2021 (5) TMI 643 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of its dues - Operational creditors - existence of debt and dispute or not - HELD THAT - When the Respondent failed to clear outstanding dues for the service rendered by the Petitioner it has terminated the Service Agreement in question vide Notices dated 20.11.2019 and 20.12.2019 by demanding to pay outstanding amounts. When efforts made by the Petitioner could not succeed the Petitioner got issued a Demand Notice dated 27.01.2020 to the Corporate Debtor in Form 3 through their Counsel which was duly served on the Corporate Debtor on 30.01.2020. Despite receiving the Demand Notice the Corporate Debtor has neither intimated the existence of any dispute within a period of ten (10) days from the date of receipt of notice (30.01.2020) nor made any payment to the Operational Creditor towards the same. Therefore the debt and default in question are deemed to be admitted and thus the Respondent committed default of debt. The Petitioner has substantiated the debt and debt in question by enclosing all relevant documents. Since the learned counsel for the Respondent conveyed the willingness of Respondent to settle the claim in question we are inclined to give one more chance to settle the claim before initiating CIRP as prayed for. Therefore it would be just and proper to grant time to the Respondent to settle the claim by disposing of the Petition instead of keeping the case pending for settlement which is not contemplated under the provisions of Code. Petition disposed off.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the IBC, 2016 based on default amount.

Analysis:
The case involved C.P. (IB) No. 180/BB/2020 filed by M/s. Whitehand Services seeking to initiate CIRP against M/s. RD Buildtech and Developers (Karnataka) Private Limited due to a default amount of Rs. 22,53,949. The Operational Creditor provided Facility Management Services to the Corporate Debtor as per a Service Agreement dated 1st May, 2019. Despite repeated notices and demands for payment, the Corporate Debtor failed to clear the outstanding dues, leading to the initiation of the CIRP.

Statement of Objections:
The Respondent contended that the Operational Creditor failed to fulfill its obligations under the Service Agreement. They claimed that incorrect invoices were raised, some for individuals who did not provide services, and disputed the authenticity of the invoices presented by the Operational Creditor. The Respondent also highlighted discrepancies in the ledger extracts provided by the Petitioner.

Court Proceedings:
During the hearing, the Petitioner's counsel emphasized the undisputed nature of the debt and default, stating that the Respondent did not respond to the demand notice. The Respondent's counsel expressed willingness to settle the claim within a specified period. The Operational Creditor terminated the Service Agreement due to non-payment and issued a Demand Notice, which was not responded to by the Corporate Debtor, leading to the admission of default.

Judgment:
The Tribunal, considering the Respondent's willingness to settle the claim, granted one month for settlement. If the claim is not settled within this period, the Petitioner can approach the Adjudicating Authority for further action. The case was disposed of without any costs being awarded. The Tribunal opted for settlement over initiating CIRP immediately, providing an opportunity for resolution before formal insolvency proceedings.