2022 (9) TMI 1008 - Tri - Insolvency and Bankruptcy

Company Petition Dismissed Due to Pre-existing Dispute

KCO Aluminium LLP Versus Elhard Marketing Limited

KCO Aluminium LLP Versus Elhard Marketing Limited - TMI Issues:1. Is there any Pre-existing disputeRs.2. Is there any jural relationship between the partiesRs.Analysis & Findings:The case involved a Company Petition filed under section 9 of the Insolvency and Bankruptcy Code, 2016 by an Operational Creditor against a Corporate Debtor for the initiation of Corporate Insolvency Resolution Process. The Operational Creditor claimed a total amount of Rs. 37,06,940 as default by the Corporate Debtor. The Operational Creditor supplied Aluminum XLPE Cables to the Corporate Debtor, who allegedly failed to clear the invoice raised. The Corporate Debtor argued that there was no contractual relation between them and the Operational Creditor, as the cables were ordered through another party, Crystal Cable Industries Limited (CCIL). The Corporate Debtor raised concerns about the quality of goods supplied by the Operational Creditor and had ongoing disputes with CCIL regarding the same.The Operational Creditor contended that the Corporate Debtor had a running account with them and failed to clear the specific invoice. They issued a statutory notice under section 8 of the Code, to which the Corporate Debtor replied, denying the alleged debt. The Operational Creditor claimed that the Corporate Debtor was aware of the transactions and had not objected to the invoices until later. The Corporate Debtor argued that the Operational Creditor had no right to claim payment as there was no direct contract between them.The Tribunal analyzed the dispute in light of previous judgments and legal provisions. Referring to cases like Innoventive Industries Ltd. v. ICICI Bank and Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software, the Tribunal emphasized the importance of pre-existing disputes in insolvency proceedings. It was noted that the Corporate Debtor had raised concerns about the quality of goods supplied by the Operational Creditor and had ongoing disputes with CCIL regarding the same. As a pre-existing dispute was established, the Tribunal dismissed the petition, allowing the Corporate Debtor to explore other legal remedies available to them.In conclusion, the Tribunal dismissed the Company Petition due to the presence of a pre-existing dispute between the parties. The Corporate Debtor was granted the liberty to pursue other legal options available to them. The order was pronounced on 19th September 2022 by the Tribunal.