{"id":284573,"date":"2023-02-20T17:00:08","date_gmt":"2023-02-20T11:30:08","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=284573"},"modified":"2023-03-22T17:32:25","modified_gmt":"2023-03-22T12:02:25","slug":"operational-creditor-corporate-debtor-agreement-services-live-tv-production-default-section-8-notice-no-reply-application-nclt-pre-existing-dispute-dismissed-appeal-nclat","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2023\/02\/20\/operational-creditor-corporate-debtor-agreement-services-live-tv-production-default-section-8-notice-no-reply-application-nclt-pre-existing-dispute-dismissed-appeal-nclat\/","title":{"rendered":"Whether Corporate Debtor can raise pre-existing dispute in reply to the petition filed under Section 9 IBC in case demand notice issued under Section 8 of IBC is not replied? NCLAT answers"},"content":{"rendered":"<div style=\"text-align: justify; line-height: 150%;\">\n<p style=\"margin-bottom: 3%;\"><b>National Company Law Appellate Tribunal, New Delhi:<\/b> In a case related to pre-existing dispute, a bench comprising of Ashok Bhushan, J. and <b>Ms. Shreesha Merla* (Technical Member)<\/b> held that the Corporate Debtor is not prevented from establishing by way of a reply and relevant documents, any Pre-Existing Dispute.<\/p>\n<p><b>Factual Matrix<\/b><\/p>\n<p style=\"margin-bottom: 3%;\">In the present matter, the petitioner, Greymatter Entertainment Private Limited (Operational Creditor) had provided services of Live TV Production of Season-1, Season-2 and Season-3 of the Pro Wrestling League (&#8216;PWL&#8217;) held in India in 2015 to the respondent, Corporate Debtor. The parties entered into the Live Production agreement for only Season-2 of the TV series PWL. It is alleged that entire consideration for the three Seasons was not paid and there is a &#8216;debt&#8217; and &#8216;default&#8217;. In lieu of the default committed thereof, the appellant served a Demand Notice under S. <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001549817\">8<\/a> <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002802178\">IBC<\/a> but received no response in return. The appellant filed an application under S. <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001549828\">9<\/a> <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002802178\">IBC<\/a> before the Adjudicating Authority. The respondent in his reply pleaded that there was a &#8220;pre-existing dispute&#8221; between the parties. The Adjudicating Authority vide order dated 27-07-2021, dismissed the application in view of the &#8220;pre-existing dispute&#8221;. Aggrieved by the impugned order by the Adjudicating Authority, the appellant preferred the present appeal before this Tribunal challenging the same.<\/p>\n<p><b>Moot Point<\/b><\/p>\n<p style=\"margin-bottom: 3%;\">Whetherany provision under the IBC prevent the &#8216;Corporate Debtor&#8217; from pleading issues of &#8216;Pre-Existing Dispute&#8217; or that the &#8216;debt&#8217; has been paid, in their reply to the petition filed under S. <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001549828\">9<\/a> <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002802178\">IBC<\/a> when S. 8 Notice is not replied?<\/p>\n<p><b>Observation and Decision<\/b><\/p>\n<p style=\"margin-bottom: 3%;\">The Tribunal relied on <i>Brandy Realty Services Ltd.<\/i> v. <i>Sir John Bakeries India (P) Ltd.<\/i>, <a href=\"http:\/\/www.scconline.com\/DocumentLink\/l3W9EddY\">2022 SCC OnLine NCLAT 290<\/a>, where it was held that <b>&#8220;&#8230;mere fact that Reply to notice under Section 8(1) having not been given within 10 days or no reply to demand notice having been filed by the Corporate Debtor does not preclude the Corporate Debtor to bring relevant materials before the Adjudicating Authority to establish that there are preexisting dispute which may lead to the rejection of Section 9 application.&#8221;<\/b><\/p>\n<p style=\"margin-bottom: 3%;\">The Tribunal observed that neither S. <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001549817\">8<\/a> nor S. <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001549828\">9<\/a> <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002802178\">IBC<\/a> indicate that in the event when reply to Demand Notice was not filed within 10 days, the Corporate Debtor is precluded from raising the question of dispute or pleading that there is no amount due and payable. The Tribunal opined that the Corporate Debtor is not prevented from establishing by way of a reply and relevant documents, any Pre-Existing Dispute.<\/p>\n<p style=\"margin-bottom: 3%;\">The Tribunal observed that failure to file rejoinder cannot be treated as admission of the pleadings in the written statement.<\/p>\n<p style=\"margin-bottom: 3%;\">The Tribunal observed despite several emails and phone calls done by the appellant, the Corporate Debtor failed to pay the balance amounts, moreover, the Corporate Debtor failed to produce any evidence supporting their contention that the amount of Rs.1 crore was paid in full and final satisfaction.<\/p>\n<p style=\"margin-bottom: 3%;\">The Tribunal also relied on <i>Mobilox Innovations (P) Ltd.<\/i> v. <i>Kirusa Software (P) Ltd.<\/i>, <a href=\"http:\/\/www.scconline.com\/DocumentLink\/96bNa54c\">(2018) 1 SCC 353<\/a>, and observed that in the present case there exist &#8216;Claims&#8217; and &#8216;Counter Claims&#8217; with respect to the amounts to be paid and the defense is not &#8216;spurious&#8217; or &#8216;mere bluster&#8217;.<\/p>\n<p style=\"margin-bottom: 3%;\">Dismissing the appeal, the Tribunal held that the appellant has failed to discharge its burden that there was indeed an &#8216;Operational Debt&#8217; which was &#8216;due and payable&#8217; as an agreement is only entered for Season 2 and no other agreement was made for other seasons.