2023 (12) TMI 609 - AT - Insolvency and Bankruptcy

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

Shree Govind Alloys Private Limited Versus Shivom Minerals Limited

The Appellate Tribunal upheld the Adjudicating Authority's decision to dismiss the Section 9 petition under the Insolvency and Bankruptcy Code, 2016, due ... Maintainability of Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - whether there is a pre-existing dispute on the basis of the submissions of both the parties and this has been dealt in detail by the Adjudicating Authority in his impugned order? - HELD THAT:- AA concluded that the respondent after the receipt of the statutory demand notice dated 11.02.2022 replied on 03.03.2022 raising a dispute. The Adjudicating Authority has gone into the circumstances of their business dealings, which was mainly basis oral arrangements and which cannot be fully substantiated and accordingly have come to the conclusion that the dispute raised by the respondent is plausible and not a patently feeble legal argument. Thus, when the Appellant received the reply to Section 8 demand notice raising a dispute, the Section 9 petition could not have been proceeded under I&B Code against the respondent. The Adjudicating Authority concluded, that to determine the contention of the respondent that the Sale Order dated 02.03.2019 was placed by the Petitioner in pursuance to an oral agreement dated 05.04.2018, to decide whether private mediation was held and settlement was arrived therein and whether petitioner agreed to forfeit Rs. 4 crores security deposit by the respondent and to decide the genuineness of the invoices and Sale Orders relied by the respondent requires, further investigation is required which can be decided only after examining the witnesses. Accordingly, AA concluded that in this scenario pre-existing dispute is existing. The inference by the Adjudicating Authority that there is a pre-existing dispute, cannot be faulted - there are no grounds to interfere in the order of the Adjudicating Authority for not allowing proceedings under Section 9 of I & B Code, 2016 - appeal dismissed. 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.