2022 (8) TMI 647 - Tri - Insolvency and Bankruptcy

Tribunal Denies Corporate Insolvency Application, Orders Further Inquiry

AXYKNO Capital Services Pvt. Ltd. Versus Dilip Buildcon Limited

The Tribunal rejected the application for Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016, citing the need for ... Maintainability of application - Initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is noted that there was a business relationship between the Operational Creditor and the Corporate Debtor, several work orders were issued by the Corporate Debtor and accepted by the Operational Creditor. As per the work orders, services are provided by the Operational Creditor against which 14 invoices were raised by the Operational Creditor from 21.04.2017 to 16.06.2017 amounting to Rs. 1,24,69,143/-. After that, the Operational Creditor requested the Corporate Debtor to pay the outstanding amount through a letter dated 19.03.2019, wherein the Corporate Debtor replied via letter dated 18.04.2019. and raised a dispute over the quality and standard of the services provided by the Operational Creditor. It is also noted that a Demand Notice under section 8 of the IBC, 2016 was issued on 17.05.2019 to the Corporate Debtor by the Operational Creditor demanding the outstanding dues of Rs. 1,79,47,390/-, the Corporate Debtor replied to the Demand Notice wherein it stated that there is a pre-existing dispute regarding the outstanding amount demanded by the Operational Creditor. It is clear that the Corporate Debtor has raised an issue with the services provided by the Operational Creditor prior to the issuance of the Demand Notice; and also, in the reply to the Demand Notice the Corporate Debtor informed the Operational Creditor about the pre-existing dispute. It can not be said that the dispute raised by the Corporate Debtor is afterthought and only in view of avoid its admission in CIRP - The disputes projected require thorough inquiry before proper forum. This Adjudicating Authority cannot undertake that exercise in its limited jurisdiction in hearing of application under section 9 IBC. Application dismissed. Issues:Application under section 9 of the Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process against Corporate Debtor for default amount.Detailed Analysis:1. Operational Creditor's Claims:- The Operational Creditor, a private limited company, provided consultancy services to the Corporate Debtor, a public limited company engaged in infrastructure development.- Various work orders were issued by the Corporate Debtor to the Operational Creditor for different services.- Invoices were raised by the Operational Creditor for the services provided, totaling Rs. 1,24,69,143/-.- The Corporate Debtor failed to make payments, leading to a demand notice for Rs. 1,79,47,390/-, which was disputed by the Corporate Debtor citing service quality issues.2. Corporate Debtor's Defense:- The Corporate Debtor claimed a pre-existing dispute regarding the quality of services provided by the Operational Creditor, stating deficiencies and losses incurred.- Disputed the authorization of the Demand Notice and raised concerns about interest charges and GST applicability on invoices.- Alleged that services promised by the Operational Creditor were not delivered, constituting a deficiency in services.- Denied dishonoring a cheque, stating technical issues were resolved promptly.3. Rebuttal and Tribunal Decision:- The Operational Creditor provided evidence of authorization for the Demand Notice by the Board of Directors.- Rejected the Corporate Debtor's claim of pre-existing dispute, labeling it as an afterthought to avoid payment.- Noted that the Corporate Debtor raised the dispute after 19 months of the last invoice, without prior objections or cancellations of work orders.- The Tribunal observed a business relationship with issued work orders and invoices, culminating in a demand notice and subsequent dispute by the Corporate Debtor.- Decided that the disputes raised require further inquiry beyond the Tribunal's jurisdiction, rejecting the insolvency application.4. Conclusion:- The application for Corporate Insolvency Resolution Process was rejected and disposed of with no cost, directing the Registry to serve the order to both parties.- The Tribunal highlighted the need for a comprehensive investigation into the disputes raised, indicating a more suitable forum for resolution beyond the Tribunal's scope.This detailed analysis encapsulates the legal judgment involving the application under the Insolvency and Bankruptcy Code, 2016, addressing the conflicting claims and defenses presented by the Operational Creditor and the Corporate Debtor, ultimately leading to the Tribunal's decision to reject the insolvency application.