Appellate Tribunal Upholds CIRP Initiation Against Corporate Debtor

The Appellate Tribunal upheld the decision of the Adjudicating Authority, dismissing the appeal and confirming the initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The Tribunal found no merit in the Corporate Debtor's arguments regarding pre-existing disputes and forgery, concluding that the Corporate Debtor had defaulted on its payment obligations and that the Operational Creditor's application under Section 9 of the Insolvency & Bankruptcy Code, 2016 was rightly admitted.

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Issues Involved:
1. Admission of application under Section 9 of the Insolvency & Bankruptcy Code, 2016.
2. Allegation of pre-existing dispute between Corporate Debtor and Operational Creditor.
3. Allegations of forgery and fabrication of documents by the Corporate Debtor.

Summary:

1. Admission of Application under Section 9 of the Code:
The appeal was filed under Section 61 of the Insolvency & Bankruptcy Code, 2016, against the order dated 16.08.2022 by the National Company Law Tribunal (NCLT), Jaipur Bench, which admitted the application under Section 9 of the Code filed by the Operational Creditor (Respondent No.2) and initiated the Corporate Insolvency Resolution Process (CIRP) against Respondent No.1 (Corporate Debtor).

2. Allegation of Pre-existing Dispute:
The Corporate Debtor argued that there was a pre-existing dispute regarding the quality of granite slabs supplied by the Operational Creditor, which were allegedly not as per the specified thickness. The Corporate Debtor claimed that this issue was communicated to the Operational Creditor and that payments were stopped due to these quality concerns. However, the Adjudicating Authority found that the dispute regarding the quality of goods was raised only after the inspection report dated 16.12.2019 and that the goods were consumed by the Corporate Debtor without any prior complaint. The Adjudicating Authority concluded that there was no genuine pre-existing dispute and that the Corporate Debtor had defaulted on its payment obligations.

3. Allegations of Forgery and Fabrication:
The Operational Creditor alleged that the Corporate Debtor had submitted forged documents to create a false dispute regarding the quality of goods. An application under Section 340 of the Code of Criminal Procedure, 1973, was filed by the Operational Creditor, alleging forgery and fabrication of diary pages by the Corporate Debtor. The Adjudicating Authority found that the Corporate Debtor had accepted the delivery of goods without raising any dispute and that the plea of pre-existing dispute was not credible.

Conclusion:
The Appellate Tribunal upheld the decision of the Adjudicating Authority, dismissing the appeal and confirming the initiation of CIRP against the Corporate Debtor. The Tribunal found no merit in the Corporate Debtor's arguments regarding pre-existing disputes and forgery, concluding that the Corporate Debtor had defaulted on its payment obligations and that the Operational Creditor's application under Section 9 of the Code was rightly admitted.

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