Tribunal allows Company Appeal, remands for Insolvency Resolution Process. Parties to appear before Adjudicating Authority.

The Tribunal allowed the Company Appeal, setting aside the Adjudicating Authority's order and remanding the matter for the initiation of Company Insolvency Resolution Process against the Corporate Debtor. Both parties were directed to appear before the Adjudicating Authority for further proceedings, with no costs awarded and pending applications closed.

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Issues:
The challenge in this Company Appeal is to the Impugned Order dated 09/04/2021 passed in CP(IB) No. 178/BB/2020, where the Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was dismissed by the Adjudicating Authority.

Issue 1:
The Appellant contended that the Respondent owed an outstanding amount for supplied cables, supported by invoices and correspondence. The Respondent failed to respond to a demand notice, leading to the Section 9 Application. The Appellant argued that Section 10A does not apply as the default period predates its enactment.

Issue 2:
The Respondent claimed to have made regular payments and proposed a settlement for the outstanding dues. Disputes arose over defective products and payment terms, with the Respondent asserting willingness to settle the dues in tranches. The Respondent highlighted the need for RBI approval for imports made over 6 months earlier.

Issue 3:
The Respondent presented evidence of quality disputes dating back to 2018, indicating prior issues with the goods supplied. The Respondent emphasized that the accounts did not reflect the amount claimed by the Appellant, citing a previous judgment to argue against the initiation of CIRP based solely on a balance sheet entry.

Judgment:
The Tribunal found the dispute raised by the Respondent to be spurious, given the admission of liability in a letter dated 31/05/2019. It disagreed with the Adjudicating Authority's view that CIRP cannot be initiated against a solvent company during a pandemic, as the debt was due since 2018. The Tribunal set aside the Adjudicating Authority's order, remanding the matter for the initiation of Company Insolvency Resolution Process against the Corporate Debtor.

Conclusion:
The Tribunal allowed the Company Appeal, directing both parties to appear before the Adjudicating Authority for further proceedings. No costs were awarded, and any pending applications were closed.

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