TMI Blog2021 (3) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... under the definition in the Code, i.e., the existence of the amount of debt, the quality of goods or service, or the breach of a representation or warranty. It is clear that 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 [prior to the notification of 24th March 2020] and that the aforesaid debt is due and payable and has not been paid, in such a case, in the absence of any existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before receipt of the demand notice of the unpaid operational debt , the application under Section 9 cannot be rejected and is required to be admitted. Since all the aforesaid conditions are fulfilled in the instant case, this Tribunal is of the opinion that the application submitted by Operational Creditor is complete in all respects - Application admitted - moratorium declared. - IBA/26/KOB/2020 - - - Dated:- 9-3-2021 - Hon ble Shri Ashok Kumar Borah, Member (Judicial) For the Operational Creditor : Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated that due to Covid 19 pandemic, the construction works have come to a standstill and they were not in a position to procure fund to pay off the admitted debt. It is also stated that Annexure E- confirmation from the part of the alleged Corporate Debtor is neither issued nor executed by the alleged Corporate Debtor, as it does not bear the seal of the Corporate Debtor which is a Private Limited Company. 7. It is also stated that in the affidavit filed in support of the Application, the applicant has no case that the contents of the Application, except part I and part V of the Form 5 under Sub Rule 1 of Rule 6 are true. 8. It is again stated that the Operational Creditor has filed a Civil Suit as O.S No. 12/2020 before the Principal Sub Court, Ernakulam against the Corporate Debtor for realising the very same amount. It is also stated that the Operational Creditor has filed complaint under Section 138 of the Negotiable Instruments Act,1881 [NI Act 1881] as S.T. No. 48/2020 and S.T No. 49/2020 before the judicial Magistrate Court, Thripunithura. 9. In the rejoinder the Operational Creditor stated that on 18.12.2019 they issued a Lawyer s notice to the Corporate Debtor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e insofar as Operational creditors , Operational Debt , Default and Dispute , to determine the eligibility for admission of this application. Section 5, Sub-Section 20: operational creditor means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred; Section 5 Sub-Section 21: operational debt means a claim in respect of the provision of goods or services including employment or a debt in respect of the repayment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority; Section 3 Sub-Section 12: default means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not repaid by the debtor or the corporate debtor, as the case may be; Section 5 Sub-section 6: dispute includes a suit or arbitration proceedings relating to- (a) the existence of the amount of debt; (b) the quality of goods or service; or (c) the breach of a representation or warranty. 15. On a careful reading of the above definitions, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icating Authority while examining an application under Section 9, which is as follows: (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. 18. From the aforesaid decision, it is clear that 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 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by prohibiting institution of any suit before a court of law transferring, encumbering, any of the assets of the debtor etc... b) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; d) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; e) the recovery of any property by an owner or lessor where such property is occupied by or in possession of the corporate debtor. II. It is further made clear that: a. The supply of essential goods or services to the corporate debtor, if continuing, shall not be terminated or suspended or interrupted during the moratorium period. b. That the provisions of Sub-Section (1) of Section 14 of IBC shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. c. That the order of moratorium ..... X X X X Extracts X X X X X X X X Extracts X X X X
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