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2020 (6) TMI 797 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - dispute regarding quality of goods, raised prior to the receiving of the Demand Notice - defective goods supplied or not - HELD THAT:- On reading of Sections 8 & 9 of the IBC together, it is found that before filing an application under Section 9 of IBC, an Operational Creditor is required to deliver a Demand Notice under Section 8 (1) of the IBC and the Corporate Debtor is required to file a reply to the same within 10 days of receiving the Demand Notice or copy of the invoices mentioned in sub-section (1) and bring to the notice of the operational creditor (a) existence of a dispute, if any, or record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute. The Corporate Debtor is also required to produce the documents to show that the amount if any has been paid. And after the expiry of the period of 10 days, if the Operational Creditor does not receive the payment from the Corporate Debtor or notice of dispute under sub-section 2 of Section 8 of IBC then the Operational Creditor has right to file an application before the Adjudicating Authority for initiating Corporate Insolvency Resolution Process. The Corporate Debtor shows that they made the payment or sent notice of dispute in that case the application under Section 9 of IBC is not maintainable. In other words, if “notice of dispute has been received by the operational creditor or there is record of dispute in the information utility” then the Adjudicating Authority may reject the application - in the present case, it is found that the Corporate Debtor has raised a dispute regarding the quality of goods prior to the receiving of Demand Notice. Mere plain reading of Section 5(6) of the IBC shows that the “dispute” includes a suit or arbitration proceedings relating to the existence of the amount of debt, or the quality of goods or service or the breach of a representation or warranty - Here in the case in hand, the Corporate Debtor has raised a dispute regarding the quality of the goods, which is one of the dispute u/s5(6) of IBC and in support of that they have placed reliance upon two letters which are enclosed at page nos. 19 & 21 of the reply, in which it is specifically mentioned that Corporate Debtor has raised a question relating to quality of goods supplied by the Operational Creditor on 09.10.2015 and also sent a reminder on 16.10.2015 in which it is alleged that the Operational Creditor is not responding to their quality complaint. The contention of the Corporate Debtor that they raised the dispute regarding the quality of goods is correct and liable to be accepted. As it is already stated that the last date of invoice is 05.10.2015 and soon thereafter, the dispute relating to quality was raised by the Corporate Debtor - the Corporate Debtor had raised a dispute regarding the quality of goods and Operational Creditor had failed to convince us that the same dispute was resolved, therefore, the Operational Creditor has falsely sworn an affidavit under Section 9 (3) (b) that no notice was given by the Corporate Debtor relating to the payment of the unpaid operational debt, therefore, in view of Section 9 (5) (ii) (d), if the notice or dispute has been raised by the Corporate Debtor or there is record of dispute in the information utility, in that case the Adjudicating Authority has no option but to reject the application of the Operational Creditor. The present application is not maintainable and same is dismissed.
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