Tribunal upholds decision on Insolvency and Bankruptcy appeal, citing pre-existing dispute and threshold requirements.

The Tribunal dismissed the appeal, ruling that the application was not barred by Section 10A of the Insolvency and Bankruptcy Code as the amounts due were prior to the specified date. It found no pre-existing dispute, noting the lack of pending claims or suits before the Section 8 Notice. The claim, including principal debt and interest, exceeded the threshold, making the application maintainable. The Tribunal cited relevant case law and upheld the original order, closing any related pending applications.

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Issues Involved:

1. Whether the application is hit by Section 10A of the Insolvency and Bankruptcy Code (IBC).
2. Whether there is a pre-existing dispute between the parties.
3. Whether the claim includes both principal debt and interest on delayed payment.

Summary:

Issue 1: Application under Section 10A of IBC

The Tribunal examined whether the application is barred by Section 10A of the Code. The invoices in question had due dates prior to 25/03/2020, and the date of default mentioned in the Section 9 Application was 22/02/2020. The Tribunal concluded that Section 10A cannot be applied as the amounts due and payable were for a period prior to 25/03/2020. Therefore, the application was not hit by Section 10A.

Issue 2: Pre-existing Dispute

The Tribunal addressed the issue of a pre-existing dispute, noting that the MSME Council had dismissed the application for arbitration, observing that the nature of the transactions required voluminous evidence unsuitable for summary proceedings. The Tribunal found no pending claims, suits, or arbitration proceedings before the initiation of the Section 8 Notice. Additionally, the Appellant had made payments even after filing the application before the MSME Council, further establishing the absence of a pre-existing dispute. The Tribunal referred to the Supreme Court's judgment in 'Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd,' which emphasized that only genuine disputes should be considered, and found the dispute raised by the Appellant to be spurious and illusory.

Issue 3: Claim Including Principal Debt and Interest

The Tribunal noted that the total amount for the maintainability of the claim includes both the principal debt and the interest on delayed payment as stipulated in the invoices. The principal amount was Rs. 1,65,60,017/- and the interest at 24% per annum amounted to Rs. 56,31,027/-. The Tribunal held that the total amount exceeded the threshold of Rs. 1,00,00,000/-, making the application maintainable. The Tribunal cited the NCLAT Principle Bench's decision in 'Mr. Prashat Agarwal Vs. Vikash Parasrampuria & Anr.' to support its conclusion.

Conclusion

The Tribunal dismissed the appeal, finding no illegality or infirmity in the impugned order dated 31/03/2023, and confirmed that the amounts were due and payable prior to 25/03/2020 with no pre-existing dispute. The appeal was dismissed with no costs, and any connected pending interlocutory applications were closed.

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