2018 (12) TMI 966 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process (CIRP) - existence of a dispute - Held that - There is a dispute, about the unpaid operational debt, between the parties which is supported by abundant evidence. This dispute existed before the serving of demand notice under section 8, and the Operational Creditor had notice of existence of such dispute. Further, this dispute truly exists in fact and is not spurious, hypothetical or illusory, as has been stated in the judgment of the Hon ble Supreme Court in Mobliox case (2017 (9) TMI 1270 - SUPREME COURT OF INDIA). For the reasons mentioned above, we hereby reject this petition as, under section 9(5)(2)(d), the notice of dispute has been received by the Operational Creditor.

Summary

Issues:
Company Petition under Insolvency & Bankruptcy Code, 2016 (IBC) to initiate Corporate Insolvency Resolution Process (CIRP) against Corporate Debtor for default in payment of salary and employment dues.

Detailed Analysis:

Issue 1: Default in Payment of Salary and Employment Dues
The petitioner, an Operational Creditor, filed a Company Petition under Section 9 of the IBC against the Corporate Debtor, alleging a default in payment of salary and employment dues amounting to ?24,63,319 as of 30.12.2017.

Issue 2: Dispute Over Salary and Termination
The dispute arose when the Petitioner's performance was deemed unsatisfactory by the Respondent, leading to financial difficulties for the Respondent. The Petitioner voluntarily accepted reduced payments, citing financial hardship of the company. However, disagreements arose regarding the terms of resignation, notice period, and final settlement.

Issue 3: Allegations and Counter-Claims
The Petitioner alleged harassment, non-payment of dues, and unauthorized actions by the Respondent, while the Respondent claimed mutual negotiation of salary reduction, early resignation, and disputed the full and final settlement amount. Both parties presented correspondence and evidence supporting their claims.

Issue 4: Existence of Dispute
The Respondent disputed the Petitioner's claims and referred to the Supreme Court judgment in Mobilox case, emphasizing the existence of a dispute as a ground for dismissal under IBC Section 9. The Court outlined conditions for rejecting a petition, including the presence of an operational debt, due payment, and a pre-existing dispute.

Issue 5: Adjudication and Decision
After analyzing the correspondence and arguments from both sides, the Tribunal concluded that a genuine dispute existed regarding the unpaid operational debt. Citing the Supreme Court's guidance, the Tribunal rejected the petition under Section 9(5)(2)(d) due to the notice of dispute received by the Operational Creditor.

Conclusion:
The Tribunal dismissed the Company Petition based on the existence of a pre-existing dispute between the parties over the unpaid operational debt, as evidenced by the correspondence and actions taken. The decision was in line with the legal requirements outlined in the IBC and supported by the Supreme Court's interpretation in the Mobilox case.