Application Rejected Due to Dispute: Order Communication via Speed Post & Email

The Tribunal rejected the application in CP(IB) No. 508/KB/2019 due to a pre-existing dispute between the operational creditor and the corporate debtor. The case was disposed of accordingly, with the Registry directed to communicate the order to both parties by Speed Post and email.

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Issues Involved:
1. Whether the application is filed by the proprietary firm or proprietor of the firm.
2. Whether the application is defective as it has been filed clubbing different causes of action.
3. Whether there exists a pre-existing dispute about the work carried by the operational creditor and hence, the application is not maintainable.

Detailed Analysis:

Issue 1: Whether the application is filed by the proprietary firm or proprietor of the firm.
The corporate debtor argued that the application was filed by the proprietary firm, which is not a "person" as defined under section 3(23) read with section 5(20) of the Insolvency & Bankruptcy Code (IBC), and thus not maintainable. The Tribunal referred to the case of M/s. Bright Star vs. MC Nally Bharat Engineering Co. Ltd., where a similar issue was discussed. However, the Tribunal noted a factual difference; in this case, the application was filed by Mr. Sanjay Kumar, the proprietor of M/s. Sri Ram Constructions, not by the firm itself. The Tribunal held that an application filed by a proprietor is maintainable, referencing the case of S.S. Engineers vs. HPCL Biofuels. Therefore, the application was deemed to be filed by the proprietor, Mr. Sanjay Kumar, and not by the proprietary firm.

Issue 2: Whether the application is defective as it has been filed clubbing different causes of action.
The corporate debtor contended that the operational creditor filed the application based on three separate work orders, which should have been treated as separate causes of action. They cited the case of International Road Dynamics South Asia Private Ltd. vs. Reliance Infrastructure Ltd., where the Hon'ble NCLAT ruled that different claims arising from different agreements cannot be clubbed together. However, the Tribunal found that the three work orders were issued under a single letter of award dated 12.01.2016, and the completion date for all work was the same, i.e., 31.08.2016. Thus, the Tribunal concluded that the cause of action was singular and not multiple, making the application valid. The Tribunal held that the ruling of the NCLAT was not applicable in this case and answered this point in the negative.

Issue 3: Whether there exists a pre-existing dispute about the work carried by the operational creditor and hence, the application is not maintainable.
The corporate debtor argued that there was a pre-existing dispute regarding the quality of work performed by the operational creditor, which was communicated through various correspondences. The Tribunal referred to the Supreme Court's decision in Mobilox Innoventive Industries Ltd. vs. Kirusa Software Private Ltd., which held that an application under section 9 must be rejected if there is a pre-existing dispute. The Tribunal examined the evidence, including numerous correspondences between the parties from 2016 to 2018, highlighting disputes about the quality of work and the amount claimed. The Tribunal found sufficient evidence of a pre-existing dispute and concluded that a full-fledged trial was required to resolve the issues, which could not be done within their limited jurisdiction. Therefore, the application was deemed not maintainable.

Conclusion:
The Tribunal rejected the application in CP(IB) No. 508/KB/2019 due to the pre-existing dispute between the operational creditor and the corporate debtor. The Registry was directed to communicate the order to both parties by Speed Post and email. The case was disposed of accordingly.

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