<\/p>\n<p style=\"margin-bottom: 3%;\">[<span style=\"font-weight: bold; color: #632423;\">Greymatter Entertainment (P) Ltd. v. Pro Sportify (P) Ltd., <a href=\"http:\/\/www.scconline.com\/DocumentLink\/JEO5U0J0\">2023 SCC OnLine NCLAT 82<\/a>, decided on 09-02-2023<\/span>]<\/p>\n<p style=\"text-indent: 18pt;\"><strong><span style=\"color: #000080;\">*Judgment by Ms. Shreesha Merla Member (T)<\/span><\/strong><\/p>\n<hr\/>\n<p>Advocates who appeared in this case :<\/p>\n<p style=\"text-indent: 18pt;\">Mr. Kuriakose Varghese, Ms. Aishwarya Hariharan and Mr. Akshat Gogna, Counsel for the Appellant;<\/p>\n<p style=\"text-indent: 18pt;\">Mr. Arvind Nayar (Senior Advocate,) Mr. Varun Tankha, Mr. Akshay Joshi and Mr. Prannoy Joe Sebastian, Counsel for the Respondent.<\/p>\n<hr\/>\n<p style=\"text-indent: 18pt;\"><strong><span style=\"color: #000080;\">*Ritu Singh, Editorial Assistant has put this report together.<\/span><\/strong><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p><i>In the instant matter, the petitioner preferred an appeal challenging the order of Adjudicating Authority dismissing application in view of the &#8220;pre-existing dispute&#8221;. NCLAT held that when the reply to Demand Notice was not filed within 10 days, the Corporate Debtor is not precluded from raising the question of dispute or pleading that there is no amount due and payable.<\/i><\/p>\n","protected":false},"author":67011,"featured_media":284626,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,11],"tags":[30596,30182,22014,12521,34910,43791,33073],"class_list":["post-284573","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-tribunals_commissions_regulatorybodies","tag-corporate-debtor","tag-national-company-law-appellate-tribunal","tag-nclat","tag-nclt","tag-operational-creditor","tag-operational-debt","tag-pre-existing-dispute"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.4 (Yoast SEO v26.4) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Whether Corporate Debtor can raise pre-existing dispute in reply to the petition filed under Section 9 IBC in case demand notice issued under Section 8 of IBC is not replied? 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The instant appeal was filed against the order\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":293827,"url":"https:\/\/www.scconline.com\/blog\/post\/2023\/06\/05\/nclat-corporate-debtor-cannot-raise-pre-existing-dispute-without-evidence-prior-lacuna-scc-blog-legal-research-news\/","url_meta":{"origin":284573,"position":3},"title":"Can Corporate Debtor raise issue of pre-existing dispute if there is no evidence of any lacuna prior to demand notice? NCLAT answers","author":"Ritu","date":"June 5, 2023","format":false,"excerpt":"\u201cThe Adjudicating Authority does not appear to have committed any error in holding the alleged disputes claimed by the Corporate Debtor to be feeble as it is not supported by credible evidence.\u201d NCLAT","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\/05\/national-company-law-appellate-tribunal-1.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/05\/national-company-law-appellate-tribunal-1.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/05\/national-company-law-appellate-tribunal-1.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/05\/national-company-law-appellate-tribunal-1.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":280247,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/12\/22\/plea-of-pre-existing-dispute-must-co-relate-with-amount-claimed-by-operational-creditor-nclat\/","url_meta":{"origin":284573,"position":4},"title":"Plea of pre-existing dispute must co-relate with amount claimed by Operational Creditor: NCLAT","author":"Editor","date":"December 22, 2022","format":false,"excerpt":"National Company Law Appellate Tribunal | Allowing the appeal as the impugned order is contrary to law, the bench comprising of Rakesh Kumar Jain*, J. and Kanthi Narahari (Technical Member) held that for a debtor to take the plea of pre-existing dispute under S. 8(2) the dispute must relate to\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":"NCLAT","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/12\/MicrosoftTeams-image-395.jpg?resize=350%2C200&ssl=1","width":350,"height":200},"classes":[]},{"id":307195,"url":"https:\/\/www.scconline.com\/blog\/post\/2023\/11\/15\/corporate-debtors-early-denial-of-liability-prior-to-issuance-of-section-8-notice-shows-pre-existing-dispute-nclat-scc-blog\/","url_meta":{"origin":284573,"position":5},"title":"Corporate Debtor\u2019s early denial of liability indicates pre-existing dispute; rejection of the Section 9 application justified: NCLAT","author":"Ritu","date":"November 15, 2023","format":false,"excerpt":"While affirming the impugned order, the NCLAT granted the appellant option to pursue proceedings as per the agreement between the parties before an appropriate forum in accordance with the law.","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\/05\/national-company-law-appellate-tribunal-1.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/05\/national-company-law-appellate-tribunal-1.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/05\/national-company-law-appellate-tribunal-1.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/05\/national-company-law-appellate-tribunal-1.webp?resize=700%2C400&ssl=1 2x"},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/284573","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\/67011"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=284573"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/284573\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/284626"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=284573"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=284573"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=284573"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}