A Section 9 petition under the IBC must be rejected if there is a 'pre-existing dispute' evidenced by a civil suit filed prior to the issuance of the Section 8 demand notice, as the insolvency process is summative and not intended for debt recovery while disputes remain sub-judice.

CORAM:

SMT. BIDISHA BANERJEE, HON’BLE MEMBER (JUDICIAL)

CMDE. SIDDHARTH MISHRA, HON’BLE MEMBER (TECHNICAL)

APPEARANCE:

For the Operational Creditor : Ms. Arti Agarwal, Adv.

: Ms. Rosy Banerjee, Adv.

For the Corporate Debtor : Mr. Shaunak Mitra, Adv.

: Mr. Patita Paban Bishwal, Adv.

: Mr. Amandeep Singh, Adv.

: Mr. Shiladitya Ghosh, Adv.

ORDER

Per: Cmde Siddharth Mishra, Member (Technical)

1. This Court congregated through a hybrid mode.

2. The Interlocutory Application being no. 2347/KB/2024 is filed by the Corporate Debtor inter alia seeking following reliefs:

a) Maintainability of C. P. 0B) NO. 299 lKBl2O24 be decided as a preliminary issue.

b) An Order dismissing the petition being C. P. (IB) NO. 299/KB/2024 with costs filed by the Respondent under Section 9 of the Insolvency and bankruptcy Code, 2016 against the Applicant as being nonmaintainable under law.

c) Pending adjudication of this application, stay of all further proceedings of C. P. (IB) No. 299/KB/2024.

d) Ad interim orders in terms of prayers above.

e) Such further and other order(s) be made and/or direction(s) be given as this Hon'ble Tribunal may deem fit and proper.

3. Factual Matrix

3.1 The main C.P (IB) No. 299/KB/2024 is preferred under Section 9 of the Insolvency and Bankruptcy Code, 2016, for brevity “IBC” by the Chandra Prakash Lohia @ Nitesh Lohia, hereinafter referred to as the“Applicant”/ “Operational Creditor” against, West Bengal Agro Textile Corporation Limited hereinafter referred to as “Respondent” / “Corporate Debtor” seeking direction from this Adjudicating Authority to initiate Corporate Insolvency Resolution Process, (for brevity “CIRP” ) in respect of the Corporate Debtor.

3.2 The present Company Petition has been filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by the Operational Creditor seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for an alleged operational debt of Rs. 1,04,47,280/- along with delay payment charges @ 12.5% per annum.

3.3 That the Corporate Debtor had placed various purchase orders for supply of raw jute. The Operational Creditor supplied materials pursuant to such purchase orders and raised 52 invoices between 04.04.2022 and 24.02.2023 aggregating to Rs. 3,49,28,144/-.

3.4 The part payments were made by the Corporate Debtor and after adjustment, a principal sum of Rs. 1,04,47,280/- remained due. The last payment was allegedly made on 04.03.2023.

3.5 A demand notice under Section 8 of the Code was issued on 26.03.2024. The present petition was thereafter filed.

3.6 The Corporate Debtor has filed I.A. No. 2347/KB/2024 praying that the issue of maintainability be decided as a preliminary issue on the ground of pre-existing dispute and prior civil suits.

4. Submission of the Operational Creditor:

4.1 It is submitted that the Corporate Debtor had acknowledged the debt in its letters dated 01.02.2023 and 05.03.2023 and also issued a confirmation of accounts for F.Y. 2022–23 admitting an outstanding of Rs. 1,04,47,280/-.

4.2 It is claimed that the Corporate Debtor has defaulted in making payment despite repeated reminders and written demands.

4.3 It is further submitted that the civil suits filed by the Corporate Debtor are frivolous and have been instituted only to create an illusionary dispute after default.

4.4 It is contended that the dispute raised is not genuine and does not satisfy the test laid down in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd..

5. Submission of the Corporate Debtor:

5.1 It is submitted that the present Section 9 petition is an abuse of the summary insolvency jurisdiction, as the disputes between the parties are already seized of by the civil court by way of Title Suit No. 1683