NCLAT | Existence of Dispute prior to issuance of Demand Notice-NCLT and NCLAT in rhythm, rejects appeal

National Company Law Appellate Tribunal (NCLAT): The Coram of Ashok Bhushan, J (Chairperson), Jarat Kumar Jain, J (Judicial) and Dr Ashok Kumar Mishra (Technical) while dismissing an appeal found no infirmity in the order of the Adjudicating Authority.

In the pertinent matter, the application filed by the Appellant under Section 9 of the Insolvency and Bankruptcy Code, 2016 (the Code) was rejected by the impugned order. A notice under Section 8 of the Code was issued by the Applicant claiming dues to the extent of the total amount. While the reply referred to a Resolution deciding that till the situation improves no Director would be paid any salary and interest on deposits. The reply further stated that due to actions of the Appellant he was removed from the directorship. Several other allegations regarding withdrawal of money from accounts and misappropriation were made in the reply.

While referring to Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd., (2018) 1 SCC 353, the Tribunal observed that the dispute was in existence prior to receipt of the demand notice. The Adjudicating Authority had rejected the prayer of the Applicant to initiate CIRP proceedings under IBC against the Corporate Debtor.

The Coram while dismissing the appeal after considering the relevant arguments stated, “We are satisfied that there was existence of dispute prior to issuance of Demand Notice. The Adjudicating Authority after considering all the relevant materials has rightly taken the view that Application under Section 9 cannot be accepted.”

[Hukum Singh v. Adaab Hotels Ltd., Company Appeal (AT) (Insolvency) No. 905 of 2021 decided on 11-11-2021]


Agatha Shukla, Editorial Assistant has reported this brief.


Counsel for the Parties:

For Appellant: Mr. Indranil Ghosh and Mr. Palzer Moktan, Adv

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