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2022 (6) TMI 106 - AT - Insolvency and BankruptcyInitiation of CIRP - existence of debt and dispute or not - Payment withheld by the respondent corporate debtor on the ground of alert circular issued by the GST department - It is submitted that, they are still willing to pay the amount once they provide the bank guarantee for the GST amount involved - NCLT rejected the application - HELD THAT:- It is not in dispute that the Appellant is a ‘Trader’ and whenever he used to get any order from any source, he used to put corresponding order on the supplier/manufacturer of that particular goods and used to directly ask them to make direct supply to the concerned source/CD - the Respondent has raised the dispute on the issue of the Input Tax Credit in the reply to the demand notice itself. Although they have not replied within 10 days which is directory in nature but has replied in a very short period (Demand notice is dated 01st July, 2019. Reply received from CD by Appellant on 22nd July, 2019). Hence, it meets the criteria of Section 9 of the Code for raising the dispute. As in the circumstances stated, this is not a moonshine defence. The IBC is a summary proceeding. The role of the Code is limited to Insolvency Resolution to Corporate Persons in a time bound manner & in case of initiation of CIRP by Operational Creditor, the Operational debt must be undisputed. As far as the GST dispute is concerned, he is free to approach Appropriate Forum under Chapter – V of the Sale of Goods Act, 1930 for redressal of its grievance - I&B Code clearly provides for the requirements of following three criteria’s before admission of a petition under Section 9 of the Code for initiation of CIRP by Operational Creditor (i) the ‘Debt’ must be due and payable in law (ii)there must be occurrence of default & (iii) the ‘Debt’ must be undisputed. It is very much clear that the amount is outstanding. But the amount is not due and payable in the law as is very much evident from the facts that one of the supplier of the Appellant has on the basis of intelligence input and investigation conducted by ‘anti invasion’ branch of the Commissionerate of GST has revealed that the concerned supplier has taken registration under GST Regime is nonexistent and fictious, resulting into perceived loss of more than two times of the outstanding amount loss to the CD without any mistake on the part of the CD - it can be concluded that it is not meeting the criteria of either debt is due and payable in law or the Debt must be undisputed which are the pre-requisite for the admission of case under Section 9 of the Code. The Appellant is not even meeting the criteria ‘as enunciated in Section 9(5)(d) as no notice of dispute has been received by the Operational Creditor. The Operational Creditor has raised the issue with a dispute that the Appellant is not providing bank guarantee. The Appellant /OC has factually failed to communicate that there is no existence of dispute. The Hon’ble Supreme Court in TRANSMISSION CORPORATION OF ANDHRA PRADESH LIMITED VERSUS EQUIPMENT CONDUCTORS AND CABLES LIMITED [2018 (10) TMI 1337 - SUPREME COURT] has already held that IBC is not intended to be a substitute to a recovery forum and also laid down that whenever there is existence of real dispute, the IBC provisions cannot be invoked. The Code cannot be used whenever there is existence of real dispute and also whenever the intention is to use the Code as a means for chasing of payment or building pressure for releasing the payments. Appeal dismissed.
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