Tribunal Upholds Dismissal of Application under IBC Section 9 - Debt Dispute Requires Civil Action

The Tribunal upheld the dismissal of the application under Section 9 of the IBC, 2016, as the debt claimed could not be determined without reconciling accounts. The dispute raised by the Corporate Debtor was deemed genuine and substantial, requiring resolution through civil proceedings or arbitration. The appeal was dismissed without costs.

---

---

Issues Involved:
1. Reconciliation of Accounts
2. Existence of Debt and Default
3. Validity of Documents and Evidence
4. Admissibility of the Application under Section 9 of IBC, 2016
5. Dispute over Quality of Goods
6. Contractual Interest Rate

Issue-wise Detailed Analysis:

1. Reconciliation of Accounts:
The Adjudicating Authority noted that there was a significant discrepancy between the amounts claimed by the Operational Creditor and the Corporate Debtor. The Operational Creditor claimed an outstanding sum of Rs. 53,52,607.73, while the Corporate Debtor's records indicated only Rs. 60,169 was due. Despite multiple opportunities given to reconcile the accounts from 05.12.2018 to 09.03.2020, the parties failed to resolve the differences. The Tribunal emphasized that the exact amount due could only be ascertained upon reconciliation of accounts.

2. Existence of Debt and Default:
The Tribunal observed that the debt and default on the part of the Corporate Debtor could not be ascertained from the documents provided by the Operational Creditor. The invoices in question dated back to 2012, and there was a vast difference in the amounts claimed by both parties. The Tribunal concluded that without reconciliation, it could not determine whether the debt claimed by the Operational Creditor met the threshold limit prescribed under Section 4 of the IBC, 2016.

3. Validity of Documents and Evidence:
The Appellant contended that the Adjudicating Authority erroneously relied on forged and fabricated documents submitted by the Corporate Debtor. The Corporate Debtor, however, disputed the authenticity of an email dated 29.10.2015, which the Operational Creditor cited as an acknowledgment of debt. The Tribunal found that the email did not explicitly state that the amount was due and payable by the Corporate Debtor.

4. Admissibility of the Application under Section 9 of IBC, 2016:
The Tribunal reiterated that the IBC is not a debt enforcement procedure and that an application under Section 9 is not maintainable if there is a dispute over the debt. The Adjudicating Authority must examine whether the dispute raised qualifies as a bona fide dispute under Section 5(6) of the Code. In this case, the Tribunal found that the dispute raised by the Corporate Debtor was genuine and substantial, necessitating further investigation.

5. Dispute over Quality of Goods:
The Corporate Debtor claimed that the materials supplied by the Operational Creditor were of sub-standard quality, causing significant losses. The Tribunal noted that this dispute over the quality of goods was a genuine issue that needed to be resolved in a civil court or through arbitration, not under the summary jurisdiction of the IBC.

6. Contractual Interest Rate:
The Operational Creditor claimed interest at a contractual rate of 30% per annum, which the Corporate Debtor denied agreeing to. The Tribunal noted that the Corporate Debtor had not admitted to this rate of interest and had consistently disputed the claim. The absence of a signed contract agreeing to this rate further weakened the Operational Creditor's position.

Conclusion:
The Tribunal upheld the Adjudicating Authority's decision to dismiss the application under Section 9 of the IBC, 2016. The Tribunal found that the debt claimed by the Operational Creditor could not be determined without reconciling the accounts and that the dispute raised by the Corporate Debtor was substantial and genuine. The Tribunal advised the parties to seek resolution through civil proceedings or arbitration. Consequently, the appeal was dismissed without costs.

---