Operational Creditor Prevails in Debt Dispute Case

The Tribunal found in favor of the Operational Creditor, determining that a debt was due and defaulted upon by the Corporate Debtor. The Tribunal upheld the Impugned Order, stating that the Operational Creditor was entitled to file an Application under Section 9 of the IBC. Additionally, the Tribunal concluded that there was no pre-existing dispute between the parties prior to the issuance of the Demand Notice under Section 8 of the IBC, dismissing the appeal and closing the connected pending Interlocutory Applications.

---

---

Issues Involved:
1. Whether there was a debt due of which default was committed by the Corporate Debtor entitling the Operational Creditor to file an Application under Section 9 of the IBCRs.
2. Whether there was a pre-existing dispute between the parties prior to issuance of Demand Notice under Section 8 of the IBC dated 23.08.2021Rs.

Issue-wise Detailed Analysis:

Issue No. (i): Whether there was a debt due of which default was committed by the Corporate Debtor (CD) entitling the Operational Creditor (OC) to file an Application under Section 9 of the IBCRs.

To determine whether a debt existed and if a default occurred, the definitions of "debt" and "default" under the IBC were examined. A debt is defined under Section 3(11) as a liability or obligation in respect of a claim, which includes financial and operational debts. A claim, as per Section 3(6), includes a right to payment or remedy for breach of contract. Operational debt and operational creditor are defined under Sections 5(21) and 5(20) respectively, indicating a claim for goods or services provided.

The CD had placed a purchase order on 01.10.2018 for 66,000 STBs valued at USD 6,38,157, agreeing to pay 15% in advance and the remaining 85% within 180 days of delivery. The STBs were delivered in three shipments, and the CD filed the necessary bill of entries with customs, establishing receipt and liability for payment. The CD argued it was merely an agent for Akshaya, earning a 3% commission, and thus not responsible for payment. However, the contract was directly between the OC and CD, making the CD liable for payment regardless of its arrangement with Akshaya.

The Tribunal agreed with the Adjudicating Authority (AA) that a debt existed, was due, and defaulted upon by the CD. The issuance of a proper demand notice in Form 3 fulfilled the requirements stipulated in the IBC. Therefore, the Tribunal found no error in the Impugned Order on this issue.

Issue No. (ii): Whether there was a pre-existing dispute between the parties prior to issuance of Demand Notice under Section 8 of the IBC dated 23.08.2021Rs.

The CD claimed a pre-existing dispute, referencing the Mobilox Innovations Pvt. Ltd. v Kirusa Software Pvt. Ltd. case, which states that if a pre-existing dispute exists, the AA must dismiss the application under Section 9 of the IBC. The CD presented evidence of correspondence advising the OC to hold shipments and pursue payments from Akshaya, alleging these communications established a pre-existing dispute.

The OC denied any pre-existing dispute, emphasizing the clear contract for the supply of 66,000 STBs and the CD's acknowledgment of receipt through customs documentation. The OC argued that disputes between the CD and Akshaya were separate and did not affect the CD's obligation to the OC.

The Tribunal noted that the CD had initiated Section 9 proceedings against Akshaya, later dismissed due to a compromise memo. The Tribunal found that the correspondence between the CD and OC did not establish a pre-existing dispute. The clause in the compromise memo between the CD and Akshaya further clarified the CD's responsibility to settle claims with the OC.

The Tribunal concluded that there was no pre-existing dispute and upheld the AA's decision. The Tribunal dismissed the appeal, finding no grounds for interference with the Impugned Order dated 22.07.2022. The connected pending Interlocutory Applications were also closed.

---