Tribunal grants appeal, sets aside order, directs Adjudicating Authority to admit application under Section 7

The Tribunal allowed the appeal, set aside the impugned order, and directed the Adjudicating Authority to admit the Appellant's application under Section 7 of the I&B Code, providing an opportunity for the Corporate Debtor to settle the claim if desired. No costs were ordered.

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Issues Involved:
1. Dismissal of application under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Alleged deficiency in service provided by the Appellant.
3. Existence of debt and pre-existing dispute.

Detailed Analysis:

1. Dismissal of application under Section 9 of the Insolvency and Bankruptcy Code, 2016:
The Appellant challenged the dismissal of its application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench. The application was dismissed on the grounds that there was a clear deficiency in the service provided by the Appellant and no debt as claimed by the Appellant.

2. Alleged deficiency in service provided by the Appellant:
The Corporate Debtor, engaged in the construction business, sought the Appellant's services to raise finance and provide advisory services. The Appellant issued a letter on 08.11.2017, which was accepted by the Corporate Debtor. Despite the Appellant's efforts, the Corporate Debtor claimed there was a delay in service, taking 11 months instead of the agreed 6 months, leading to consequential losses. The Corporate Debtor amicably settled the fee at Rs. 150 Lakhs, out of which Rs. 75 Lakhs was paid. The Appellant, however, raised a demand notice under Section 8 of the I&B Code for Rs. 2,41,90,000/-, which was not complied with, prompting the Appellant to initiate the Corporate Insolvency Resolution Process.

3. Existence of debt and pre-existing dispute:
The Corporate Debtor contended that the Appellant's services were delayed, and the agreed professional fees were settled at Rs. 1.5 Crores due to the delay. The Appellant argued that the Corporate Debtor obtained funding of Rs. 280 Crores, and the fees were 1% of this amount. The Corporate Debtor made a part payment of Rs. 75 Lakhs but defaulted on the remaining fees. The Appellant asserted that the Corporate Debtor's letter dated 02.05.2019 was an afterthought to evade liability, and no pre-existing dispute existed. The Corporate Debtor, however, maintained that the Appellant failed to provide services within the fixed period, and discussions led to a mutual agreement of Rs. 1.5 Crores as the full and final settlement. The Corporate Debtor was willing to pay the balance Rs. 75 Lakhs if the Appellant issued the full and final invoice.

Judgment Analysis:
The Tribunal examined the contractual relationship and found that the Appellant provided services for raising finance and advisory services. The engagement letter dated 08.11.2017 specified a six-month period for concluding transactions, extendable by mutual agreement. The Appellant raised invoices based on the Sanction Letter from 'KKR India Asset Finance Pvt. Ltd.' for Rs. 280 Crores. The Tribunal noted that no suit or arbitration proceedings were pending regarding the alleged deficiency of service, and the Corporate Debtor did not respond to the demand notice under Section 8(1) of the I&B Code. The Tribunal concluded that the Appellant was entitled to raise the invoice for the unpaid balance of Rs. 2,05,00,000/-, and the Corporate Debtor's non-payment of Rs. 75 Lakhs was unjustified. The Tribunal found the Adjudicating Authority erred in dismissing the application based on alleged deficiency in service and absence of debt.

Conclusion:
The Tribunal allowed the appeal, set aside the impugned order, and directed the Adjudicating Authority to admit the Appellant's application under Section 7 of the I&B Code, providing an opportunity for the Corporate Debtor to settle the claim if desired. No costs were ordered.

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