Operational Creditor's Insolvency Petition Dismissed for Genuine Pre-Existing Dispute

The National Company Law Tribunal, Ahmedabad Bench, dismissed the Operational Creditor's petition for Corporate Insolvency Resolution Process against the Corporate Debtor under Section 9 of the Insolvency & Bankruptcy Code. The Tribunal found a genuine pre-existing dispute existed based on the Corporate Debtor's concerns regarding the authenticity of transactions and potential GST liabilities, leading to the rejection of the petition.

---

---

Issues Involved:
- Application under Section 9 of the Insolvency & Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process (CIRP) against a Corporate Debtor for default amount.
- Claim of Operational Creditor for non-payment of invoices against the Corporate Debtor.
- Allegation of pre-existing dispute by the Corporate Debtor regarding the authenticity of transactions and GST issues.
- Response of Corporate Debtor claiming a pre-existing dispute and readiness to pay the due amount with conditions.
- Evaluation of evidence and arguments by the Tribunal to determine the existence of a pre-existing dispute under Section 8(2)(a) of the IB Code.

Analysis:

1. The Operational Creditor filed an application under Section 9 of the IBC seeking initiation of CIRP against the Corporate Debtor for defaulting on payment of invoices totaling Rs. 26,89,290. The Operational Creditor provided details of the transactions and non-payment by the Corporate Debtor.

2. The Operational Creditor contended that all goods were supplied to the Corporate Debtor, invoices were raised with valid GST, and a demand notice was issued after non-payment. The Corporate Debtor allegedly raised debit notes without valid grounds to show a pre-existing dispute.

3. The Corporate Debtor argued a pre-existing dispute based on an alert circular regarding a fictitious company supplying goods. The Corporate Debtor expressed willingness to pay the due amount if the Operational Creditor provided a bank guarantee to cover GST issues until assessment.

4. The Tribunal analyzed the submissions and evidence. It noted the amount due, the alert circular about the fictitious supplier, and the Corporate Debtor's willingness to pay with conditions. The Tribunal found the dispute genuine, considering the potential GST implications and lack of agreement for a bank guarantee.

5. The Operational Creditor denied the pre-existing dispute claim, stating all consignments were from genuine suppliers, and GST returns were regularly filed without dispute. The Tribunal observed the lack of evidence supporting the Operational Creditor's claims regarding original suppliers' invoices.

6. Ultimately, the Tribunal dismissed the Operational Creditor's petition for CIRP initiation under Section 9 of the IB Code. It concluded that a pre-existing dispute under Section 8(2)(a) was established, based on the Corporate Debtor's concerns about the authenticity of transactions and potential GST liabilities.

7. The judgment, delivered by the National Company Law Tribunal, Ahmedabad Bench, dismissed the application and provided a detailed analysis of the issues raised by both parties, emphasizing the importance of establishing a genuine pre-existing dispute under the Insolvency & Bankruptcy Code.

---