Appeal dismissed, operational creditor failed to prove debt. Corporate debtor not precluded from raising disputes.

The Tribunal dismissed the appeal, affirming the Adjudicating Authority's decision to dismiss the Section 9 Application. The operational creditor failed to prove the debt and liability, and the corporate debtor was not precluded from raising disputes or claims of payment despite not replying to the Section 8 Notice within 10 days. The Tribunal found that the appellant did not establish the existence of an operational debt that was due and payable.

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Issues Involved:
1. Whether the petitioner proved the debt and the liability of the respondent-corporate debtor to pay the same.
2. Whether the non-reply to the Section 8 Notice precludes the corporate debtor from raising issues of pre-existing dispute or payment of debt in their reply to the Section 9 petition.
3. Whether the Adjudicating Authority was justified in dismissing the Section 9 Application filed by the appellant.

Issue-wise Detailed Analysis:

1. Debt and Liability Proof:
The primary issue was whether the petitioner proved the debt and the liability of the respondent-corporate debtor to pay the claimed amount. The petitioner, an operational creditor, provided Live TV Production services for three seasons of the Pro Wrestling League (PWL). The respondent-corporate debtor contended that they had paid Rs. 21.25 crores for Season 2 and Rs. 1 crore for Season 3 in full and final settlement. The petitioner did not file a rejoinder to dispute these specific averments. The Adjudicating Authority held that due to the absence of a specific denial by the petitioner and the failure to prove the debt and liability, the issue was decided against the petitioner.

2. Non-Reply to Section 8 Notice:
The appellant argued that the corporate debtor did not reply to the Demand Notice under Section 8 of the Insolvency and Bankruptcy Code, 2016, within the stipulated 10 days, thus precluding them from raising any dispute or claim of payment in their reply to the Section 9 petition. However, it was observed that neither Section 8 nor Section 9 of the Code precludes the corporate debtor from raising the question of dispute or pleading that the debt has been paid, even if no reply was given within 10 days. The Tribunal relied on the judgment in "M/s. Brandy Realty Services Ltd. Vs. M/s. Sir John Bakeries India Pvt. Ltd." which clarified that the statutory scheme does not indicate that failure to reply within 10 days precludes the corporate debtor from raising disputes.

3. Justification of Dismissal by Adjudicating Authority:
The Tribunal considered whether the Adjudicating Authority was justified in dismissing the Section 9 Application. The Tribunal noted that the petitioner did not file a rejoinder to the respondent's reply, which cannot be construed as an admission of the respondent's claims. The Tribunal examined the merits, noting that there was an agreement for Season 2, but no agreements for Seasons 1 and 3. The respondent's defense included claims of deficient services and a stop payment on a cheque due to these deficiencies. The Tribunal referred to the Supreme Court's judgment in "Mobilox Innovations Private Limited Vs. Kirusa Software Pvt. Ltd." which emphasized that the existence of a dispute must be a plausible contention requiring further investigation, not a patently feeble legal argument or an assertion of fact unsupported by evidence. The Tribunal concluded that there were claims and counterclaims regarding the amounts to be paid, and the defense was not spurious or mere bluster. The appellant failed to discharge the burden of proving that there was an operational debt due and payable.

Conclusion:
The Tribunal dismissed the appeal, affirming the Adjudicating Authority's decision to dismiss the Section 9 Application. The Tribunal held that the operational creditor failed to prove the debt and liability, and the corporate debtor was not precluded from raising disputes or claims of payment despite not replying to the Section 8 Notice within 10 days. The Tribunal found that the appellant did not establish the existence of an operational debt that was due and payable.

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