TMI Blog2019 (7) TMI 1259X X X X Extracts X X X X X X X X Extracts X X X X ..... lication shows that the aforesaid debt is due and payable and has not been paid, in such case, in absence of 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. It is clear that the claim means a right to payment even if it is disputed. Therefore, merely because the Corporate Debtor has disputed the claim by showing that there is certain counter claim, it cannot be held that there is pre-existence of dispute - In the present case, there is no record to suggest pre-existence of dispute with regard to the services rendered by the Appellant, the application under Section 9 should not have been rejected by the Adjudicating Authority on the ground that the dispute about the quantum of payment cannot be determined. Case remitted to the Adjudicating Authority to admit the application under Section 9 after notice to the Respondent. - Company Appeal (AT) (Insolvency) No. 720 of 2018 - - - Dated:- 24-7-2019 - Mr. S.J. Mukhopadhaya, Mr. A.I.S. Cheema Mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are serious issues with respect to the engagement with the Appellant, but such e-mail does not relate to any pre-existing dispute. Whatever the stand taken by the Corporate Debtor before the Adjudicating Authority, are afterthought which is after receipt of Demand Notice under Section 8(1) of the I B Code issued on 14th July, 2017. 3. The Adjudicating Authority has not rejected Section 9 application on the ground of pre-existing dispute, but rejected it on the ground that it, cannot enter into enquiry with regard to the disputed claim. 4. The aforesaid finding has been given by the Adjudicating Authority on the basis of statement made by the Corporate Debtor as apparent from the impugned order, relevant of which is quoted below: 5. The Learned Counsels for the Petitioner, while pointing out various averments made in the Company Petition and the documents filed in support of the petition, has also filed written arguments dated 18.09.2018, by inter alia, contending as follows: a. The details of invoices raised, the corresponding amount paid by the respondent and the outstanding amounts remaining have been tabulated below: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25,61,300 5,40,000 20,21,800 That from the above, it is amply clear that an amount of ₹ 20,21,800/-still remains outstanding from the Respondent. Based on the request made by the respondent, the Petitioner put a replacement for the position held by Mr. Rajit Mehta. The Petitioner was offered a settlement of ₹ 6,00,000/- by the Respondent. However, that was not accepted. b. It is contended that the Petitioner cannot adjust in his books to adjust the amount paid in relation to the employment of Mr. Rajit Mehta. There is no provision for set-off under the IBC, 2016. The respondent issued reply with a delay of 12 days. The additional documents filed by the respondent should not be taken into consideration with a defense raised by the respondent is moonshine defense. 6. The Learned Counsel for the Respondent has disputed the contention of the Petitioner and the debt in question is a disputed and has pointed the averments stated in additional Statement of Objections as briefly stated above. The case is covered by the Apex Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the expiry of the period of the said 10 days, the operational creditor does not either receive payment from the corporate debtor or notice of dispute, that the operational creditor may trigger the insolvency process by filing an application before the adjudicating authority under Sections 9(1) and 9(2). This application is to be filed under Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 in Form 5, accompanied with documents and records that are required under the said form. Under Rule 6(2), the applicant is to dispatch by registered post or speed post, a copy of the application to the registered office of the corporate debtor. Under Section 9(3), along with the application, the statutory requirement is to furnish a copy of the invoice or demand notice, an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt and a copy of the certificate from the financial institution maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt by the corporate debtor. Apart from this information, the other information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34. Therefore, the adjudicating authority, when examining an application under Section 9 of the Act will have to determine: (i) Whether there is an operational debt as defined exceeding ₹ 1 lakh? (See Section 4 of the Act) (ii) Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid? and (iii) Whether there is 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 in relation to such dispute? If any one of the aforesaid conditions is lacking, the application would have to be rejected. Apart from the above, the adjudicating authority must follow the mandate of Section 9, as outlined above, and in particular the mandate of Section 9(5) of the Act, and admit or reject the application, as the case may be, depending upon the factors mentioned in Section 9(5) of the Act. 8. From the aforesaid decision, it is clear that the existence of dispute must be pre-existing i.e. it must exist prior to is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate debtor- it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in part III, particulars of the financial debt in part IV and documents, records and evidence of default in part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. This it must do within 14 days of the receipt of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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