2018 (9) TMI 1892 - AT - Insolvency and Bankruptcy

Maintainability of application - Initiation of CIRP - Validity of demand notice under Section 8(1), issued by an advocate - existence of dispute or not - HELD THAT - Insofar as the supply made during the year 2015, there is no dispute with regard to quality of goods supplied, from May, 2015 onwards, except one or other invoice, which is not the subject matter of the claim. Therefore, we hold that there is no dispute in existence with regard to goods supplied between 16th April, 2013 to 8th May, 2014 and the majority of goods supplied during the year 2015, except for one of which report dated 13th August, 2015 enclosed, which is not subject matter. Thereby, we hold that the Appellant has made out a case for admission of application under Section 9. Issuance of demand notice by advocate - HELD THAT - The case being covered by decision of the Hon'ble Supreme Court in Macquarie Bank Ltd. v. Shilpi Cable Technologies Ltd. 2017 (12) TMI 850 - SUPREME COURT cannot be a ground to reject the application. Appeal allowed.

Summary

Issues: Dismissal of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 due to existence of dispute and demand notice issued by an advocate.

In this judgment by the National Company Law Appellate Tribunal, the Adjudicating Authority dismissed the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, citing two main grounds: the demand notice was issued by an advocate, and there was an existence of a dispute. The Respondent had raised a dispute regarding the quality of waste paper supplied, contending that the application was not maintainable as a dispute was already pending. The Adjudicating Authority noted the Respondent's challenge to the quality of goods supplied in various notices, including a reply notice highlighting the unusable waste paper supplied. The Appellant argued that subsequent invoices raised after the initial dispute should not affect the application's validity. The Respondent claimed that a quality report from 2015 showed substandard goods, but the Appellant pointed out that invoices from 2013 to 2015 did not have accompanying quality reports. The Tribunal found that there was no dispute regarding the majority of goods supplied after 2013, except for one invoice in 2015, which was not the subject of the claim, leading to the admission of the application under Section 9.

Furthermore, the Tribunal addressed the issue of the demand notice being issued by an advocate, citing a Supreme Court decision that such a factor should not be a ground for rejecting the application. As the Adjudicating Authority failed to consider crucial facts, the Tribunal set aside the order and remitted the case for admission, allowing the Respondent to settle the claim with the Appellant before admission. The appeal was allowed with these observations, and no costs were awarded in the matter.