Appellate Tribunal dismisses insolvency petition due to pre-existing dispute over material lifting, citing Apex Court precedent.

The Appellate Tribunal upheld the Adjudicating Authority's decision to dismiss the Section 9 petition under the Insolvency and Bankruptcy Code, 2016, due to a pre-existing dispute between the parties regarding the lifting of materials. The Tribunal agreed with the Adjudicating Authority's reliance on the Apex Court's judgment in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited, confirming that the dispute was plausible and warranted further investigation. The appeal was dismissed, and no jurisdictional overreach or error was found in the Adjudicating Authority's order.

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Issues Involved:
The appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 filed against the Impugned Order dated 07.08.2023, dismissal of the Application under Section 9 of the Code, dispute regarding lifting of materials, jurisdiction of Adjudicating Authority, pre-existing dispute, reliance on judgment of the Apex Court.

Brief facts:
The appeal was filed against the Impugned Order passed by the Adjudicating Authority, dismissing the Application under Section 9 of the Insolvency and Bankruptcy Code, 2016. The dispute arose between the Appellant and Respondent regarding the lifting of materials, with the Respondent arguing that the Appellant failed to lift the agreed quantities. The Adjudicating Authority considered the oral business dealings between the parties and concluded that there was a pre-existing dispute.

Jurisdiction Issue:
The Appellant raised an issue regarding the Adjudicating Authority exceeding its jurisdiction by deciding the Section 9 Application on the basis of preponderance of probabilities. The Adjudicating Authority explained the reasons for dismissing the application, stating that it was not solely based on probabilities but also on circumstantial factors. The main consideration was whether a pre-existing dispute existed, which the Adjudicating Authority found to be the case.

Pre-existing Dispute:
The Adjudicating Authority relied on the judgment of the Apex Court in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited (2018) 1 SCC 353. The Adjudicating Authority concluded that a dispute was raised by the Respondent after receiving the demand notice, which was deemed plausible and not a feeble legal argument. Further investigation was deemed necessary to determine the genuineness of the invoices and Sale Orders, indicating the existence of a pre-existing dispute.

Conclusion:
The Adjudicating Authority's decision to dismiss the Section 9 petition based on the existence of a pre-existing dispute was upheld by the Appellate Tribunal. The appeal was dismissed, and no grounds were found to interfere with the Adjudicating Authority's order.

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