Tribunal admits petition under IBC based on proven operational debt and lack of genuine dispute

The Tribunal found that there was no genuine dispute prior to the issuance of the Demand Notice between the parties regarding the supply of goods. The Corporate Debtor's defenses were considered afterthoughts and lacked credibility. The Operational Creditor successfully proved the existence of 'Operational Debt' and the default by the Corporate Debtor. Consequently, the Tribunal admitted the petition under Section 9(5) of the IBC, 2016, appointed an Interim Resolution Professional, and imposed a moratorium as per Section 14(1) of the IBC, 2016.

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Issues Involved:
1. Whether there exists any dispute between the parties prior to the issuance of the Demand Notice.
2. Whether the Operational Creditor has proved the 'Operational Debt' and the 'default' committed on the part of the Corporate Debtor.

Issue-wise Detailed Analysis:

Issue 1: Existence of Dispute Prior to Demand Notice
The Tribunal examined whether any dispute existed between the parties before the issuance of the Demand Notice. The Corporate Debtor alleged discrepancies in the supply of goods and billing issues, claiming these disputes should be resolved by a Competent Arbitral Tribunal as per the Purchase Order. However, the Tribunal noted that no documentary evidence or proof was provided by the Corporate Debtor to substantiate these claims. The Tribunal highlighted that if the materials supplied were indeed defective, there should have been some correspondence between the parties, which was not presented. Furthermore, the Tribunal observed that the Debit Notes issued by the Corporate Debtor on 30.04.2019 were only raised after the Operational Creditor issued a final reminder notice on 20.02.2019, suggesting that these defenses were afterthoughts. Consequently, the Tribunal concluded that there was no genuine dispute regarding the supply of goods by the Operational Creditor and that the defenses raised by the Corporate Debtor were not credible and were raised after the issuance of the Demand Notice, thus not constituting a dispute as envisaged under Section 9 of the IBC, 2016.

Issue 2: Proof of Operational Debt and Default
The Tribunal evaluated whether the Operational Creditor had established the existence of an 'Operational Debt' and the default by the Corporate Debtor. The Tribunal noted that the invoices raised by the Operational Creditor were for the period from 2017 to 2018, and the application was filed on 21.02.2020. The Tribunal confirmed that the services provided by the Operational Creditor and the failure of the Corporate Debtor to make payments fell within the definition of "Operational Debt" under Section 5(20) of the IBC, 2016. The Tribunal found that the Operational Creditor had sufficiently proved the debt and default by the Corporate Debtor.

Conclusion:
Based on the findings, the Tribunal admitted the petition filed by the Operational Creditor under Section 9(5) of the IBC, 2016. The Tribunal appointed Mr. K. Ganesan as the Interim Resolution Professional (IRP) to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The Tribunal ordered a moratorium as per Section 14(1) of the IBC, 2016, which included the suspension of suits or proceedings against the Corporate Debtor, the prohibition of transferring or disposing of assets, and the continuation of essential goods or services to the Corporate Debtor during the moratorium period. The moratorium would remain in effect until the completion of the CIRP or until an order for liquidation or approval of the Resolution Plan is passed by the Adjudicating Authority. The Tribunal directed the Registry to communicate the order to the relevant parties and authorities, including the IBBI and the Registrar of Companies.

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