Appeal Dismissed, Upholding CIRP Admission Decision

The appeal was dismissed, upholding the Adjudicating Authority's decision to admit the Corporate Debtor into Corporate Insolvency Resolution Process (CIRP) due to default in payment. The Tribunal allowed Bank of Baroda's intervention, directing the Insolvency Resolution Professional (IRP) to proceed with CIRP without preferential treatment to creditors. The IRP was instructed to manage the Corporate Debtor as a going concern and address management cooperation issues promptly. The Tribunal disposed of the IRP fees application, directing the IRP to discuss costs with the Committee of Creditors. The Appellant's deposit was refunded, and other incidental applications were resolved accordingly.

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Issues Involved:
1. Pre-existing disputes between the parties.
2. Claims and counter-claims regarding the quality of goods supplied.
3. Admission of the Corporate Debtor into CIRP.
4. Intervenor application by Bank of Baroda.
5. Directions to IRP for running the Corporate Debtor as a going concern.
6. Determination and payment of IRP fees and expenses.

Summary of Judgment:

Pre-existing Disputes:
The Appellant contended that the Adjudicating Authority failed to consider pre-existing disputes regarding the poor quality of goods supplied by the Operational Creditor during FY 2015-16 and 2016-17. The Corporate Debtor had issued debit notes and claimed compensation for losses. The Operational Creditor countered that these disputes were a sham defense to evade payment, and the Adjudicating Authority found no real or substantial pre-existing disputes.

Claims and Counter-claims:
The Corporate Debtor claimed that after adjusting for defective supplies and advance payments, nothing was due to the Operational Creditor. The Operational Creditor argued that credit notes amounting to Rs.35,91,500/- had already settled the dispute, and the Corporate Debtor's counter-claims were fabricated. The Adjudicating Authority concluded that disputes regarding claims and counter-claims could not be adjudicated under Section 9 of IBC.

Admission into CIRP:
The Adjudicating Authority admitted the Corporate Debtor into CIRP, finding that the Operational Creditor had established a default in payment of operational debt amounting to Rs.13,42,230/- plus interest. The Tribunal upheld this decision, noting no real pre-existing disputes and fulfillment of conditions to trigger CIRP under Section 9.

Intervenor Application by Bank of Baroda:
Bank of Baroda, as a lead member of a consortium of banks, sought to intervene, claiming an outstanding amount of Rs.37,36,32,233/- from the Corporate Debtor. The Tribunal allowed the intervention, directing the IRP to proceed with CIRP and rejecting any preferential treatment to one creditor.

Directions to IRP:
The Tribunal directed the IRP to run the Corporate Debtor as a going concern with cooperation from ex-management and employees. The IRP was also instructed to address the lack of cooperation from the suspended management and to commence CIRP without further delay.

Determination and Payment of IRP Fees:
The Tribunal disposed of the application for IRP fees, directing the IRP to take up the matter of CIRP costs, including their fees, with the CoC in accordance with law.

Conclusion:
The appeal was dismissed, and the Adjudicating Authority's order was upheld. The Tribunal directed the refund of the amount deposited by the Appellant and allowed Bank of Baroda to pursue their claims with the IRP. All other IAs were disposed of accordingly.

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