No Petition u/s 9 Of IBC can be Rejected on Grounds of Raising Fake Claim of Pre-Existing Dispute: NCLAT [Read Order]
It was held that making belated entries in the books of account to show that goods were misappropriated cannot escape the conclusion that the dispute raised by the corporate debtor was merely to avoid the liability
No Petition- IBC can – Rejected – Grounds of Raising Fake Claim – Pre-Existing Dispute-NCLAT-taxscan
No Petition- IBC can – Rejected – Grounds of Raising Fake Claim – Pre-Existing Dispute-NCLAT-taxscan
The National Company Law Appellate Tribunal ( NCLAT ) New Delhi bench has held that the Adjudicating Authority didn’t commit any error in holding that all requisite conditions necessary to trigger CIRP under Section 9 stands fulfilled and that the grounds of pre-existing disputes do not rest on genuine foundations. It was observed that petition under section 9 of Insolvency and Bankruptcy Code ( IBC ) , 2016 cannot be rejected on ground of raising a false claim of pre existing dispute.
Romi Datta, the appellant filed an appeal under Section 61 of IBC by the Appellant arising out of the Order dated 06.12.2023 ('Impugned Order') passed by the Adjudicating Authority.
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The Adjudicating Authority has admitted the Section 9 application filed by the Operational Creditor and admitted the Corporate Debtor into the rigors of Corporate Insolvency Resolution Process (“CIRP”). Aggrieved by the impugned order, the present appeal has been filed by the shareholder of the Corporate Debtor.
The Corporate Debtor entered into Service Agreement with Sigma Supply Chain Solutions Pvt. Ltd., the Operational Creditor for the purpose of handling, storage, maintenance, administration, distribution and arrangement of the goods of the Corporate Debtor kept in the warehouses at various locations within the country.
The Operational Creditor sent e-mails to the Corporate Debtor regarding outstanding amounts due and payable by the Corporate Debtor. The Operational Creditor, claiming that the outstanding amount remained unpaid issued a Demand Notice on 25.02.2020 under Section 8 of the IBC to the Corporate Debtor demanding payment of Rs 4.02 Cr including interest.
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The Corporate Debtor sent a Notice of Dispute on 07.03.2020 denying their liability besides claiming that there were pre-existing disputes between the parties. The Operational Creditor filed a Section 9 application against the Corporate Debtor on 28.12.2021 claiming an amount of Rs 1.75 Cr as due and payable by the Corporate Debtor including interest @18% per annum.
The appellant contended that the pre-existing disputes stem from the Operational Creditor acting in complete contravention of the terms of the Service Agreement much prior to issue of Section 8 demand notice.
The Corporate Debtor had denied the outstanding amount besides notifying the Operational Creditor about the pre-existing dispute. Per contra, the respondents submitted that the ground of pre-existing dispute raised by the Corporate Debtor is simply a ruse to escape their liability of paying the debt owed by them to the Operational Creditor.
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That the Corporate Debtor had clearly acknowledged their debt in their letter dated 22.04.2015 in which they had requested further time to make payments as they were facing financial difficulty.
It was also mentioned that the Corporate Debtor had raised allegations against them of having misappropriated goods and illegally sold the stocks of the Corporate Debtor as an after-thought only after they received various e-mails from the Operational Creditor calling upon them to pay the outstanding dues.
The Adjudicating Authority after noting the admissions made by the Corporate Debtor in a letter dated 22.04.2015 has observed that the same amounts to be a clear acknowledgment of debt of Rs 1.76 cr being due and payable. It was observed that no error was committed by Adjudicating Authority in coming to the conclusion that in fact there existed debt and default was committed in respect of the debt.
To the issue whether there existed pre-existing dispute between the parties , it was noted that the Adjudicating Authority had ordered on 27.03.2023 to explain how the misappropriation of disputes was handled by the Corporate Debtor in their books of accounts following which the Corporate Debtor had submitted a single page screen shot of a ledger reflecting a ledger entry dated 30.06.2016, the amount of which roughly resembled the alleged misappropriated amount .
The tribunal while rejecting the contention of the appellant observed that the Corporate Debtor failed to produce plausible evidence before the Adjudicating Authority to corroborate that there was a pre-existing dispute between the parties with regard to Operational Creditor having misappropriated any goods, therefore the ground of disputes raised by the Corporate Debtor deserves to be disregarded being in the nature of a moonshine defence.
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The bench of Mr. Justice Ashok Bhushan ( Chairperson ) and Mr. Barun Mitra ( Technical Member )
concluded that when the operational debt had already arisen and become due and invoices raised were not specifically disputed, there is nothing on record which detracts from the operational debt having become due and payable.
While dismissing the appeal, the tribunal held that the Adjudicating Authority didn’t commit any error in holding that all requisite conditions necessary to trigger CIRP under Section 9 stands fulfilled and that the grounds of pre-existing disputes do not rest on genuine foundations.
To Read the full text of the Order CLICK HERE
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