Tribunal dismisses forged bill petition under Insolvency Code, stresses prevention of misuse

The Tribunal dismissed the application for initiation of Corporate Insolvency Resolution Process under section 9 of the Insolvency and Bankruptcy Code, 2016. It found the presented bill to be forged and collusive, lacking evidence of actual material supply. The Tribunal highlighted the absence of a formal agreement, genuine admission, or payment, deeming the petition as an attempt to misuse the Code. Emphasizing the prevention of such misuse, the Tribunal dismissed the petition without costs awarded, and the file was archived.

---

---

Issues:
Application under section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process based on operational debt.

Analysis:
The applicant, an operational creditor, filed an application under section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process against the respondent company, claiming to be the corporate debtor. The applicant detailed the transactions leading to the petition, stating that the operational creditor provided materials and labor for a project, amounting to a total of Rs. 1,66,680. Despite various reminders and a demand notice, the corporate debtor failed to release the outstanding payment of Rs. 1,86,900.8. The demand notice was sent but returned undelivered. In response, the corporate debtor explained that the project was stalled due to the architect's failure to prepare and approve the building plan, resulting in a lack of funds to continue. The debtor expressed willingness to pay and engage the creditor once the project resumed.

The Tribunal considered the arguments of both parties and examined the case records. It noted the absence of any formal agreement for the supply of building materials, despite the operational nature of the creditor and the builder status of the debtor. Only one invoice was presented, not endorsed by any authorized representative of the respondent. The respondent's acknowledgment of the demand notice via email was highlighted. The Tribunal found no prior correspondence regarding billing or material supply between the parties. It concluded that the presented bill appeared forged and collusive to trigger the respondent's Corporate Insolvency Resolution Process under false pretenses. The Tribunal emphasized the lack of genuine admission or payment despite the pending petition and the relatively small disputed amount. It deemed the petition collusive and lacking evidence of actual material supply, leading to its dismissal. The Tribunal emphasized the importance of preventing misuse of the Insolvency and Bankruptcy Code by unscrupulous parties. Consequently, the petition was dismissed with no costs awarded, and the file was archived.

---