Citation:
The NCLAT New Delhi Bench set aside the order of NCLT and directed AA to pass an order of admission of Sec 9 Application under IBC.
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench comprising Justice Ashok Bhushan, Chairperson, Dr. Alok Srivastava and Barun Mitra, Technical Members on Wednesday were hearing an Appeal against the order of the Adjudicating Authority (AA), wherein the AA dismissed the section 9 of IBC Application on the ground of pre-existence of disputes. The NCLAT New Delhi Bench set aside the order of the AA and directed the AA to pass an order of admission for the section 9 Application.
The present appeal filed under Section 61 of the Insolvency and Bankruptcy Code 2016 by the Appellant arises out of the Order passed by the Adjudicating Authority. By the Impugned Order, the Adjudicating Authority dismissed the application filed under Section 9 of the IBC by the Operational Creditor for initiation of CIRP against the Corporate Debtor. Aggrieved by this impugned order the present appeal has been preferred.
The Appellate Authority observed that the issue in the present case for consideration was whether any operational debt above the threshold limit had become due and payable to the Operational Creditor and a default in payment thereof had arisen and whether any pre-existing dispute can be deciphered.
In the present case, the Appellant has contended that the Corporate Debtor on 15.04.2017 has by way of an email communication unequivocally admitted that as per their books of accounts, an amount of Rs.37,33,552.10 is due to the Operational Creditor. In another communication thereafter from the Operational Creditor to the Corporate Debtor dated 27.12.2017 in which the Corporate Debtor has been requested to immediately release the payment of the outstanding amount as already admitted by them in their books of accounts. The same email has also elaborately explained how a net amount of Rs.55,23,253/- is receivable from the Corporate Debtor.
The Appellate Authority noted that the Adjudicating Authority has also taken note of the fact that the Corporate Debtor has admitted that a debt of Rs.37,33,552.10 is due and payable to the Operational Creditor.
However, the Adjudicating Authority has further held that there was a difference of opinion between the Operational Creditor and the Corporate Debtor on the amount which was due and payable. While the Operational Creditor claimed a sum of Rs.55 lakhs and odd, the Corporate Debtor claimed that the entire due is paid including a sum of Rs.82,141/- paid in excess. The Adjudicating Authority came to this conclusion on the basis of the reply filed by the Corporate Debtor to the Section 8 notice.
It is well settled that in the Section 9 proceeding of IBC, the Adjudicating Authority is not to enter into final adjudication with regard to the existence of disputes between the parties regarding the operational debt but what has to be looked into is whether the defence raised by the Corporate Debtor is moonshine defence or not.
It has been noted by the Adjudicating Authority that there is no prior dispute regarding the quality of goods or materials supplied. What however has been held as a dispute by the Adjudicating Authority is the difference of views on the actual amount payable by the Corporate Debtor to the Operational Creditor. One reason for this difference to have cropped up is an account of express unwillingness on the part of the Corporate Debtor to clear the liability of outstanding debt for the period prior to the change of management. The other reason for the difference has been attributed by the Corporate Debtor to the non-reconciliation of accounts.
Since the Adjudicating Authority has come to the conclusion of a “serious dispute” between the Operational Creditor and Corporate Debtor on the quantum of operational debt due and payable by placing reliance on the reply of the Corporate Debtor to the Section 8 notice, it may be appropriate at this stage to peruse the said reply dated 11.12.2018 and find out if the contentions contained in the reply were plausible. After perusing the above reply, the Appellate Authority found that the Adjudicating Authority has glossed over the fact that the Corporate Debtor has not controverted the outstanding liability that it had admitted on 15.04.2017. Furthermore, claiming that no amount is due and payable to the Operational Creditor, the Corporate Debtor has made this statement with the caveat that only invoices, post change in management, have been paid in full. To our mind, this caveat needs to be examined to find out whether it supports the claims of there being a pre-existing dispute.
The Appellate Authority were of the considered view that the stand taken by the Corporate Debtor in their reply to the Demand Notice that they are not liable for the claims of the Operational Creditor prior to the change in management is not a tenable argument. Change in management is an internal matter of the Corporate Debtor in which the Operational Creditor had no role to play. Change in management of the Corporate Debtor cannot be a ground for extinguishing/wiping off the past liabilities that they owed to the Operational Creditor. Therefore, it is not open for the Corporate Debtor to contend that they were not liable for the outstanding liability which had accrued during the period of the previous management and hold this as a ground of dispute. The untenability of this contention is reinforced by the fact that they had already categorically acknowledged and admitted their outstanding liability in their communication dated 15.04.2017.
The Appellate Tribunal noted that the Corporate Debtor has tried to take advantage of their own wrong of being lackadaisical in reconciling the accounts in spite of nearly 30 requests made by the Operational Creditor to do so. In the entire discussion by the Adjudicating Authority, no notice has been taken in respect of repeated and multiple reminders sent by the Operational Creditor to the Corporate Debtor in this regard.
The Appellate Authority observed that both these grounds lacked merit to be treated as pre-existing disputes and appeared to be clearly motivated by the Corporate Debtor to wriggle out of their obligation to clear outstanding liabilities therefore the defence raised is at best a moonshine defence and hence untenable.
In the result, the Appellate Authority were of the view that the ground for rejection of the Application under Section 9 of IBC was erroneous. The appeal was allowed and the Impugned Order dated 20.07.2022 was set aside and it was directed that the Adjudicating Authority pass an order of admission of Section 9 Application under IBC.
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