TMI Blog2022 (11) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... Notice dated 05.03.2021, the Appellant / Operational Creditor had brushed aside the prior Demand Notice dated 04.09.2020. It transpires that the disputes pertaining to the existence and extent of alleged Debt, the Liabilities / Claims / Counter Claims and issues pertaining to the violation of the contentions and warranties under the Agreement, executed between the parties are a subject matter of conclusion and trial in the Commercial Suit, pending before the Hon ble Commercial Court, Bangalore. It is crystalline clear, that there was a pre-existing Dispute(s) between the Appellant / Petitioner / Operational Creditor, and the Respondent / Corporate Debtor, and in such circumstances, filing of the petition is, per se, not maintainable in the eye of Law. Viewed in that perspective, the conclusion arrived at, by the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench, Bengaluru) in petition, in dismissing the Application, is free from any Legal errors. Appeal dismissed. - Company Appeal (AT)(CH)(Ins) No.381/2022 & IA No.967/2022 - - - Dated:- 18-11-2022 - [Justice M. Venugopal] Member (Judicial) And [Naresh Salecha] Member (Technical) For the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand notice dated 04.09.2020 and also from the reply dated 03.10.2020 of the Respondent/Corporate Debtor which was much prior to the date of issuance of the demand notice dated 05.03.2021. Hence, we are of the view that the Respondent/Corporate Debtor able to show the existence of the dispute between the parties prior to the relevant date i.e., prior to 05.03.2021. Hence, this ground is held against the Petitioner. and dismissed the CP (IB) No.67/BB/2021, by making an observation, that the Orders shall not preclude the Appellant / Petitioner, from availing any other remedy, in accordance with Law . Appellant s contentions: 4. The Learned Counsel for the Appellant / Petitioner / Operational Creditor submits that the impugned order of Dismissal , dated 23.06.2022 in CP (IB) No.67/BB/2021 (filed under Section 9 of the Insolvency Bankruptcy Code, 2016 read with Rule 6 of the I B (AAA) Rules, 2016) passed by the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench, Bengaluru) is an incorrect one in the eye of the Law . Furthermore, it is represented on behalf of the Appellant / Petitioner / Operational Creditor that the Tribunal had c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Decision of this Tribunal in Apya Capital Services Pvt. Ltd. v Guardian Homes 2020 SCC Online NCLAT 803, wherein it is observed as under: - Therefore, it is futile on the part of the Corporate Debtor to raise the grievance that there was a dispute relating to the quality of service. As already noticed no suit or arbitration proceedings were pending on the date of filing of application under Section 7 in regard to quality of service to bring the same within the ambit of the dispute as contemplated under Section 5(6)(b) of the I B Code to disentitle the Appellant-Financial Creditor from initiating Corporate Insolvency Resolution Process. No such dispute was even brought to the notice of the Appellant Financial Creditor as the demand notice served under section 8(1) of the I B Code was not responded by the Corporate Debtor . 11. According to the Appellant, No Dispute , had existed between the parties, during the Term of Agreement , when the Appellant had performed its obligations in an efficient and timely manner . The Learned Counsel for the Appellant projected an argument that the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench, B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 days , after the receipt of the Demand Notice . An E-mail communication was addressed by the Appellant s Learned Counsel to the Group CFO of the Respondent pointing out to him that the Respondent had failed to respond to the Appellant s Demand Notice dated 05.03.2021. 18. While rounding up, the Learned Counsel for the Appellant prays for setting aside the Impugned Order dated 23.06.2022 in CP (IB) No.67/BB/2021, passed by the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench, Bengaluru). BIRD S EYE VIEW on I B Code, 2016: 19. It is pointed out that an Adjudicating Authority , is to determine, whether there is a plausible contention , which requires more investigation and ensure that the Dispute , is not raised on patently, feeble legal Plea(s) or Assertions of Fact , which are unsupported by Material evidence. The Adjudicating Authority ( Tribunal ) must satisfy that there exists Genuine and Reasonable Dispute . DEBT : 20. Section 3 (11) of the Insolvency Bankruptcy Code, 2016 defines debt meaning a liability or obligation in respect of a Claim , which is due from any person and includes a Financial D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Insolvency Bankruptcy Code, 2016; and 2) The Adjudicating Authority ( Tribunal ) can examine whether Merits of Dispute , given by the Corporate Debtor , satisfy the Condition specified under Sub Section 2 (8) of the Insolvency Bankruptcy Code, 2016. 