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Supreme Court Upholds Rejection of Insolvency Application | Genuine Dispute Overcharging | Plausible Contention The appeal against the rejection of the application under Section 9 of the Insolvency & Bankruptcy Code, 2016 was dismissed by the Supreme Court. The ...
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The appeal against the rejection of the application under Section 9 of the Insolvency & Bankruptcy Code, 2016 was dismissed by the Supreme Court. The Court found that the Respondent had raised a genuine dispute regarding overcharging in December 2015, supported by evidence and a counterclaim, thus justifying the rejection of the application. The Court emphasized the need for a plausible contention to reject such applications and cited relevant case law to support its decision.
Issues: - Appeal against rejection of application under Section 9 of Insolvency & Bankruptcy Code, 2016 based on existence of dispute.
Analysis: 1. The appeal was filed by the Operational Creditor against the order rejecting the application under Section 9 of the Insolvency & Bankruptcy Code, 2016 due to the existence of a dispute. The Respondent disputed the claim based on a legal notice dated 12th December, 2015, alleging overcharging by the Operational Creditor. The Adjudicating Authority found a preexisting case of overcharging based on this notice.
2. The Appellant argued that the Respondent's dispute was frivolous as they had deducted Tax at Source (TDS) and deposited it with the Income Tax Department. Reference was made to the Supreme Court decision in "Mobilox Innovations Private Limited Versus Kirusa Software Private Limited" [(2018) 1 SCC 353], emphasizing the need for a plausible contention to reject an application under Section 9. The Appellant contended that the Adjudicating Authority failed to separate spurious defense in this case.
3. The Supreme Court decision in "Innoventive Industries Ltd. Vs. ICICI Bank and Ors." [(2018) 1 SCC 407] was cited to highlight the importance of a genuine dispute supported by evidence. The Court clarified that if a dispute exists based on records and evidence, the application can be rejected. In this case, the Respondent had raised a dispute in December 2015 regarding overcharging, informing the Operational Creditor of the incurred losses and making a counterclaim. Therefore, the Court found no merit in the appeal and dismissed it without costs.
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