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of <h1>Appeal dismissed under Insolvency & Bankruptcy Code for unpaid operational debt. Genuine disputes emphasized.</h1> The appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016, concerning unpaid operational debt of Rs. 78,22,421 was dismissed by the ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - Pre-existing dispute or not - service of demand notice - HELD THAT:- The Appellant has no doubt issued a demand notice as required under the Code for initiation of proceedings under Section 9 of the Code. It is true that in a project work change of contractor results into delays and increased costs. So, in a commercial organization an understanding is always created to get the job done through the same contractor - Deduction on account of LD and Performance bank guarantee is a part of contractual terms and hence the Code is being a summary proceeding, the veracity of the statement cannot be examined like a trial court. Pre-existing dispute and chasing for payment also cannot be ruled out in this instant case. The Hon’ble Supreme Court in TRANSMISSION CORPORATION OF ANDHRA PRADESH LIMITED VERSUS EQUIPMENT CONDUCTORS AND CABLES LIMITED [2018 (10) TMI 1337 - SUPREME COURT] has already held that IBC is not intended to be a substitute to a recovery forum and also laid down that whenever there is existence of real dispute, the IBC provisions cannot be invoked. The Appeal is dismissed. Issues involved:1. Appeal filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 against an order passed by the Adjudicating Authority.2. Dispute regarding unpaid operational debt amounting to Rs. 78,22,421.3. Consideration of pre-existing disputes and contractual terms.4. Respondent's allegations of delay in work completion and losses suffered.5. Legal interpretation of Sections 8 and 9 of the Insolvency and Bankruptcy Code.6. Application of the law in relation to disputes and invoking the Insolvency and Bankruptcy provisions.Detailed Analysis:1. The appeal was filed against an order by the Adjudicating Authority regarding unpaid operational debt. The Appellant claimed the Respondent owed Rs. 78,22,421. However, the Adjudicating Authority rejected the petition, considering the disputes genuine and not spurious. The Respondent disputed the claim, citing delays in work execution, quality issues, and non-compliance with contractual terms.2. The Respondent alleged that the Appellant failed to complete the contracted works on time, leading to significant losses. The Respondent highlighted delays in work completion, issuance of letters regarding slow progress, and non-provision of required documentation by the Appellant. The Respondent also initiated a Money Suit against the Appellant post the demand notice.3. The Adjudicating Authority observed delays in work execution, disputes in quality, and non-compliance with contractual terms. It emphasized that it is not a forum to adjudicate disputes and determine recoverable amounts. The Respondent's reply to the demand notice detailed the disputes, including deductions for Liquidated Damages and Performance Bank Guarantee.4. The legal interpretation of Sections 8 and 9 of the Insolvency and Bankruptcy Code was crucial. The Appellant issued a demand notice as required under Section 8. However, the Respondent responded, highlighting the disputes and deductions. The Tribunal noted that the Code is not a substitute for a recovery forum and cannot be invoked in the presence of real disputes.5. The Tribunal considered the commercial understanding of avoiding contractor changes to prevent delays and increased costs. It upheld the contractual terms regarding deductions for Liquidated Damages and Performance Bank Guarantee. Referring to legal precedents, the Tribunal dismissed the appeal, citing the existence of disputes and the inapplicability of the Insolvency and Bankruptcy provisions in such cases.6. In conclusion, the Tribunal upheld the Adjudicating Authority's decision, emphasizing the presence of genuine disputes and the contractual obligations between the parties. The appeal was dismissed, with no costs awarded. The judgment highlighted the importance of resolving disputes outside the Insolvency and Bankruptcy framework when real disputes exist.
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