Tribunal Upholds Decision on Operational Debt under Insolvency Law

The Tribunal dismissed the Appeal, finding that the Appellant did not provide enough evidence to establish the existence of an operational debt. The Adjudicating Authority's decision was upheld, emphasizing that mere acknowledgment of liability does not constitute an operational debt under the Insolvency and Bankruptcy Code, 2016. The Tribunal directed the Registry to upload the Judgment on its website and send a copy to the National Company Law Tribunal, Mumbai Bench.

---

---

Issues Involved:
1. Whether the amounts claimed by the Appellant are "due and payable" as an "Operational Debt" under the Insolvency and Bankruptcy Code, 2016.
2. Whether the letters dated 15/05/2019, 30/05/2019, and 01/07/2019 constitute an acknowledgment of debt.
3. Validity and relevance of the Forensic Report submitted by the Appellant.
4. Whether the dishonor of cheques constitutes an operational debt.
5. Whether the Appellant provided sufficient documentary evidence to substantiate the claim of operational debt.

Issue-wise Detailed Analysis:

1. Whether the amounts claimed by the Appellant are "due and payable" as an "Operational Debt" under the Insolvency and Bankruptcy Code, 2016:
The Appellant claimed that the Respondent owed them an operational debt based on the supply of steel materials and delayed payment charges. However, the Adjudicating Authority found that the Appellant failed to provide supporting invoices or documentary evidence for the claimed amounts such as delay charges, khalapur expenses, and travel charges. The 37 invoices provided by the Appellant did not mention payment terms, and only one invoice referred to a delay of 365 days. The Bench concluded that there was no outstanding operational debt as all invoices had been fully paid, and additional claims were unsubstantiated and frivolous.

2. Whether the letters dated 15/05/2019, 30/05/2019, and 01/07/2019 constitute an acknowledgment of debt:
The Appellant argued that these letters acknowledged a liability of Rs. 4,16,18,466 and Rs. 7,76,706. However, the Respondent denied the authenticity of these letters, claiming they were forged and fabricated. The Adjudicating Authority noted that the Appellant's forensic report was obtained without permission and thus could not be relied upon. The Tribunal held that mere acknowledgment in these letters does not establish an operational debt as defined under Section 5(21) of the Code.

3. Validity and relevance of the Forensic Report submitted by the Appellant:
The Appellant submitted a forensic report to prove the authenticity of the letters. However, the Tribunal found that the report was obtained without the Adjudicating Authority's permission and thus could not be considered valid evidence. The Tribunal emphasized that the Appellant failed to provide sufficient documentary proof to substantiate the claim of an operational debt.

4. Whether the dishonor of cheques constitutes an operational debt:
The Appellant contended that the dishonored cheques issued by the Respondent indicated an operational debt. However, the Tribunal noted that the dishonor of cheques is a matter under the Negotiable Instruments Act, 1881, and does not necessarily relate to any outstanding operational debt. The Tribunal further observed that the Appellant had already initiated proceedings under Section 138/141 of the NI Act, 1881, and the dishonored cheques did not prove the existence of an operational debt.

5. Whether the Appellant provided sufficient documentary evidence to substantiate the claim of operational debt:
The Tribunal found that the Appellant did not provide adequate evidence to prove the existence of an operational debt. The Appellant's claim was based on journal entries and alleged acknowledgments of debt, which were not supported by invoices or any agreement between the parties. The Tribunal concluded that the Appellant failed to establish that the amounts claimed were in respect of the provision of goods and services, as required under Section 5(21) of the Code.

Conclusion:
The Tribunal dismissed the Appeal, concluding that the Appellant failed to provide sufficient evidence to prove the existence of an operational debt. The Tribunal upheld the Adjudicating Authority's decision, emphasizing that mere acknowledgment of liability does not constitute an operational debt under the Insolvency and Bankruptcy Code, 2016. The Tribunal directed the Registry to upload the Judgment on its website and send a copy to the National Company Law Tribunal, Mumbai Bench.

---