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Operational Creditor's CIRP Application Rejected Due to Pre-existing Dispute Over Accounts Reconciliation

NCLAT set aside the NCLT's order admitting the Corporate Debtor into CIRP. Though the application was filed within the limitation period (within three years of the last payment on 19.10.2016), the Tribunal found a pre-existing dispute evidenced by email exchanges regarding accounting differences. The Corporate Debtor had clearly stated in emails that no amount was payable to the Operational Creditor. Following precedents from the Supreme Court in S.S. Engineers and Sabarmati Gas Limited cases, which established that failure of reconciliation of accounts qualifies as a pre-existing dispute, the NCLAT concluded that NCLT erred in ignoring this dispute when admitting the Corporate Debtor into CIRP. .....

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