National Company Law Appellate Tribunal (NCLAT) -The Coram of Justice Jarat Kumar Jain and Alok Srivastava, Technical Member while deciding an appeal denied to put a stay on the CIRP proceedings. The Tribunal was of the opinion that the alleged ‘pre-existing-dispute’ was raised at such a late stage even though it was a spurious dispute, only with an intention to avoid action under IBC. The Tribunal further made it clear that the order will not have any effect on the final outcome of the

In the instant matter the Corporate Debtor (Appellant) alleged that the Appellant had repeatedly sought reconciliation of the invoices that were presented by the Operational Creditor (Respondent No. 1) and in the absence of non-production of work completion reports relating to the invoices under question, the requisite payments could not be made. His argument was that it was a ‘dispute’ as defined in Insolvency and Bankruptcy Code, 2016  and in accordance with the Supreme Court’s judgment in Mobilox Innovations vs. Kirusa Software Civil Appeal, (2018) 1 SCC 353 the application for insolvency under Section 9 of IBC cannot be admitted. While the counsel for the Appellant submitted that the it was only after the two letters of the Operational demanding pending payments and threat of legal action before the NCLT that the Corporate Debtor started sending communications for reconciliation and submission of supporting documents. And cited the same case, claiming that a spurious dispute cannot come in the way of admission of the operational creditor’s application u/s 9 of IBC.

The Tribunal considering the relevant arguments and the same case that both the parties referred to in favour of their arguments stated, “We are, therefore, at this stage persuaded by the argument of the Ld. Counsel of Respondent No. 1 that this alleged dispute has been raised at this late stage only after the Operational Creditor started asking for his pending payments to show that a pre-existing dispute was present even though it is a spurious dispute, to avoid action under IBC. Thus we find that a prima facie case doesn’t exist in favour of the Appellant”.

[Amit Wadhwani v. Global Advertisers, 2021 SCC OnLine NCLAT 325, decided on 28-09-2021]

Agatha Shukla, Editorial Assistant has put this report together 

Counsel for the Parties:

For Appellant:-

Mr. Ramji Srinivasan, Sr. Advocate, Mr. Dharam Jumani, Mr. Kunal Mehta, Mr. Rajshree Chaudhary, Mr. Suraj Iyer, Ms. Priyashree Sharma, Ms. Gauri Joshi, Mr. Kush Chaturvedi, Ms. Rushall Agarwal, Advocates

For Respondent:-

Mr. Krishnendu Datta, Sr. Advocate with Mr. Girish Kedia, Ms. Shivangi Kedia, Mr. Mohit Chaudhary, Ms. Garima Sharma, Mr. Amir Ariswala, Advocates for R1 Mr. Ami Jain, R2 for IRP

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