2026 (1) TMI 427 - AT - IBC

GST-backed proforma invoice payment claim and non-signatory tripartite agreement dispute; s.9 IBC petition dismissed as disputed

The NCLAT examined whether a s.9 IBC application was maintainable on the claimed operational debt. It held that reliance on proforma invoices bearing GST ... Dismissal of the Section 9 application - pre-existing disputes - contractual agreements provided for arbitration clause - proforma invoices which contained a GST number - unsigned documents - failed to meet the minimum threshold requirement of Rs. 1 Cr. - deficiencies in the management of the property and business operations of the Respondent - HELD THAT:- When Section 9 application was filed on the basis of proforma invoices which contained a GST number, it was incumbent on the part of the Appellant to make GST payment. When the Adjudicating Authority gave reasonable opportunity to the Appellant to submit GST details and yet the latter failed to furnish the same, it gave sufficient basis for the Adjudicating Authority to doubt the validity of the claim. Since the Appellant failed to provide the GST details inspite of being given a chance by the Adjudicating Authority to do so, the Appellant cannot justifiably assert any infirmity in the impugned order on this count. When we look at the signatories of the SMA dated 10.06.2019, we find that the Appellant was not a signatory therein. The SMA was a tripartite agreement executed between LSMHPL, Corporate Debtor and IBFW with the Appellant clearly not being a party thereto. We, therefore, find substance in the contention of the Respondent that there was no privity of contract between the Appellant and the Respondent in respect of the SMA and hence the claim qua the SMA is misconceived as there was no contractual obligation on the Corporate Debtor. It is the case of the Appellant that the Corporate Debtor had been continuously availing the services from the Operational Creditor without raising any disputes contemporaneously. When there were no real- time disputes raised before the Section 8 Demand Notice it shows that the defence raised by the Corporate Debtor was feeble defence raised as an after- thought. If the disputes were genuine, it remains unexplained as to why the FMA was not terminated. Thus, at the point of time when the Appellant had raised a formal demand of outstanding debt under Section 9 of IBC, there was no record of dispute. Hence, the concerns raised by the Corporate Debtor on the quality of services rendered by the Operational Creditor and other deficiencies/ shortcomings/irregularities after the filing of the Section 9 application could not have been treated as pre-existing disputes as has been erroneously done by the Adjudicating Authority. It was also vehemently contended that not only were the agreements between the Appellant and Respondent not terminated but even the invocation of arbitration proceedings was done after the filing of the Section 9 application and hence cannot be treated as pre-existing dispute. The law on this aspect is well settled that in Section 9 proceedings, the Adjudicating Authority is not required to enter final adjudication with regard to existence of dispute between the parties regarding the operational debt but what has to be looked into is whether the defence has raised a plausible dispute which needs further adjudication by a competent court. Section 9 cannot be triggered for any debt which amount falls below threshold limits or for debts which are steeped in disputes. The stance taken by the Appellant that the Corporate Debtor was trying to manufacture disputes fails to pass muster for reasons discussed above. The defence raised by the Corporate Debtor cannot be held to be moonshine, spurious, hypothetical or illusory and for such disputed operational debt, Disputes pertaining to contractual issues are not to be resolved in Section 9 proceedings and hence in the present factual matrix, the Section 9 proceeding cannot be initiated at the instance of the Operational Creditor. In the given facts and circumstances, this is not a case where the Adjudicating Authority could have admitted the Section 9 application. We are of the considered view that the Adjudicating Authority has not committed any error in dismissing the Section 9 application filed by the Appellant. Issues: (i) Whether the Section 9 application filed by the Operational Creditor was maintainable having regard to the threshold requirement and disputed nature of the claimed debt; (ii) Whether claims based on proforma/unsigned invoices and absence of proof of GST (GSTR extracts) rendered the claimed operational debt invalid; (iii) Whether amounts claimed under agreements/MoU/SMA to which the Operational Creditor was not a signatory were admissible.Issue (i): Whether the Section 9 application was maintainable in view of the admitted quantum, claimed interest, and existence of pre-existing disputes.Analysis: The admitted principal management-fee claim under the Franchisee and Management Agreement (FMA) was Rs. 60.18 lakhs and the contract did not provide for interest; inclusion of interest was therefore not sustainable and reduced the claim below the statutory threshold in Section 4. The record showed contemporaneous communications and a meeting dated 27.01.2023 and legal notices prior to the Section 9 filing documenting grievances and counter-claims; these facts supported a plausible pre-existing dispute requiring adjudication outside Section 9 proceedings.Conclusion: The issue is decided in favour of Respondent.Issue (ii): Whether reliance on proforma/unsigned invoices that bear a GST number without accompanying GSTR-1/GSTR-3B extracts or other proof of GST payment defeats the operational debt claim.Analysis: Regulation 2B of the IBBI Regulations requires an operational creditor possessing a GST number to furnish relevant extracts of Form GSTR-1 and Form GSTR-3B along with a Section 9 application. The proforma invoices produced by the Operational Creditor displayed a GST number but were not supported by the required GSTR extracts or proof of GST payment despite an opportunity granted by the Adjudicating Authority to produce such proof. Absence of the mandated GSTR records and unsigned/proforma status of the invoices reasonably undermined the validity of the claimed debt.Conclusion: The issue is decided in favour of Respondent.Issue (iii): Whether claims asserted under the MoU dated 26.08.2021 and the Sales and Marketing Agreement (SMA), to which the Operational Creditor was not a signatory, could be included to meet the threshold and sustain the Section 9 petition.Analysis: The MoU of 26.08.2021 and the SMA were signed by other entities and did not show privity between the Corporate Debtor and the Operational Creditor; the MoU was not executed by the Operational Creditor and the SMA was a tripartite agreement in which the Operational Creditor was not a party. Claims based on agreements to which the Operational Creditor was not a contracting party and which lacked contractual entitlement to the sums claimed could not be admitted to augment the admitted FMA dues. Interest claimed under these instruments was also not contractually provided.Conclusion: The issue is decided in favour of Respondent.Final Conclusion: The Adjudicating Authority correctly dismissed the Section 9 application because the admitted principal claim fell below the statutory threshold when unsustainable interest was excluded, the Operational Creditor failed to produce mandatory GST records for invoices bearing a GST number, and there existed plausible pre-existing disputes and lack of privity on portions of the claim that precluded initiation of CIRP under Section 9.Ratio Decidendi: Where an operational creditor relies on invoices showing a GST number, Regulation 2B requires filing of corresponding GSTR-1/GSTR-3B extracts; absence of such mandated proof together with a plausible pre-existing dispute and lack of contractual privity for portions of the claim justifies dismissal of a Section 9 petition when the admitted undisputed claim does not meet the statutory threshold.