{"id":307195,"date":"2023-11-15T17:00:18","date_gmt":"2023-11-15T11:30:18","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=307195"},"modified":"2023-12-01T12:17:22","modified_gmt":"2023-12-01T06:47:22","slug":"corporate-debtors-early-denial-of-liability-prior-to-issuance-of-section-8-notice-shows-pre-existing-dispute-nclat-scc-blog","status":"publish","type":"post","link":"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\/","title":{"rendered":"Corporate Debtor\u2019s early denial of liability indicates pre-existing dispute; rejection of the Section 9 application justified: NCLAT"},"content":{"rendered":"
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National Company Law Appellate Tribunal, New Delhi:<\/span> While deciding whether there was a pre-existing dispute between the parties justifying the rejection of the Section 9 application, a 3-member bench comprising of Ashok Bhushan, J., Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member), held that a pre-existing dispute existed, as the Corporate Debtor had denied liability even before the demand notice was issued.<\/p>\n

Brief Facts<\/p>\n

In the instant matter, the appellant filed an appeal against the order dated 17-03-2023, wherein the Adjudicating Authority rejected the application filed under Section 9 of the IBC. The Section 9 application was filed based on a Work Order issued by the Corporate Debtor to the Appellant for certain work.<\/p>\n

The legal notices were exchanged, including one dated 28-02-2019, demanding a sum of Rs.1,80,81,534\/- from the Corporate Debtor. The Corporate Debtor responded, denying the claims and alleging a fictitious and fabricated claim by the Appellant. Despite the denial, the appellant issued a demand notice under Section 8 on 20-05-2019 and subsequently filed the Section 9 application. The Adjudicating Authority, in its impugned order, rejected the Section 9 application on the ground of a pre-existing dispute, noting the termination of the Work Order on 02-01-2019.<\/p>\n

Moot Point<\/p>\n

Whether there was a pre-existing dispute between the parties justifying the rejection of the Section 9 application?<\/p>\n

Parties’ Contentions<\/p>\n

The appellant contended that the respondent never disputed the claimed amount, as evidenced by emails between the parties. It was argued that since the amount was not disputed, the termination of the Work Order should not be considered a pre-existing dispute, and there was a regular business transaction between the parties.<\/p>\n

Key Legal Principles<\/p>\n