26. It is a settled Law , that when there is an existence of Dispute , earlier to the issuance of Demand Notice , the Adjudicating Authority , ( Tribunal ) must reject the Application , as per the decision of the Hon ble Supreme Court of India in Mobilox Innovations Private Ltd. v Kirusa Software Private Ltd. 2018 1 SCC Online 353. APPRAISAL : 27. Before the 23.06.2022 in CP (IB) No.67/BB/2021 passed by the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench, Bengaluru), the Appellant / Petitioner / Operational Creditor in Form 5 Part IV (Particulars of Operational Debt ) had mentioned that the total amount of debt was Rs.2,46,48,956/- and it was clearly mentioned that the Debt comprises of both amounts that were payable before 25.03.2020 and amounts that fell due for payment after 25.03.2020. Moreover, as per Section 10A of the Insolvency Bankruptcy Code, 2016, according to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate Debtor , to the Appellant / Petitioner / Operational Creditor . Further, case of the Appellant is that even though the Respondent / Corporate Debtor had acknowledged its Debt , through E-mail Communications dated 19.03.2020 and 27.03.2020, no payment was forthcoming and the Appellant / Petitioner / Operational Creditor was forced to issue a Legal Notice dated 13.08.2020 to the Respondent / Corporate Debtor , demanding a sum of Rs. 2,36,59,289/- for the services rendered by the Appellant / Petitioner / Operational Creditor and Rs.44,73,424/- for the services rendered by the Fourthlion Technologies Pvt. Ltd. 30. The Appellant , also issued a Demand Notice dated 04.09.2020, claiming payment for the unpaid Operational Debt , being a sum of Rs.2,36,59,289/-. On 03.10.2020, the Respondent / Corporate Debtor through its response had disputed the same, on the ground, that since there was a suspension on the initiation of the Corporate Debtor Insolvency Resolution Process (CIRP), for any default arising on or after 25th March, and, therefore, the Appellant / Petitioner / Operational Creditor cannot initiate any proceedings under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Notice dated 04.09.2020 of the Appellant / Operational Creditor ), wherein numerous disputes were mentioned of and that were pending between the parties. 35. The Appellant / Petitioner / Operational Creditor , after coming to know that the Demand Notice dated 04.09.2020 was not in conformity with the facts and transactions that had taken place between them, had issued an another Fresh Notice dated 05.03.2021, as per the ingredients of Section 8 of the Insolvency Bankruptcy Code, 2016. In this connection, this Tribunal , pertinently points out that in the Fresh Notice dated 05.03.2021, the Appellant / Operational Creditor had brushed aside the prior Demand Notice dated 04.09.2020. 36. On perusal of the contents of 05.03.2021 Notice (Form 3) issued by the Appellant / Operational Creditor side to the Respondent / Corporate Debtor , demanding payment in respect of the unpaid operational debt , which felt due, for payment before 25.03.2020 and that the Respondent / Corporate Debtor was in default and, therefore, liable to pay the Appellant / Petitioner / Operational Creditor , the principal sum of Rs.1,75,73,690/-. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tailed Reply . It transpires that the disputes pertaining to the existence and extent of alleged Debt , the Liabilities / Claims / Counter Claims and issues pertaining to the violation of the contentions and warranties under the Agreement , executed between the parties are a subject matter of conclusion and trial in the Commercial Suit , pending before the Hon ble Commercial Court, Bangalore . 41. The main Company Petition before the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench, Bengaluru) was on 09.04.2021. The Agreement for the Digital Application Development Services was executed on 05.05.2016 between the Parties and the Addendum was dated 04.06.2018. The categorical Plea of the Appellant / Operational Creditor is that by virtue of the Reconciliation Statement dated 27.03.2020, where the amount was reconciled between the Parties, although according to the Appellant , the Respondent had purportedly disputed the total sum and hence, had saved the Limitation Period and, therefore, the Main Petition (CP (IB) No.67/BB/2021) is maintainable. 42. Be that as it may, on a careful consideration of the contentions a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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