurred losses due to delays was unsupported by evidence. The Tribunal noted the lack of legal actions by the Corporate Debtor to pursue arbitration or other remedies, indicating the dispute was raised to avoid IBC proceedings.

Issue 3: Default of the Operational Debt
The Tribunal examined the differing responses from the Corporate Debtor to the first and second demand notices. The Corporate Debtor's counter-claims and arguments of additional costs were inconsistent and unsupported by records. The Tribunal found that the Corporate Debtor's actions, including invoking the arbitration clause on the day the first petition was withdrawn, were attempts to avoid IBC proceedings. The Tribunal concluded that the Corporate Debtor defaulted on the debt due and payable to the Operational Creditor.

Conclusion:
The Tribunal admitted the petition filed by the Operational Creditor under section 9 of the IBC, initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. A moratorium was declared under section 14 of the IBC, and Mr. Jitendra Kumar Yadav was appointed as the Interim Resolution Professional (IRP). The Tribunal ordered the Operational Creditor to deposit Rs. 3,00,000 with the IRP for expenses related to public notice and claims. The Registry was directed to communicate the order to relevant parties and update the Corporate Debtor's Master Data with the Registrar of Companies, Maharashtra, Mumbai.

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