2021 (11) TMI 179 - Tri - Insolvency and Bankruptcy

Operational Creditor's Application Dismissed Due to Pre-existing Dispute

URC Construction Private Limited Versus S.P. Mani and Mohan Dairy (India) Private Limited

URC Construction Private Limited Versus S.P. Mani and Mohan Dairy (India) Private Limited - TMI Issues involved:1. Maintainability of the Application under Section 9 of the Insolvency and Bankruptcy Code, 2016.2. Existence of a pre-existing dispute between the parties.3. Period of limitation for filing the Application.4. Admissibility of evidence and documents submitted by both parties.Issue-wise Detailed Analysis:1. Maintainability of the Application under Section 9 of the Insolvency and Bankruptcy Code, 2016:The Operational Creditor, M/s. URC Construction Private Limited, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, against the Corporate Debtor, M/s. S.P. Mani and Mohan Dairy (India) Private Limited, seeking to initiate the Corporate Insolvency Resolution Process (CIRP). The Operational Creditor claimed an amount of Rs. 3,07,81,310/- as due and payable by the Corporate Debtor. The Corporate Debtor contested the maintainability of the application, citing a pre-existing dispute.2. Existence of a pre-existing dispute between the parties:The Corporate Debtor argued that there was a pre-existing dispute regarding the work performed by the Operational Creditor. The Corporate Debtor submitted various emails dated 22.11.2014, 08.04.2015, 09.04.2015, 10.10.2015, 20.04.2016, 21.09.2019, and 31.01.2020, highlighting issues such as slow progress and negligence in speeding up the work. The Operational Creditor, however, contended that these disputes were raised only after the Demand Notice was issued and were merely an afterthought to avoid liability. The Tribunal noted that the emails exchanged between the parties before the issuance of the Demand Notice indicated that disputes existed regarding the project execution.3. Period of limitation for filing the Application:The Operational Creditor argued that the last payment of Rs. 8,82,000/- was received on 25.06.2018, and the application was filed on 22.09.2020, which is within the three-year limitation period as per Section 19 of the Limitation Act, 1963. The Tribunal acknowledged that the application was filed within the statutory limitation period.4. Admissibility of evidence and documents submitted by both parties:The Tribunal examined the documents submitted by both parties, including the Deed of Agreement, running account bills, ledger statements, and emails. The Tribunal emphasized that proceedings under Section 7, 9, and 10 of IBC, 2016, are summary in nature and do not permit detailed examination of evidence. The Tribunal found that the Corporate Debtor had raised disputes regarding the completion and quality of work, which required further investigation and could not be resolved in a summary proceeding.Conclusion:The Tribunal concluded that there existed a dispute between the parties that required further investigation. The Tribunal referred to the Hon'ble Supreme Court's judgment in M/s. 'Mobilox Innovations Pvt. Ltd. Vs. 'Kirusa Software Pvt. Ltd.' (2018) 1 SCC 353, which established that the Adjudicating Authority must determine whether there is a plausible contention requiring further investigation and that the dispute is not a patently feeble legal argument or an assertion unsupported by evidence. Based on this, the Tribunal dismissed the application filed by the Operational Creditor, stating that the alleged debt and default could only be established after a detailed trial and not in a summary proceeding. The application was dismissed with no costs.