Tribunal confirms debt due, initiates insolvency resolution process

The Tribunal held that the Corporate Debtor failed to raise any dispute before the Demand Notice was issued, leading to the conclusion that the debt was payable as per the Memorandum of Understanding. The debt was found to have fallen due, necessitating the initiation of the Corporate Insolvency Resolution Process. The Tribunal confirmed its jurisdiction to entertain the application filed before the threshold limit was raised. Efforts to settle the dues through instalments were made, resulting in a full settlement acknowledged by the Respondent. Consequently, the main application was withdrawn, and the formation of the Committee of Creditors was stayed until the withdrawal application was disposed of.

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Issues:
1. Interpretation of Section 8(2)(a) of IBC, 2016 regarding dispute notification requirements.
2. Examination of Memorandum of Understanding for debt crystallization.
3. Determination of default in payment and debt falling due.
4. Analysis of pecuniary jurisdiction in relation to the threshold limit.
5. Consideration of settlement efforts during the proceedings.
6. Applicability of Rules 11 and 32 of National Company Law Tribunal Rules, 2016.
7. Permission to reopen proceedings and payment acknowledgment.
8. Decision on withdrawal of the main application and formation of Committee of Creditors.

Issue 1:
The Adjudicating Authority observed that under Section 8(2)(a) of IBC, 2016, the Corporate Debtor must notify the Operational Creditor of any dispute before receiving the Demand Notice. In this case, the Corporate Debtor failed to raise any dispute before the Demand Notice was issued, leading to the conclusion that the debt of Rs. 80 lakhs was payable as per the Memorandum of Understanding dated 22.08.2019.

Issue 2:
The Adjudicating Authority found that the debt had fallen due on 05.11.2019, and the Operational Creditor had proven the existence of an Operational Debt. The Corporate Debtor's default in repayment necessitated the initiation of the Corporate Insolvency Resolution Process.

Issue 3:
Regarding pecuniary jurisdiction, the Tribunal confirmed its authority to entertain the application filed before the threshold limit was raised to Rs. 1 crore, as the application was submitted before the amendment.

Issue 4:
The Appellant attempted to reconcile disputes with the Respondent during the proceedings, seeking a settlement. However, due to lockdown conditions, face-to-face meetings were challenging, and no resolution was achieved within the given time frame.

Issue 5:
The Appellant made efforts to settle the dues by proposing payments in instalments, seeking to reopen the proceedings under Rules 11 and 32 of the National Company Law Tribunal Rules, 2016.

Issue 6:
The Appellant's request to reopen the proceedings was denied by the Adjudicating Authority, stating that only the Operational Creditor had the prerogative to file a reopen application.

Issue 7:
The Appellant made payments totaling Rs. 77 lakhs to the Respondent, who acknowledged the full and final settlement of all dues. This led the Tribunal to direct the filing of an application for withdrawal of the main application within 10 days.

Issue 8:
Considering the payment acknowledgment and full settlement, the Tribunal ordered the withdrawal of the main application and stayed the formation of the Committee of Creditors until the withdrawal application was disposed of by the Adjudicating Authority. The Comp. App was disposed of with no costs incurred, and related applications were closed.

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