Application for CIRP Rejected Due to Unresolved Debt Dispute

The application under Section 9 of the IBC for initiation of CIRP due to default in paying operational debt was rejected by the Adjudicating Authority. The dispute over the amount payable by the Corporate Debtor to the Operational Creditor was deemed a serious issue requiring a detailed hearing in the appropriate forum. Citing precedent, the Authority held the application was not maintainable due to the unresolved dispute, leading to the rejection of the application without costs awarded to either party. The case was closed with instructions for the Registry to provide copies of the order to both parties.

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Issues:
Application under Section 9 of IBC for initiation of CIRP due to default in paying operational debt.

Analysis:
1. The application was filed by the Operational Creditor seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for defaulting on an operational debt of Rs. 55,23,253. The Operational Creditor sold goods to the Corporate Debtor on payment-on-demand terms, and despite repeated demands, the outstanding amount was not paid, leading to the application under Section 9 of the IBC.

2. The Corporate Debtor's defense was that it had paid the entire amount and no debt was due to the Operational Creditor. The Corporate Debtor claimed to have made payments for goods received during the relevant period and provided detailed statements and evidence to support its contention, including a ledger statement and bank statements.

3. The dispute centered around the amount claimed to be due and payable by the Corporate Debtor. The Operational Creditor asserted that a significant sum was outstanding, while the Corporate Debtor maintained that it had made all payments, even claiming an excess payment of Rs. 82,141. The correspondence between the parties prior to the Demand Notice highlighted the disagreement on the exact amount owed.

4. The Adjudicating Authority noted the existence of a serious dispute regarding the actual amount payable by the Corporate Debtor to the Operational Creditor. The Authority emphasized its limited jurisdiction and inability to resolve such disputes, stating that a detailed hearing was necessary to ascertain the accuracy of the accounts maintained by both parties, which should be addressed in the appropriate forum.

5. Citing the ruling in Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd., the Authority held that the application was not maintainable before them due to the unresolved dispute over the amount payable. Consequently, the application was rejected, and no costs were awarded to either party.

6. The judgment concluded with instructions for the Registry to provide copies of the order to both the petitioner and the respondent, thereby closing the case with the rejection of the application under Section 9 of the IBC.

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