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2022 (12) TMI 727 - AT - Insolvency and BankruptcyInitiation of CIRP - whether pre-existing dispute is discernible or not? - whether payment of operational debt the threshold limit to the Operational Creditor/Respondent No.1 had become due and payable? - NCLT admitted the application - HELD THAT:- Sub-section (2) of Section 8 obligates the Corporate Debtor who has been delivered a Demand Notice under Section 8(1) by Operational Creditor to bring to the notice of the Operational Creditor the “existence of a dispute, if any, or record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute”. There is a statutory purpose for requiring a Corporate Debtor for bringing into notice of the Operational Creditor about the existence of a dispute in its reply to Section 8(1) notice. The purpose is that if there is a dispute in existence, the same be immediately communicated to the Operational Creditor so that he charts out his next actionable step. If no mention of existence of dispute is made by the Corporate Debtor, the Operational Creditor can go ahead and file an application under Section 9(1). In the present case the demand notice has been served on Respondent No.2 on 12.03.2018 to which no reply has been furnished by Respondent No.2 and therefore the Respondent No.1 was well within its rights to file the Section 9 application. It is a well settled proposition that for a pre-existing dispute to be a ground to thwart an application under Section 9, the dispute raised must be truly existing at the time of filing a reply to notice of demand as contemplated by Section 8(2) or at the time of filing the Section 9 application. In the present case, we notice that no reply was framed in response to the demand notice at all. In such circumstances the Adjudicating Authority is only required to look into the substance of the pleadings to find out whether a real dispute is discernible from the stated facts. It is an undisputed fact that the notice of demand was issued on 12.03.2018. Hence, we proceed to examine from the material on the record to find out was to whether there was any dispute raised by the Corporate Debtor regarding inferior quality of coal supplied by Respondent No.1 prior to 12.03.2018 being the date on which Demand Notice was issued - This lends credulity to the stand taken by the Learned Counsel for Respondent No.1 that had genuine disputes been in existence, the Respondent No.2 would have articulated these disputes by responding to the demand notice and not remained silent. We are inclined to agree with the Respondent No.1 that the coal test reports appear to be an after-thought which is validated by the fact that these reports were submitted as additional documents before the Adjudicating Authority by Respondent No.2 only after the Section 9 application had been filed by Respondent No.1. The findings of the Adjudicating Authority that the defence raised by the Respondent No. 2 is an after-thought and a moonshine defence do not appear to be misplaced - the Adjudicating Authority did not commit any error in admitting the Section 9 application filed by Respondent No.1. Appeal dismissed.
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