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TMI Blog2019 (7) TMI 1188X X X X Extracts X X X X X X X X Extracts X X X X ..... ute must be pre-existing i.e. it must exist before the receipt of the demand notice or invoice. If it comes to the notice of the Adjudicating Authority that the operational debt is exceeding ₹ 1 lakh and the application shows that the aforesaid debt is due and payable and has not been paid, in such case, in absence of any existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt , the application under Section 9 cannot be rejected and is required to be admitted. The Respondent has defaulted to pay more than ₹ 1 Lakh and in absence of any pre-existing dispute, and the record being complete, the application under Section 9 preferred by the Appellant was fit to be admitted - appeal allowed. - Company Appeal (AT) (Insolvency) No. 703 of 2018 - - - Dated:- 23-7-2019 - Mr. S.J. Mukhopadhaya Chairperson, Mr. A.I.S. Cheema Member (Judicial) and Kanthi Narahari Member (Technical) For Appellant: - Mr. Shashank Garg, Mr. Tariq Khan and Mr. Debojyoti Sengupta, Advocates. For Respondent:- Mr. Jayant Mehta, Mr. Saurabh Kali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide the e-mail dated 21st August, 2017 were baseless and unsubstantiated. 8. According to the Appellant, subsequently the Appellant raised R.A. Bill No. 21 on 25th October, 2017 for plumbing work executed by the Appellant and certified by the Respondent. Another R.A. Bill No. 22 for plumbing work was executed by the Appellant which was also certified by the Respondent on 23rd February, 2018. 9. On 5th March, 2018, an e-mail was again sent by Appellant for pending WCT certificates for the period from 2014-15 onwards, followed by e-mail dated 22nd March, 2018 requesting the Corporate Debtor to release long pending dues of ₹ 5.50 Crores and drawing attention of the Respondent of non-compliance of statutory requirements. 10. It is only on failure of payment, demand notice under Section 8(1) was issued by the Appellant on 28th April, 2018. 11. Referring to the aforesaid facts, it was submitted that there is no pre-existing dispute with regard to the work done by the Appellant for which R.A. Bill No. 36 dated 18th March, 2016, R.A. Bill No. 20 dated 28th February, 2017 and R.A. Bill No. 21 dated 25th October, 2017 and R.A. Bill No. 22 dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate debtor in the form set out in Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Form 3 or 4, as the case may be (Section 8(1)). Within a period of 10 days of the receipt of such demand notice or copy of invoice, the corporate debtor must bring to the notice of the operational creditor the existence of a dispute and/or the record of the pendency of a suit or arbitration proceeding filed before the receipt of such notice or invoice in relation to such dispute (Section 8(2)(a)). What is important is that the existence of the dispute and/or the suit or arbitration proceeding must be pre-existing i.e. it must exist before the receipt of the demand notice or invoice, as the case may be. .. 17. In the said case, the Hon ble Supreme Court held as to what are the facts to be examined by the Adjudicating Authority while examining an application under Section 9, which is as follows: 34. Therefore, the adjudicating authority, when examining an application under Section 9 of the Act will have to determine: (i) Whether there is an operational debt as defined exceeding ₹ 1 lakh? (See Section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of rupees one lakh or more (Section 4). The corporate insolvency resolution process may be triggered by the corporate debtor itself or a financial creditor or operational creditor. A distinction is made by the Code between debts owed to financial creditors and operational creditors. A financial creditor has been defined under Section 5(7) as a person to whom a financial debt is owed and a financial debt is defined in Section 5(8) to mean a debt which is disbursed against consideration for the time value of money. As opposed to this, an operational creditor means a person to whom an operational debt is owed and an operational debt under Section 5(21) means a claim in respect of provision of goods or services. xxx xxx xxx 29. The scheme of Section 7 stands in contrast with the scheme under Section 8 where an operational creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the operational debtor in the manner provided in Section 8(1) of the Code. Under Section 8(2), the corporate debtor can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned of a dispute or the record of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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