Tribunal dismisses petition under Insolvency Code citing pre-existing disputes. Legal remedies available.

The tribunal dismissed the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, due to the existence of genuine pre-existing disputes between the parties regarding the goods supplied. C.P.(IB) No. 140/KB/2020 was deemed not maintainable and was consequently dismissed on 19th September 2022. The Operational Creditor was informed that other legal remedies could still be pursued, and all parties involved were to receive e-mail copies of the order.

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Issues Involved:
1. Validity of the Demand Notice.
2. Existence of Pre-existing Disputes.
3. Maintainability of the Petition under Section 9 of the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:

1. Validity of the Demand Notice:

The Operational Creditor issued a demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016, on 13.11.2019. The Corporate Debtor contended that the demand notice was sent to incorrect email addresses, specifically to the statutory auditor's email and an unrelated email. However, the tribunal noted that the email address used by the Operational Creditor was registered with the Registrar of Companies (ROC) as the email of the Corporate Debtor. Thus, the tribunal concluded that the service of the demand notice to the said email was valid. The tribunal stated, "the service of the demand notice to the said email id is valid."

2. Existence of Pre-existing Disputes:

The Corporate Debtor argued that there were pre-existing disputes regarding the quantity and quality of the goods supplied. The tribunal found that the Corporate Debtor had raised issues about the weight and quantity of the paper reels supplied as early as 01.10.2018, well before the demand notice was issued. The Operational Creditor had acknowledged these disputes in an email dated 01.10.2018. The tribunal stated, "the dispute relating to the weight of the reels supplied was first raised by the Corporate Debtor vide letter dated 01.10.2018." The tribunal further noted that several correspondences between the parties indicated ongoing disputes, including issues about short supply, excess rates, and non-furnishing of original challans and reel charts. Consequently, the tribunal concluded that there were genuine pre-existing disputes, stating, "this adjudicating authority is satisfied that there are pre-existing disputes in the instant petition."

3. Maintainability of the Petition:

Given the pre-existing disputes, the tribunal referred to the Supreme Court's decision in Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited, which held that the existence of a dispute prior to the receipt of the demand notice would render the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, not maintainable. The tribunal emphasized that the disputes in this case were not "mere feeble arguments" but were backed by evidence. The tribunal concluded, "the pre-existing disputes in the instant case are not mere feeble arguments, instead they are backed by evidence." Therefore, the petition was deemed not maintainable and was dismissed.

Conclusion:

The tribunal dismissed the petition, stating, "C.P.(IB) No. 140/KB/2020 shall stand dismissed." The Operational Creditor was advised that the dismissal does not preclude pursuing other legal remedies, and the registry was directed to send e-mail copies of the order to all parties involved. The order was signed on 19th September 2022.

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