TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Tribunal sets aside CIRP order, finds pre-existing dispute</h1> <h3>Raju Jagtap, Suspended Director of Insteel Engineers Private Limited Versus Jayesh Steel Pvt. Ltd., Insteel Engineers Private Limited</h3> Raju Jagtap, Suspended Director of Insteel Engineers Private Limited Versus Jayesh Steel Pvt. Ltd., Insteel Engineers Private Limited - TMI Issues Involved:1. Existence of operational debt and default.2. Pre-existing dispute.3. Jurisdiction and scope of the Adjudicating Authority under IBC.Summary:Existence of Operational Debt and Default:The appeal arises from the order dated 12.04.2023 by the National Company Law Tribunal (NCLT), Mumbai Bench-IV, which admitted the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) filed by the Operational Creditor (Respondent No.1) and initiated Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The Corporate Debtor had issued a purchase order on 08.05.2019, and the Operational Creditor supplied goods accordingly. Payments were partially made, leaving an outstanding debt of Rs.1,37,14,859/-. The Operational Creditor issued a demand notice under Section 8 of IBC on 22.02.2021, which the Corporate Debtor replied to on 09.03.2021. The Adjudicating Authority admitted the Section 9 application, leading to the present appeal by the suspended Director of the Corporate Debtor.Pre-existing Dispute:The Appellant contended that payments were to be made directly by Anwesha, not the Corporate Debtor, as per an understanding reached on 05.11.2019. The Operational Creditor had accepted this arrangement and received payments from Anwesha. The Appellant argued that there was a pre-existing dispute regarding the payment terms, evidenced by communications and the conduct of the parties. The Operational Creditor's issuance of a demand notice after Anwesha entered CIRP indicated an attempt to use IBC as a recovery forum, contrary to its objectives.Jurisdiction and Scope of the Adjudicating Authority:The Adjudicating Authority should determine the existence of operational debt, its default, and any pre-existing dispute as per the Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd. guidelines. The Appellant argued that the Adjudicating Authority erred in not recognizing the pre-existing dispute and the modified payment arrangement. The Operational Creditor's conduct, such as accepting post-dated cheques from Anwesha and not challenging the new payment arrangement, supported the existence of a dispute.Judgment:The Tribunal found that the Adjudicating Authority failed to recognize the pre-existing dispute and the modified payment arrangement. The Operational Creditor's conduct indicated acceptance of the new arrangement. The Tribunal concluded that the Section 9 application should not have been admitted due to the pre-existing dispute and the lack of liability on the Corporate Debtor's part. The impugned order dated 12.04.2023 initiating CIRP was set aside, and the Corporate Debtor was released from CIRP. The Operational Creditor was allowed to seek alternative legal remedies. The appeal was allowed with no costs, and the Operational Creditor was directed to pay nominal fees and actual expenses incurred by the IRP.
TaxTMI 
TaxTMI 
