Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + AT Insolvency and Bankruptcy - 2017 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (5) TMI 1774 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of dispute between the parties - impugned ex parte order was passed by 'Adjudicating Authority without prior notice or intimation of hearing to the Appellants-Corporate Debtors against the principles of rules of natural justice - winding up notice under Section 433 of Companies Act 1956 - HELD THAT:- Once the term "dispute" is given its natural and ordinary meaning, upon reading of the Code as a whole, the width of "dispute" should cover all disputes on debt, default etc. and not be limited to only two ways of disputing a demand made by the operational creditor, i.e. either by showing a record of pending suit or by showing a record of a pending arbitration - The intent of the Legislature, as evident from the definition of the term "dispute", is that it wanted the same to the illustrative (and not exhaustive). If the intent of the Legislature was that a demand by an operational creditor can he disputed only by showing a record of a suit or arbitration proceeding, the definition of dispute would have simply said dispute means a dispute pending in Arbitration or a suit. What appears from the present case is that much before enactment of the Insolvency and Bankruptcy Code 2016, in or around 2013, the Appellant-Corporate Debtor' entered with respondent M/s. Essar Projects India Limited and Another Memorandum of Understanding for construction of work at 0.2MTPA Steel Melt Shop Complex at Pithampur, Dist. Dhar, Madhya Pradesh. For one or other reason the outstanding dues in connection with construction work were alleged to have not been paid by appellant to the Respondent - Operational Creditor - the appellants were called upon by Respondent - Operational Creditor to repay the dues of ₹ 6,83,06,077/- along with interest® 18%. It was mentioned that the said notice issue under Section 433(e) read with Section 434 of the Companies Act 1956. In the present case as admittedly a notice was issued by Respondent-Operational Creditor under Section 433(e) and 434 of the Companies Act 1956 in 28th October 2016 which was disputed by Appellant - 'Corporate Debtor' objecting quality of service and non-completion of the work within time which is much prior to enactment of 'I & B Code', 2016, and notice under Section 8 of the I & B code', there is an "existence of dispute" for which the petition under Section 9 preferred by Respondent - Operational Creditor was not maintainable - as the impugned order dated 6th March 2017 was passed by 'Adjudicating Authority without notice to the Appellant - Corporate debtor in violation of principle of natural justice and the Adjudicating Authority failed to notice the relevant facts that there was a dispute raised and replied by the Corporate Debtor, the impugned order passed by Adjudicating Authority cannot be upheld. Appeal allowed.
|