Petition for Corporate Insolvency Resolution Process Dismissed as Misconceived.

The Tribunal concluded that the petition to initiate Corporate Insolvency Resolution Process (CIRP) was filed on misconceived facts and against the objectives of the Insolvency and Bankruptcy Code (IBC). It directed the Petitioner to provide necessary documents to the Respondent for consideration and settlement of the claim. The Petition was disposed of with no order as to costs.

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Existence of Operational Debt
3. Dispute over Debt and Services Provided
4. Admissibility of Interest on Debt
5. Compliance with Procedural Requirements under IBC

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The Petitioner, an Operational Creditor, sought to initiate CIRP against the Corporate Debtor under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016. The petition was based on the default of Rs. 13,26,340, including default interest as of 31.01.2019. The Operational Creditor provided mentoring and consultancy services to the Corporate Debtor from August 2016 to April 2017. Despite partial payments, several invoices remained unpaid, leading to the petition.

2. Existence of Operational Debt:
The Corporate Debtor acknowledged the debt and made partial payments but disputed the full amount claimed by the Operational Creditor. The Respondent contended that the services provided in April 2017 were unsatisfactory, leading to the termination of the relationship. The Petitioner argued that the debt was acknowledged through TDS deductions and various communications, including WhatsApp messages.

3. Dispute over Debt and Services Provided:
The Respondent argued that the petition was filed with suppressed material facts and that the Petitioner failed to provide supporting documents for the services rendered. The Corporate Debtor requested details of activities and supporting documents for the invoices raised, which the Petitioner did not furnish. The Tribunal noted that the Petitioner did not take legal action promptly and issued the demand notice only on 21.01.2019, despite the first invoice being due on 28.08.2016.

4. Admissibility of Interest on Debt:
The Petitioner calculated interest at 15% compound annual interest, which the Respondent termed as absurd. The Tribunal observed that there was no mention of interest in the invoices or any agreement regarding it. The principal amount claimed was Rs. 10,12,930, and the interest due was Rs. 3,13,410. The Tribunal suggested that the interest charged was not substantiated by any agreement or market practice.

5. Compliance with Procedural Requirements under IBC:
The Tribunal emphasized that the provisions of the IBC could not be invoked for the recovery of outstanding amounts but to initiate CIRP on justified grounds. It referred to the Supreme Court's rulings in *Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited* and *Transmission Corporation of A.P. Ltd. Vs. Equipment Conductors and Cables Ltd.*, which stated that the existence of undisputed debt is essential for initiating CIRP. The Tribunal found that the Petitioner failed to establish the debt and its legal recoverability before filing the petition.

Conclusion:
The Tribunal concluded that the petition was filed on misconceived facts and law, and against the objectives of the IBC. It directed the Petitioner to furnish the requisite documents to the Respondent within four weeks. The Respondent was then directed to consider the documents and settle the claim within four weeks thereafter. The petition was disposed of with no order as to costs.

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