2018 (9) TMI 1044 - AT - Insolvency and Bankruptcy

Corporate insolvency resolution process - existence of dispute - Held that - From the record we find that e-mails were exchanged between the parties on 3rd May, 2017, 5th May, 2017, and 18th May, 2017 alleging non-submission of work completion certificate, non-completion of work, amount deductible for lead piping and non-removal of scrap material charges and exorbitant tonnage claim made by the appellant contrary to existing industry practices. All these disputes were raised by the respondent much prior to issuance of demand notice under Section 8(1) issued on 7th July, 2017. There is nothing on record to suggest any correctional measure was taken by the appellant. On the other hand, respondent pleaded before the Adjudicating Authority that there is an existence of dispute . There being disputed question of facts as to whether subsequently the scrap material were removed and exorbitant tonnage claim by the appellant was corrected or amount deducted or reduced, and as such issues cannot be determined by the Adjudicating Authority, we hold that the Adjudicating Authority rightly held that it was not a fit case for admission of application under Section 9. Appeal dismissed.

Summary

Issues: Dismissal of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 due to the existence of a dispute.

The judgment by the National Company Law Appellate Tribunal, New Delhi, involved an appeal filed by an 'Operational Creditor' against the dismissal of their application under Section 9 of the Insolvency and Bankruptcy Code, 2016 by the Adjudicating Authority. The appellant argued that despite the respondent admitting the dues, the Adjudicating Authority wrongly relied on other evidence to establish the existence of a dispute. The appellant pointed to an email dated 12th July, 2017, as evidence of the respondent admitting the dues.

Upon reviewing the records, the Tribunal noted that prior to the demand notice issued on 7th July, 2017, the respondent had raised disputes regarding non-submission of work completion certificate, non-completion of work, deductions for lead piping, non-removal of scrap material charges, and an exorbitant tonnage claim made by the appellant. The respondent had contended before the Adjudicating Authority that there was indeed an 'existence of dispute'. The Tribunal observed that there was no evidence to indicate any corrective action taken by the appellant in response to these disputes.

Given the factual disputes regarding the removal of scrap material, correction of the tonnage claim, and any deductions or reductions made, the Tribunal held that such issues could not be determined by the Adjudicating Authority. Consequently, the Tribunal upheld the decision that the application under Section 9 was not suitable for admission. The appeal was found to lack merit and was accordingly dismissed by the National Company Law Appellate Tribunal, New Delhi.

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