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TMI Blog2018 (10) TMI 1792X X X X Extracts X X X X X X X X Extracts X X X X ..... plication under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as I B Code) for initiation of Corporate Insolvency Resolution Process against Respondent- D-Art Furniture Systems Pvt Ltd.- (Corporate Debtor). The Adjudicating Authority (National Company Law Tribunal), Principal Company Appeal (AT) (Insolvency) No. 327 of 2018 Bench, New Delhi, by impugned order dated 24th April, 2018 rejected the application on the ground of existence of dispute giving rise to the present appeal. 2. Learned Senior Counsel appearing on behalf of the Appellant- (Operational Creditor) submitted that there is no dispute in existence and the Adjudicating Authority wrongly noticed one or other communication which are unrelated or does not disclose any dispute. 3. Reliance has also been placed on letter dated 13th November, 2013 written by the Respondent- (Corporate Debtor) on which the Adjudicating Authority relied upon to hold that there is an existence of dispute. 4. On the other hand, according to learned counsel for the Respondent- (Corporate Debtor), there is an existence of dispute which is apparent from letter dated 13th November, 2013. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion true copy of the ledger account maintained by the Appellant- (Operational Creditor) has also been placed on record. 8. The grievance of the Appellant- (Operational Creditor) is that despite successful completion of the contract by Operational Creditor to the satisfaction of the Respondent- (Corporate Debtor), the outstanding amount was not paid. It is stated that Respondent- (Corporate Debtor) vide communication dated 13th November, 2013 while acknowledging the amount payable, assured the applicant that the payment shall be made very soon. The Appellant- (Operational Creditor) in his last visit in January 2016, made it clear to the Respondent- (Corporate Debtor) that in case payment is not received by 31st March 2016, the Appellant (Operational Creditor) will proceed against the Respondent- (Corporate Debtor) as per law. 9. Further case of the Appellant- (Operational Creditor) is that while nothing was heard from the Respondent- (Corporate Debtor), the Appellant- (Operational Creditor) was constrained to send statutory Company Appeal (AT) (Insolvency) No. 327 of 2018 notice dated 13th April, 2016 under Sections 433 (e) and 434 (1) (a) of the Companies Act, 195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e demand notice or copy of the invoice mentioned in sub-section (1), bring to the notice of the operational creditor the existence of a dispute or the record of the pendency of a suit or arbitration proceedings, which is pre-existingi.e. before such notice or invoice was received by the corporate debtor. The moment there is existence of such a dispute, the operational creditor gets out of the clutches of the Code. 16. From the aforesaid finding it will be evident that the existence of a dispute or the record of the pendency of a suit or arbitration proceedings should be pre-existingi.e. prior to demand notice or invoice received by the Corporate Debtor. The moment there is existence of dispute, the Operational Creditor gets out of the clutches of the I B Code. 17. It will be also desirable to refer the decision of the Honble Supreme Court in Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software (P) Limited 2017 SCC OnLine SC 1154, wherein the Honble Supreme Court held: 40. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which Company Appeal (AT) (Insolvency) No. 327 of 2018 requires further inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as soon as the Respondent- (Corporate Debtor) get the payment from OC on this account which is subject of approval of reconciliation of a third party i.e. M/s. ESAJV D-Art India Pvt. Ltd. (not the Corporate Debtor). The arbitration of which reference has been made in the impugned order is between other parties and the Operational Creditor which is not a party to it. Thereby it is clear that the Respondent- (Corporate Debtor) has not raised any dispute relating to debt nor raised any dispute relating to quality of service of goods. Pendency of any arbitral proceeding is not between the Operational Creditor and the Corporate Debtor but between some other parties which cannot be taken into consideration that there is pre-existing dispute between the Appellant- (Operational Creditor) and the Respondent- (Corporate Debtor). 22. The other letter dated 9th September, 2017 has been sent by the Corporate Debtor in reply to the demand notice under Section 8(1) and is as follows: Company Appeal (AT) (Insolvency) No. 327 of 2018 Dated 09.09.2017 Manish Kumar Associates, 18, Todarmal Road, First Floor, Bengali Market, New Delhi - 110001. Sub: Reply to the Demand Notice dated 02.09.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to Company Appeal (AT) (Insolvency) No. 327 of 2018 DG Sets and separate invoices for diesel which was never raised earlier. No such allegation was made in the letter dated 13th November, 2013 that the Appellant- (Operational Creditor) about the quality of DG Sets of raising separate invoices for diesel. 24. The letter dated 9th September, 2017 having issued in reply to the demand notice under Section 8(1) cannot be taken into consideration to hold that there is a pre-existence of dispute between the Appellant- (Operational Creditor) and the Respondent- (Corporate Debtor). The reply dated 9th September, 2017 is an afterthought, a case made out by the Respondent- (Corporate Debtor) to oppose the case having issued after receipt of the demand notice under Section 8(1), cannot be relied upon to reject the application under Section 9. 25. In Innoventive Industries Ltd.(Supra), the Honble Supreme Court held that pre-existing dispute is the dispute raised before demand notice or invoices was received by the Corporate Debtor. Any subsequent dispute raised while replying to the demand notice under Section 8(1) cannot be taken into consideration to hold that there is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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