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of <h1>Tribunal dismisses insolvency application citing pre-existing dispute over returned goods</h1> <h3>RBA Systems Pvt. Ltd. Versus Optiemus Infracom Ltd. and Ors.</h3> The Tribunal dismissed the application to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor, citing a pre-existing dispute ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - pre-existing dispute - service of demand notice - HELD THAT:- As per Section 8 of the IBC, the CD has brought to the notice of the OC the pre-existing dispute for which he has submitted the email dated 22.02.2019 from the Company to the effect that all the DoA products are beyond 12 months from the date of manufacturing. In the reply dated 02.08.2019 to the demand notice dated 17.07.2019, reference has been made to the reply of HTC for not accepting the DoA, products - In view of the fact that there is a pre-existing dispute with respect to the goods returned by the OC to the CD, the application for initiating Corporate Insolvency Resolution Process against the CD is not maintainable and is liable to be dismissed. Application dismissed. Issues:Initiation of insolvency corporate resolution process based on default of payment for supplied goods.Analysis:The petition was filed by the Operational Creditor against the Corporate Debtor for non-payment of outstanding debt. The Operational Creditor supplied 73 units of HTC brand products to the Corporate Debtor, who partially paid but defaulted on the remaining amount. The Corporate Debtor failed to settle the outstanding balance even after confirmation, leading to a demand notice under Section 8 of the IBC. The Corporate Debtor responded with a frivolous reply, attempting to evade the debt, which was countered by the Operational Creditor's response.The Corporate Debtor, a distributor of HTC mobiles, was obligated to purchase the products and had admitted the debt. The dispute arose when the Corporate Debtor started contesting the amount due only after the demand notice was issued. The Corporate Debtor's attempt to evade payment by corresponding with the manufacturer was deemed unjustified, as the authorized dealers had no direct transactions with the manufacturer.The Corporate Debtor argued that the goods returned by the Operational Creditor were in violation of the Dead on Arrival (DoA) policy of HTC. The Corporate Debtor claimed a pre-existing dispute, as per the rejection of the DoA claim by HTC, and contended that the Operational Creditor had no right to claim on behalf of a third party. Additionally, Mron International Pvt. Ltd. confirmed the settlement of all claims with the Corporate Debtor.The terms and conditions of sale specified that products were returnable only as per the manufacturer's warranty or DoA policy, making the disputed return of goods non-refundable. The rejection of the claim by HTC based on the DoA policy further supported the Corporate Debtor's argument against the debt claim.Considering the pre-existing dispute regarding the returned goods and the rejection based on the DoA policy, the Tribunal dismissed the application for initiating the Corporate Insolvency Resolution Process against the Corporate Debtor, ruling it as not maintainable.
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