2023 (4) TMI 1028 - AT - Insolvency and Bankruptcy

Appellate Tribunal Upholds Decision on Section 9 Application, Emphasizes Pursuing Legal Remedies

Chawla Silica Sand Trading Co. Versus Indo Farm Equipments Ltd.

The Appellate Tribunal upheld the Adjudicating Authority's decision to reject the Section 9 Application due to a pre-existing dispute between the parties ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - notice under Section 8 of IBC - pre-existing disputes or not - HELD THAT:- The fact which is not disputed that there was a meeting between the parties on 12.11.2019 and the meeting itself indicated that there was some issues to be sorted out and on the same date the Appellant shot the email on 12th November, 2019 sending Section 8 Notice and the Corporate Debtor has also initiated suit by filing the same on 14th November, 2019. The filing of the suit can not be relevant to find out pre-existing dispute because Section 8 Notice was issued on 12th November, 2019 but the attending facts and circumstances including meeting between the parties to settle the issue and the email dated 23.10.2019 sent by the Appellant itself indicate that there was issue regarding the rates and the corporate debtor was complaining about the rates as well as there was pre-existing dispute and the Adjudicating Authority did not commit any error in rejecting the Application. There is no ground to interfere with the Impugned Order - the Appeal is dismissed. Issues involved: The judgment involves the rejection of a Section 9 Application by the Adjudicating Authority based on the existence of a pre-existing dispute between the parties.Details of the Judgment:Issue 1: Existence of Pre-existing DisputeThe Adjudicating Authority rejected the Section 9 Application due to a pre-existing dispute between the parties. The operational creditor filed an affidavit stating that no notice was given by the corporate debtor under Section 8(2)(a) of the Insolvency and Bankruptcy Code, 2016, and no payment was made towards the debt. The corporate debtor had filed a civil suit for recovery before receiving the demand notice. The Adjudicating Authority found that there was a dispute regarding the rates of Silica Sand supplied by the operational creditor, leading to the rejection of the Section 9 Application.Issue 2: Appellant's ArgumentThe Appellant argued that the civil suit filed by the corporate debtor should not be considered a pre-existing dispute as the Section 8 Notice was issued before the suit was initiated. The Appellant contended that they voluntarily reduced the rates, which should not be deemed a pre-existing dispute. However, the Adjudicating Authority found that the facts, including a meeting between the parties to settle issues and an email sent by the Appellant regarding rates, indicated the existence of a pre-existing dispute.Decision and ConclusionThe Appellate Tribunal upheld the decision of the Adjudicating Authority, stating that the rejection of the Section 9 Application was justified due to the pre-existing dispute between the parties. The Tribunal emphasized that the Appellant could seek legal remedies through appropriate channels for debt recovery. Therefore, the Appeal was dismissed, and the Impugned Order was upheld without interference.