2022 (9) TMI 17 - AT - Insolvency and Bankruptcy

Tribunal upholds admission of application under Section 9 of Insolvency and Bankruptcy Code

The Tribunal dismissed the appeal challenging the admission of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016. The Appellant's ... Initiation of CIRP - NCLT admitted the application ex-parte - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - service of demand notice - HELD THAT:- It is also pertinent to mention here that though the Appellant had a remedy to file the application before the Tribunal for recalling of the admission order dated 12.01.2022 but again for the reasons best known to it no such application was filed rather the present appeal has been filed in which the issue of pre-existing dispute which is purely an issue of fact has been raised. Applicable Threshold limit - the threshold was Rs. 1 lac and during the pendency of the application the threshold is changed Rs. 1 lac to 1 Crore - HELD THAT:- the decision rendered in the case of Madhusudan Tantia [2020 (10) TMI 547 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] by this Tribunal is directly on the issue wherein it was held that, 'if the notification dated 24.03.2020 of the Ministry of Corporate Affairs, Government of India, is made applicable to the pending applications of IBC (filed earlier to the notification in issue) it will create absurd results of wider implications / complications.' Pre-existing dispute or not - HELD THAT:- There is no evidence brought on record by the Appellant in this regard, except for referring to invoices relied upon by the Operational Creditor to contend that those invoices pertains to a new company i.e. Rajprotim Supply Chain Solutions Pvt. Ltd. In this regard, we would hasten to add that by virtue of an agreement dated 21.12.2016, the entire business of the Appellant was transferred to the new company i.e. Rajprotim Supply Chain Solutions Pvt. Ltd. and the Appellant had been paying the dues/debts of the Operational Creditor till December, 2017 and then stopped the same. As a result thereof, the Operational Creditor had to initiate the proceedings. No other point has been raised. There are no merit in this appeal and the same is hereby dismissed though without any order as to costs. Issues involved:1. Maintainability of the application under Section 9 of the Insolvency and Bankruptcy Code, 2016.2. Existence of a pre-existing dispute.Detailed analysis:1. The appeal challenged an order admitting an application filed under Section 9 of the Code by an Operational Creditor against a Corporate Debtor. The Operational Creditor served a notice before filing the application, which the Corporate Debtor received but did not respond to. The Corporate Debtor did not file a reply to the application and stopped appearing before the Adjudicating Authority. The Appellant raised concerns about the maintainability of the application due to a change in the minimum default amount specified by the Government. The Appellant also claimed a pre-existing dispute based on a notice issued to a different entity. However, the Adjudicating Authority admitted the application ex-parte. The Appellant chose to appeal rather than seek a recall of the order.2. The Appellant contended that the change in the default amount threshold during the pendency of the application affected the jurisdiction of the Adjudicating Authority. The Operational Creditor argued that the change was prospective, citing a Tribunal decision. The Appellant also raised the issue of a pre-existing dispute, claiming payments made to the Operational Creditor until December 2017. The Tribunal noted the Corporate Debtor's business relationship with the Operational Creditor, compliance with Section 8 notice requirements, and the lack of response from the Corporate Debtor. The Tribunal emphasized the importance of timely responses and the consequences of non-appearance in insolvency proceedings. The Tribunal rejected the Appellant's arguments, citing relevant legal provisions and precedents.In conclusion, the Tribunal dismissed the appeal, finding no merit in the Appellant's contentions regarding the maintainability of the application and the existence of a pre-existing dispute. The Tribunal emphasized the importance of compliance with statutory requirements and timely responses in insolvency proceedings.