Tribunal upholds rejection of Section 9 application due to pre-existing dispute over goods quality.

The Tribunal upheld the Adjudicating Authority's decision to reject the Section 9 application due to a genuine pre-existing dispute regarding the quality of goods raised by the Respondent. The appeal was dismissed, allowing the Appellant to pursue alternative legal avenues.

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Issues Involved:
1. Whether operational debt above the statutorily prescribed threshold limit had become due and payable.
2. Whether there has been any default in respect of such payment on the part of the Corporate Debtor.
3. Whether the debt has been disputed.

Summary:

Issue 1: Operational Debt and Default
The Appellant (Operational Creditor) argued that the Corporate Debtor owed Rs.3,01,89,141/- for unpaid invoices, including interest. The Appellant sent a Section 8 demand notice on 28.06.2019, to which the Respondent replied beyond the statutory period. The Appellant contended that the Corporate Debtor created a "moonshine defence" of pre-existing disputes to evade payment. The Respondent had allegedly raised disputes through three communications regarding defective goods. The Appellant argued these disputes were fabricated and never received, as confirmed by an RTI application showing the letters were issued from a non-existent post office. The Appellant also pointed out that the Respondent had acknowledged a liability of Rs.2,20,00,724/- on 01.04.2019, but raised a defence about two credit notes amounting to Rs.14,03,472/-.

Issue 2: Pre-existing Disputes
The Respondent argued that disputes about the quality of goods were raised before the Section 8 demand notice, citing communications from 01.07.2017, 03.10.2017, and 25.04.2019. The Respondent claimed these communications were bona fide and supported by postage receipts. The Appellant countered that these communications were fabricated and not delivered, as the post office mentioned had closed before the letters were purportedly sent. The Adjudicating Authority found that the authenticity of postal receipts cannot be decided under the summary jurisdiction of the IBC.

Issue 3: Examination of Dispute
The Tribunal referred to the Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Private Limited case, emphasizing that the adjudicating authority must reject a Section 9 application if there is a "plausible contention" of a dispute. The Tribunal found that the Respondent's communications consistently raised concerns about the quality of goods, fulfilling the requirements of Section 8(2)(1)(a) of IBC. The Tribunal agreed with the Adjudicating Authority that there was a genuine dispute and that allegations of forgery and fabrication were beyond the remit of summary proceedings.

Conclusion:
The Tribunal concluded that the Adjudicating Authority did not err in rejecting the Section 9 application on the ground of pre-existing dispute. The appeal was dismissed, but the Appellant was granted the liberty to resort to other legal remedies.

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