TMI Blog2020 (1) TMI 1423X X X X Extracts X X X X X X X X Extracts X X X X ..... t showed pre-existing dispute. The Appellant had a relief open under the MSME Act and only because the Appellant moved the Authority under MSME Act, it does not mean that there is a pre-existing dispute. The dispute raised by the Appellant before the MSME was that it had dues to recover and that the Respondent has not paid. This by itself does not mean that there is pre-existing dispute as far as the Respondent is concerned. The context of the word dispute in Section 18 takes colour from Section 17 of MSME Act. It is different from context of Section 5(6) read with Section 8 of IBC - At present, nothing is shown that there was any pre-existing dispute raised by the Respondent with regard to the services rendered by the Appellant. When ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned between the Operational Creditor and the Corporate Debtor and fee was fixed at ₹ 22 Lakhs for availing project monitoring services, which were to be rendered by the Appellant. The Appellant raised invoices between 24.11.2014 till 16 th February, 2017 and the Corporate Debtor had released payments up to 6 th October, 2016. The Appellant claimed that part payment was due and the Appellant sent Notice under Section 8 of IBC on 21st January, 2019 (Page 94) referring to the invoices due and outstanding and sought to recover the dues for services rendered. In spite of the Notice, the Respondent did not pay and thus, Section 9 Application was moved under IBC. 3. The learned Counsel for the Respondent refers to the Reply which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edressal in terms of MSME Development Act, 2016 and Arbitration proceedings between the Operational Creditor and Corporate Debtor have been commenced with the failure of conciliation between the parties as per section 18(3) of the MSME Development Act, 2006. Furthermore, the Corporate Debtor has also sent a reply on 07.02.2019, to the demand notice dated 21.01.2019, sent by the Operational Creditor raising the pre-existing dispute with regards to the amount claimed to the demand notice. The Adjudicating Authority has already held that the pendency of the Application before MSME establishes pre-existing dispute as long as the dispute is not spurious, hypothetical or illusory but an admitted fact on record. (Shrishti Electromech Pvt. Ltd. Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bitration is pending that by itself is no bar to move an Application under Section 9. The Counsel referred to engagement letter (Page 48 at Page 53) to state that when the invoices were raised in 2017, no disputes were ever raised by the Respondent even till the Notice dated 21st January, 2019 sent under Section 8 of IBC. The Counsel states that the Adjudicating Authority has gravely erred in rejecting the Application as there was no pre-existing dispute as contemplated under Section 5(6) of IBC. 6. The learned Counsel further pointed out that for the invoices which were raised on 2nd January, 2017 (copies of which have been filed at Pages 54 to 57), the Respondent Corporate Debtor had deducted TDS from the amounts payable to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the said principal amount. It does not refer to any contract between the parties and even a transaction. The Counsel further relied on Judgement in the matter of Utility Powertech Limited Vs. Amit Traders reported as MANU/DE/1872/2018 and referred to para 19 for the following observations:- 19 . On the issue of TDS deduction, the Trial Court may have erred as the settled position is that deduction of TDS does not constitute an admission of liability. The Trial Court may be wrong in holding that the TDS certificate by itself constitutes an admission of liability. This is not so, inasmuch as the TDS can be deducted even on the expectation of estimated liability. 8. It is further argued that in the subsequent financial state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t due under section 17, make a reference to the Micro and Small Enterprise Facilitation Council. Thus the context of the word dispute in Section 18 takes colour from Section 17 of MSME Act. It is different from context of Section 5(6) read with Section 8 of IBC. 11. At present, nothing is shown that there was any pre-existing dispute raised by the Respondent with regard to the services rendered by the Appellant. When this is so, only because the Appellant went to the MSME Authorities was no ground for the Adjudicating Authority to reject the Application under Section 9. A further communication from the Authority has been placed on record by the Appellant at Page 89. Although the subsequent letter shows that the conciliation proce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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