The Insolvency and Bankruptcy Code does not apply where a genuine pre-existing dispute exists that prevents admission of a petition for insolvency resolution.

ORDER

Per: Kuldip Kumar Kareer, Member (Judicial)

1. The present petition has been filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "Code") by KTR Management Services Limited (hereinafter called ‘Operational Creditor’) praying, inter-alia, for initiation of Corporate Insolvency Resolution Process (‘CIRP’) against Sahara Hospitality Limited (hereinafter called ‘Corporate Debtor’) for resolution of an unresolved Operational Debt of Rs. 8,22,82,004/- (Rupees Eight Crores Twenty Two Lakhs Eighty Two Thousand and Four) The submissions of the Operational Creditor are as follows:

2. The Corporate Debtor entered into an agreement with the Operational Creditor to provide manpower supply services since 2009 renewable on yearly basis. The Operational Creditor provided all the services as required under the aforesaid agreement. In pursuance of the said services provided, the Operational Creditor raised as per the agreement running bills payable within 7 days from the date of invoice and which were accepted by the Corporate Debtor without raising any protest or demur.

3. Since April 2016, the Corporate Debtor started paying ad hoc amounts as against invoices and not the complete amount that were due and payable upon raising of running bills by Operational Creditor.

4. The Operational Creditor had time and again informed the Corporate Debtor about the accumulating principal outstanding amounts that are due and payable so that immediate payment of the operational debt can be made by the Corporate Debtor. Due to the short payments of the Corporate Debtor, the Operational Creditor struggled to manage its finances and had challenges to fulfill its statutory compliances such as GST, ESIC, and PF arising out of its services to the Corporate Debtor.

5. The Operational Creditor sent a legal notice to the Corporate Debtor on 01^st July, 2019 for recovery of unpaid dues resulting in the Corporate Debtor agreeing for reconciliation of the dues payable for making the payment. Consequently, both the parties met together and agreed to a reconciliation in order to determine the amount which was due and payable. The amount, which was determined between the parties after sitting for reconciliation, is INR 8,22,82,004/- due as of November 20, 2019 by the Corporate Debtor to the Operational Creditor. The aforesaid amount was also acknowledged by the Corporate Debtor upon reconciliation.

6. Despite reminders for repayment of the reconciled principal amount referred to herein before, the Corporate Debtor failed to make payment of the above outstanding amount. Thereafter, the Corporate Debtor terminated the Contract with Operational Creditor vide Notice dated 26.12.2019, without paying outstanding operational debt. The Operational Creditor, through its Notice dated 03.01.2020, responded to the Corporate Debtor’s notice stating that the actions of the Corporate Debtor were malafide with an intent to purely avoid making payment of the outstanding operational debt which was due and payable by the Corporate Debtor to the Operational Creditor and such termination does not in any way constitute a pre-existing dispute under the provisions of the Code.

7. The Operational Creditor issued a Demand Notice in terms of Section 8 of the Code to the Corporate Debtor on 03^rd January, 2020 in Forms 3 and 4. The said Demand Notice was attempted to be physically delivered to the Registered Office of the Corporate Debtor on 04^th January, 2020. However, the same was not accepted by the office of