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TMI Blog2019 (12) TMI 1450X X X X Extracts X X X X X X X X Extracts X X X X ..... on of 'the operational creditor' and the amount also does not fall under the definition of 'operational debt', cannot be agreed upon. Presence of dispute in the form of a civil suit filed against the corporate debtor by the operational creditor or not - HELD THAT:- Section 5(6) of the I B Code referred to above. It is true that the dispute includes pendency of suit. It is the specific case of the operational creditor that it has filed the civil suit against the corporate debtor in respect of the debt referred to in the petition. Therefore, there is a pre-existing dispute and as such the petition cannot be admitted under section 9 of the I B Code - Similarly, the learned counsel for the corporate debtor also relied on decision of the Hon'ble NCLAT in the matter of Ashoke Ghosh [ 2020 (1) TMI 473 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] , and contended that when a civil suit is pending it amounts to prior dispute and hence the petition cannot be admitted. The present petition cannot be admitted for the reason that already a civil suit was filed by the operational creditor against the corporate debtor, which amounts to prior dispute. The petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 17-6-2019 and prior to filing of the present petition. 3.2 The respondent/corporate debtor relying on sub-section (6) of section 5 of the I B Code, 2016 which reads as under: (6) 'dispute' includes a suit or arbitration proceedings relating to- (a) the existence of the amount of debt; (b) the quality of goods or service; or (c) the breach of representation or warranty; contended that when a suit is pending in the subject matter the present petition under section 9 of I B Code, 2016 is not maintainable. 3.3 It is contended that the petitioner/operational creditor was engaged in the business of distributorship of various consumer products and the respondent/corporate debtor is the manufacturer and supplier of vitamin gummies. The petitioner/operational creditor and the respondent/corporate debtor have entered into an agreement of distributorship dated 3-4-2017 (ANNEXURE R-1 to the Counter Affidavit). 3.4 It is further contended in paras 7 and 8 of the Counter Affidavit that the petitioner's claim for repayment qua returned goods is based on credit notes issued by the respondent/corporate debtor. However, it is not explained as to how the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.1 The petitioner in para 2 of its Written Submissions refuted the allegation of the respondents that there is pre-existing dispute. The petitioner relied on the provisions of sub-section (5) of section 9 of I B Code, 2016, which reads as under: 9(5) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), by an order - (i) admit the application and communicate such decision to the operational creditor and the corporate debtor if, - (a) the application made under sub-section (2) is complete; (b) there is no payment of the unpaid operational debt; (c) the invoice or notice for payment to the corporate debtor has been delivered by the operational creditor; (d) no notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility; (e) There is no disciplinary proceeding pending against any resolution professional proposed under sub-section(4), if any; 4.2 It is contended by the petitioner in para 2 of the Written Submissions that the corporate debtor has failed to prove that the application under section 9 of the Code is incomplete, failed to refu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We have heard PCS for the operational creditor and the learned counsel for the corporate debtor. The case of the operational creditor is that the corporate debtor supplied vitamin gummies. PCS for the operational creditor would contend that the goods supplied by the corporate debtor worth ₹ 5,52,944/- were found to be defective and hence they were returned to the corporate debtor. PCS would contend that the corporate debtor did not dispute receiving defective goods. There is no dispute that the corporate debtor issued credit notes for the returned goods and the operational creditor raised debit notes in respect of the defective goods which were returned to the corporate debtor. PCS would contend that the corporate debtor did not pay the value of the defective goods and the operational creditor issued Demand Notice which was acknowledged by the corporate debtor and there was no prior dispute between the parties. PCS would contend that the operational creditor is able to establish the amount due by the corporate debtor and also the default. The learned counsel contended that the defence taken by the corporate debtor has no merit at all and the petition is liable to be admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor is that the present petition cannot be admitted under section 9 of the I B Code on the ground that there is a dispute in the form of a civil suit filed against the corporate debtor by the operational creditor. We have seen section 5(6) of the I B Code referred to above. It is true that the dispute includes pendency of suit. It is the specific case of the operational creditor that it has filed the civil suit against the corporate debtor in respect of the debt referred to in the petition. Therefore, there is a pre-existing dispute and as such the petition cannot be admitted under section 9 of the I B Code. In this connection the learned counsel for the corporate debtor relied on the decision of the Hon'ble NCLAT dated 8-3-2018 in Kanti Commercials (P.) Ltd.'s case (supra) wherein the Hon'ble NCLAT held that,- PARA 8 34 (i) Whether there is an operational debt as defined exceeding ₹ 1 lakh? (see section 4 of the Act). (ii) .. .. (iii) Whether there is 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 in relation to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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