TMI Blog2022 (1) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... argument but is substantiated by sufficient evidence. It is satisfied by the material on record that there is a Pre-Existing Dispute prior to the issuance of the Demand Notice‟ - the ratio of Mobilox Innovations Private Limited is squarely applicable to the facts of this case. There exists a dispute between the parties, we do not wish to go into the other issues raised regarding the Partnership Deed. Appeal dismissed. - COMPANY APPEAL (AT) (INSOLVENCY) No. 1110 of 2019 - - - Dated:- 17-1-2022 - [Justice Anant Bijay Singh] Member (Judicial) And [Ms. Shreesha Merla] Member (Technical) For the Appellant : Mr. Gautam Singh, Advocate For the Respondent : Mr. Pratik Tripathi, PCS JUDGEMENT [ Per; Shreesha Merla, Member (T) ] 1. Aggrieved by the Order dated 14.08.2019, passed by the Learned Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench) in C.P. No. (IB)- 477/9/NCLT/AHM/2018, M/s. Equipment Planet/ the Operational Creditor preferred this Appeal. By the Impugned Order, the Adjudicating Authority has dismissed the Application filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,90,000 5,90,000 26,186.30 6,16,186.30 90 22 30.4.18 1.5.18 5,90,000 5,90,000 17,457.53 6,07,457.53 60 39 31.5.18 1.6.18 5,90,000 5,90,000 8,437.81 5,98,437.81 29 Total 29,50,000 26,51,501 1,06,533.42 27,58,034.17 14. On perusal of the records it is found that operational creditor has wilfully or knowingly concealed the fact that the corporate debtor had already notified operational creditor about the termination of work way back on 22.02.2018, whereas, the demand notice was issued on 02.07.2018. 15. From the above discussions it is found that the documents attached to the application are misleading. Mere allegation of non-payment of alleged disputed debt is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esponse. On 02.07.2018, a Demand Notice was sent by the Appellant but there was no response and subsequently on 10.09.2018, a Petition was filed under Section 9 of the Code. It is strenuously contended that the Demand Notice under Form 4 was duly served on the Corporate Debtor on 09.07.2018, but no dispute was raised. The Counsel places reliance on the decision of the Hon ble Supreme Court in Macquarie Bank Limited Vs. Shilpi Cable Technologies Ltd. that notice sent on behalf of an Operational Creditor‟ by a lawyer would be valid and proper‟. Since the Appellant is a partnership firm, the partner has an authority to initiate proceedings unless specifically barred. The Partnership Deed has also been produced before the Adjudicating Authority . The Corporate Debtor has never disputed the date of demobilization of the machinery i.e., end of February 2018, which is admittedly pending. The Corporate Debtor only states that Invoice No. 133 dated 05.02.2018 was for an amount of ₹ 6,37,654/-, whereas the invoice produced by the Appellant is of ₹ 5,90,000/-, which is lesser than the invoice which was served upon the Respondent. It is submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isting Dispute between the parties and if there is any amount due and payable . 5. The facts of the present case need to be examined in the light of the law laid down by the Hon ble Supreme Court in Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited (2018) 1 SCC 353. It is relevant to refer to para 51 of the Judgement which is detailed as hereunder: 51. It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the 'existence of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the dispute is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce No. 133 appended to the Application showing ₹ 5,90,000/- it is the case of the Respondent that it is on account of the reduction in the amount as prayed for by the Corporate Debtor . Even if we take this submission by the Appellant into consideration, the fact remains that the services were terminated on 22.02.2018 and the Demand Notice is subsequent on 02.07.2018. We also observe that there are some discrepancies in the Ledger Entries submitted to the Corporate Debtor vis- -vis the entries filed with the Appeal Paper Book. Be that as it may, the email dated 22.02.2018 is not disputed by the Operational Creditor . 9. The Hon ble Apex Court in K. Kishan Vs. Vijay Nirman Co. (P) Ltd. (2018) 17 SCC 662, has observed as follows: 19. After referring to Section 8, the judgment in Mobilox Innovations case went on to hold that what is important is that the existence of the dispute and/or a suit or arbitration proceeding must be pre-existing i.e. it must exist before the receipt of the demand notice or invoice, as the case may be. 20. The adjudicating authority, therefore, when examining an application under Section 9 of the Code, will have to determine the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application. 22. Following this judgment, it becomes clear that operational creditors cannot use the Insolvency Code either prematurely or for extraneous considerations or as a substitute for debt enforcement procedures. The alarming result of an operational debt contained in an arbitral award for a small amount of say, two lakhs of rupees, cannot possibly jeopardise an otherwise solvent company worth several crores of rupees. Such a company would be well within its rights to state that it is challenging the arbitral award passed against it, and the mere factum of challenge would be sufficient to state that it disputes the award. Such a case would clearly come within para 38 of Mobilox Innovations, being a case of a pre-existing ongoing dispute between the parties. The Code cannot be used ..... X X X X Extracts X X X X X X X X Extracts X X X X
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