TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Tribunal Dismissed Application Due to Genuine Dispute</h1> The Tribunal dismissed the application under Sections 7 and 9 of the I&B Code, 2016, as it found a genuine dispute existed between the parties before ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- Corporate Debtor has drawn the attention of this Tribunal to the Notices of Dispute dated 01.08.2018 and 17.09.2018 sent by the Corporate Debtor to the Section 8 Notices issued by the Operational Creditor wherein a reference has been made with regard to the return of the materials worth ₹ 17,12,649/- by the Corporate Debtor vide Tax Inv. No. RM-RTN-001 dated 06.02.2017, owing to the quality issue and expiry of shelf life and the same were duly received and acknowledged by the Operational Creditor. It is further submitted that vide notice of dispute dated 01.08.2018, the Corporate Debtor had categorically put the Operational Creditor on notice of several disputes such as the returned goods, Debit Notes not accounted for, payments not given credit to and among others. It is worthwhile to refer to the provisions of the I&B Code, 2016 more particularly to Section 9(5)(ii)(d) of the I&B Code, 2016 which provides that if notice of dispute has been received by the Operational Creditor or there is a record of dispute in Information Utility, this Authority is required to reject the Application and thereby communicating the dismissal to both the Operational Creditor as well the Corporate Debtor. There exists a 'dispute' between the parties before the issuance of the Demand Notice itself and the contentions raised by Corporate Debtor is a plausible contention which requires further investigation - since this Adjudicating Authority is having summary jurisdiction and while admitting or rejecting the Applications filed under Sections 7 and 9 of the I&B Code, 2016 if precise documents substantiating the claim not being filed in order to substantiate that the 'debt' has become due and payable by the Corporate Debtor, this Authority would certainly not be able to ascertain the 'default' on the part of the Corporate Debtor. Application dismissed. Issues:Adjudication under Section 9 of the Insolvency & Bankruptcy Code, 2016 against a Corporate Debtor.Detailed Analysis:1. Claim by Operational Creditor: The Operational Creditor filed an application seeking to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor, claiming an amount due of Rs. 63,54,412 along with interest at 24% per annum. The claim was based on 11 invoices for the supply of chemicals to the Corporate Debtor.2. Contentions of Operational Creditor: The Operational Creditor submitted that they had supplied chemicals to the Corporate Debtor and raised various invoices to support the claimed amount. They also highlighted the Notice under Section 8 of the I&B Code sent on 05.09.2018 and the subsequent reply from the Corporate Debtor disputing certain aspects of the claim.3. Reconciliation of Accounts: The Tribunal directed a reconciliation of accounts through an independent Chartered Accountant due to discrepancies in the claims and counterclaims made by both parties. The Official Liquidator submitted a detailed report, noting disputes regarding the appropriation of payments and the validity of Debit Notes raised by the Corporate Debtor.4. Existence of Dispute: The Corporate Debtor raised disputes regarding returned goods, Debit Notes, and payments not credited, asserting the existence of a pre-existing dispute before the initiation of insolvency proceedings. Referring to relevant legal provisions and precedents, the Tribunal emphasized the need for a genuine dispute to exist before admitting an insolvency application.5. Decision: Considering the evidence and contentions presented, the Tribunal concluded that a dispute existed between the parties before the issuance of the Demand Notice. As the Corporate Debtor's contentions required further investigation and precise documents substantiating the claim were not provided, the Tribunal dismissed the application under Sections 7 and 9 of the I&B Code, 2016.In summary, the judgment delves into the intricacies of the dispute between the Operational Creditor and the Corporate Debtor, emphasizing the importance of pre-existing disputes and the need for substantiating claims with precise evidence in insolvency proceedings. The Tribunal's decision to dismiss the application was based on the existence of genuine disputes and insufficient documentation to establish the default on the part of the Corporate Debtor.
TaxTMI 
TaxTMI 
