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2020 (12) TMI 952 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute or not - HELD THAT:- The Hon’ble Supreme Court in a catena of Judgements has laid down the Principle that in an Application under Section 9, the Corporate Debtor can point out any ‘Pre-Existing Dispute’ raised prior to the issuance of Demand Notice under Section 8, IBC, 2016. The existence of ‘Dispute’ must be ‘pre-existing’ i.e. it must exist before the receipt of the demand notice or invoice. If it comes to the notice of the Adjudicating Authority that the ‘operational debt’ is exceeding ₹ 1 lakh and the Application shows that the aforesaid debt is due and payable and has not been paid, in such case, in absence of any existence of a ‘Dispute’ between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid ‘operational debt’, the Application under Section 9 cannot be rejected and is required to be admitted. Whether the ‘Dispute’ pertaining to the invoice of November 2017 was settled between the parties? - HELD THAT:- This Tribunal finds force in the contention of the Learned Counsel appearing for the Respondent that there is no cogent evidence that these amounts have been paid towards November 2017 transaction and that the ‘Dispute’ was completely settled. Learned Counsel placed reliance on the email dated 30.01.2019 and 03.02.2019 to establish that the ‘Dispute’ with respect to the November 2017 transaction was never resolved. There is an ongoing ‘Dispute’ which is not ‘specific’ to only November 2017 transaction. The email dated 08.02.2019 sent by the Operational Creditor to the Corporate Debtor categorically states that ‘the issue was never settled,’ that nobody on behalf of the Operational Creditor had confirmed the closure of the matters; that the problem in the material supplied was on account of process malfunction at the end of the Corporate Debtor and that the Operational Creditor suffered huge losses and had instructed their office to stop future business with the Operational Creditor. The material on record, specifically the email dated 08.02.2019 evidences that the ‘Dispute’ is not ‘transaction centric’ but is an ongoing ‘Dispute’. Additionally, there is no documentary evidence to substantiate the contention of the Learned Counsel for the Appellant that November 2017 ‘Dispute’ was settled. The correspondence between the parties establishes that the ‘Dispute’ is with respect to substandard material supplied for both the consignments and explicitly refers to ‘problem of adhesion’ which led to laminates becoming unusable. The object of the Code, at least insofar as Operational Creditors are concerned, was to initiate Insolvency Process against the Corporate Debtor only in clear cases where a real ‘Dispute’ between the parties as to the ‘debt owed’ did not exist. In the instant case, this Tribunal is of the considered view that there is sufficient evidence on record to exhibit a ‘Pre-Existing Dispute’ between the parties prior to the issuance of the Demand Notice under Section 8, IBC, 2016 - In the present case, the defence is not spurious, mere bluster, plainly frivolous or vexatious. Therefore, this Tribunal is of the consequent view that the ratio of the Judgement of the Hon’ble Supreme Court in the case of M/s. Mobilox Innovations Pvt. Ltd. V/s. Kirusa Software Pvt. Ltd. [2017 (9) TMI 1270 - SUPREME COURT] squarely applies to the facts of the attendant circumstances of the case. Appeal dismissed.
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