{"id":196067,"date":"2018-05-17T15:06:03","date_gmt":"2018-05-17T09:36:03","guid":{"rendered":"http:\/\/www.scconline.com\/blog\/?p=196067"},"modified":"2018-05-30T12:35:07","modified_gmt":"2018-05-30T07:05:07","slug":"dispute-among-stakeholders-in-corporate-debtor-company-is-not-dispute-as-contemplated-u-s-56-of-insolvency-and-bankruptcy-code","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2018\/05\/17\/dispute-among-stakeholders-in-corporate-debtor-company-is-not-dispute-as-contemplated-u-s-56-of-insolvency-and-bankruptcy-code\/","title":{"rendered":"Dispute among stakeholders in corporate debtor company is not \u2018dispute\u2019 as contemplated under Section 5(6) of Insolvency and Bankruptcy Code"},"content":{"rendered":"<p style=\"text-align: justify;\"><strong>National Company Law Appellate Tribunal:<\/strong> The NCLAT has held in an appeal against a common order passed by the NCLT\u2019s Allahabad Bench that any dispute within a corporate debtor company (\u201cdebtor\u201d) is not one defined in the Insolvency and Bankruptcy Code (the Code), which only takes into consideration disputes between the debtor and its operational creditors (\u201ccreditors\u201d).<\/p>\n<p style=\"text-align: justify;\">The appellant is the head of a company which is a corporate debtor, appealing against a common order passed by the NCLT for separate appeals filed by different operational creditors, who are owed a total sum of about 6 crore rupees by the debtor. In response to applications filed under Section 9 of the Code, the NCLT admitted one application, passed a moratorium order and appointed an Interim Resolution Professional. The other applications were disposed of.<\/p>\n<p style=\"text-align: justify;\">The creditors-respondents have stated that the debtor-appellant placed orders for crude rice bran oil but refused to pay for the same even after demand notices were issued\u00a0under Section 8(1) of the Code.<\/p>\n<p style=\"text-align: justify;\">The debtor, however, claimed that though the debtor company did place purchase orders for the oil, the oil was actually delivered to one Dinesh Arora, the then MD of the debtor company. The invoices, however, were raised against the debtor though it was never actually supplied the ordered oil. Once this fraud was discovered, Mr Arora signed a MoU with the debtor undertaking personal liability to pay off all invoices raised against the fraudulent delivery. The debtor argued that there was consensus ad idem between the debtor, Mr Arora and the creditors on the MoU and this led to novation of the contract, making only Mr Arora, and not the debtor liable for the payment. He further contended that the creditors could not back out of this due to the application of Section 62 of the Contracts Act and must claim all payment from Mr Arora.<\/p>\n<p style=\"text-align: justify;\">The counsel for the creditors argued that the creditors were never a party to the MoU and the same is a mere instrument of collusion between the debtor and Mr Arora to escape their liability. It was shown by the creditors that the debtor company in its balance sheets had accepted its credit liability towards the creditors, these ledgers having been duly signed by the debtor company\u2019s director.<\/p>\n<p style=\"text-align: justify;\">NCLAT was of the view that the \u2018dispute\u2019 was merely one of the officials of the debtor company and not between the debtor and the creditors. It stated that while a debt was an asset of the creditor, which he could assign to an assignee of his will, the liability to pay off a debt was not transferable and the burden of repayment being shifted from one official of the debtor company to another does not absolve the debtor company of its liability. Since the appellant had taken over the shares of the other stakeholder-Mr Arora, he would be responsible to pay off the entire debt. The MoU was an agreement between different stakeholders in the same company and so was the issue of who received the delivery of the oil, which was an internal matter of the debtor company and the creditors were entitled to payment for the same. Lastly, the NCLAT also found that the debtor company had shown purchases made from the creditors in its tax returns and had claimed input tax credit on the same. Hence the appeal was dismissed. [Mr Chetan Sharma v. Jai Lakshmi Solvents (P) Ltd.,\u00a0 Company Appeals (AT) (Insolvency) Nos. 66-70 of 2017, decided on 10.05.2018]<\/p>\n<p style=\"text-align: justify;\">\n","protected":false},"excerpt":{"rendered":"<p>National Company Law Appellate Tribunal: The NCLAT has held in an appeal against a common order passed by the NCLT\u2019s Allahabad Bench <\/p>\n","protected":false},"author":91,"featured_media":153604,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,11],"tags":[30183,30184,30182,22014],"class_list":["post-196067","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-tribunals_commissions_regulatorybodies","tag-corporate-debtor-company","tag-dispute","tag-national-company-law-appellate-tribunal","tag-nclat"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.4 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Mukhopadhaya, Chairperson and Justice A.I.S Cheema, Member (Judicial) and Kanthi Narahari, Member (Technical) allowed the appellant (shareholder of the Corporate Debtor) to pay the total dues of the Operational Creditor after the application filed against it under Section 9\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":289975,"url":"https:\/\/www.scconline.com\/blog\/post\/2023\/04\/18\/nclt-admitted-section-9-ibc-application-nclat-objection-pre-existing-dispute-appeal-dismissed-scc-blog-legal-research-news\/","url_meta":{"origin":196067,"position":2},"title":"To reject application under Sec. 9 IBC, a genuine pre-existing dispute must exist: NCLAT","author":"Ritu","date":"April 18, 2023","format":false,"excerpt":"The National Company Law Appellate Tribunal held that no pre-existing dispute regarding quality of supplied goods exist as the same was not raised before consumption of the goods.","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"National Company Law Appellate Tribunal","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/02\/MicrosoftTeams-image-458.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/02\/MicrosoftTeams-image-458.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/02\/MicrosoftTeams-image-458.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/02\/MicrosoftTeams-image-458.png?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":200117,"url":"https:\/\/www.scconline.com\/blog\/post\/2018\/08\/13\/directors-of-the-corporate-debtor-held-to-be-financial-creditor-against-the-same-company-in-light-of-outstanding-unsecured-debt-nclat\/","url_meta":{"origin":196067,"position":3},"title":"Directors of the \u2018Corporate Debtor\u2019 held to be \u2018Financial Creditor\u2019 against the same company in light of outstanding unsecured debt: NCLAT","author":"Bhumika Indulia","date":"August 13, 2018","format":false,"excerpt":"National Company Law Appellate Tribunal (NCLAT): A two-member bench comprising of Justice S.J. Mukhopadhaya, Chairperson and Justice Bansi Lal Bhat, Member (Judicial), dismissed an appeal filed against the judgment of National Company Law Tribunal, New Delhi whereby Respondents 1 and 2 were held to be Financial Creditors. Factual matrix of\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":219586,"url":"https:\/\/www.scconline.com\/blog\/post\/2019\/09\/16\/nclat-appellate-tribunal-exercises-inherent-powers-under-r-11-of-nclat-rules-quashes-cirp-where-settlement-reached-between-parties-before-constitution-of-coc\/","url_meta":{"origin":196067,"position":4},"title":"NCLAT | Appellate Tribunal exercises inherent powers under R. 11 of NCLAT Rules, quashes CIRP where settlement reached between parties before constitution of CoC","author":"Bhumika Indulia","date":"September 16, 2019","format":false,"excerpt":"National Company Law Appellate Tribunal (NCLAT):\u00a0A Bench of Justice S.J. Mukhopadhaya, Chairperson and Kanthi Narahari, Member (Technical), allowed an appeal seeking to quash the Corporate Insolvency Resolution Process against the Corporate Debtor. The Operation Creditor had filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 which\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":200221,"url":"https:\/\/www.scconline.com\/blog\/post\/2018\/08\/17\/i-insolvency-resolution-process-cannot-be-defeated-by-taking-resort-to-internal-dispute-nclat\/","url_meta":{"origin":196067,"position":5},"title":"I&#038;B Code overrides Companies Act; Insolvency Resolution Process cannot be defeated by taking resort to internal dispute: NCLAT","author":"Bhumika Indulia","date":"August 17, 2018","format":false,"excerpt":"National Company Law Appellate Tribunal (NCLAT): A two-member bench comprising of Justice S.J. Mukhopadhaya, Chairperson and Justice Bansi Lal Bhat, Member (Judicial) dismissed an appeal filed by the Corporate Debtor against the initiation of Insolvency Resolution Process. The Financial Creditor had granted a loan of Rs 1.02 crores to the\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/NCLAT.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/196067","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/91"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=196067"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/196067\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/153604"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=196067"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=196067"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=196067"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}