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2023 (3) TMI 1075 - AT - Insolvency and BankruptcyMaintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of discernible pre-existing dispute surrounding the debt claimed to be due and payable by the Operational Creditor or not - HELD THAT:- The Corporate Debtor in its reply dated 08.08.2020 to the Section 8 demand notice had disputed both the quantum of operational debt and also deficiencies in respect of discharge of contractual obligations by the Operational Creditor. There are no material to have been placed on record by the Operational Creditor wherein the Corporate Debtor can be said to have unambiguously admitted the operational debt claimed by the Appellant - the Adjudicating Authority has rightly observed in the impugned order that the Corporate Debtor had raised an issue with regard to the existence of amount claimed by the Operational Creditor and asked for reconciliation of accounts. Deficiencies in respect of discharge of contractual obligations by the Operational Creditor as raised by the Corporate Debtor - whether there was a plausible dispute supported by the materials raised by the Corporate Debtor in Reply to Demand Notice? - HELD THAT:- On looking into the contents of allegations made in the Reply to the Demand Notice, it is clear that Reply notice raises substantial and genuine issues to oppose the claim of the Operational Creditor’s amount due. The issue of deficiency in terms of defects and delays in respect of supplies received from the Operational Creditor was raised by the Corporate Debtor prior to issue of demand notice of 29.07.2020 as borne out from a series of emails placed at pages 432-437 of APB. Concisely put, the email dated 10.10.2017 from the Corporate Debtor raises issues about repair/replacement of supplies made; email dated 18.10.2017 relates to complaint about oil drums having been sent without sealing; email dated 18.05.2018 is about non-supply of oil; email dated 29.11.2018 is about oil drums sent without sealing; email dated 23.02.2019 is about repair of leaking power transformers; email dated 15.10.2019 and 26.11.2019 are about repair of power transformers. These emails which are on record clearly substantiate that the Operational Creditor was put to notice regarding non-supply of goods, delay in supplies, supply of defective goods which are clear signs of pre-existing disputes. The Adjudicating Authority having noted that the arbitration proceedings were kick-started by the Corporate Debtor starting September 2020, also observed that these arbitration proceedings were clearly initiated after the issuance of the demand notice in July 2020. Hence, it has been rightly held by the Adjudicating Authority that the invocation of the arbitration proceedings being subsequent to the issue of the demand notice cannot be treated as a pre-existing dispute. There exists a pre-existing dispute with respect to the existence of amount due and payable and quality of goods and services supplied by the Operational Creditor to the Corporate Debtor. Present is a case where it cannot be said that defence taken by the Corporate Debtor in Reply Notice is a moonshine defence unsupported by any evidence. The ratio of judgment by the Hon’ble Supreme Court in Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Private Limited [2017 (9) TMI 1270 - SUPREME COURT] is indeed squarely applicable in the present case and has been correctly applied by the Adjudicating Authority. The Adjudicating Authority did not commit any error in rejecting the Section 9 Application filed by the Appellant on the ground of pre-existing dispute. There is no merit in the Appeal - Appeal dismissed.
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