2023 (11) TMI 967 - AT - Insolvency and Bankruptcy

Application Dismissed Due to Pre-Existing Dispute, Demand Notice Countered by Corporate Debtor, Appeal Rejected.

The Adjudicating Authority rejected the Appellant's Section 9 application, citing a pre-existing dispute between the parties, as supported by the 'Mobilox ... Section 9 Application not admitted - pre-existing dispute between the parties - Disputed reply to the notice - HELD THAT:- The Appellant submits that the Reply to the Demand Notice was not correct reply and it was duly explained in the Rejoinder by Corporate Debtor - On looking into the Reply to the Demand Notice, the notice is clearly notice of dispute. When the Corporate Debtor immediately after first design was submitted said that it was not complete and refund of Rs.3 Lakhs was claimed, the dispute was raised immediately after 31.07.2019, which was much prior to the Demand Notice. The averments made in the Reply to Demand Notice clearly indicate that dispute was raised which cannot be a moonshine or not supported by any material. The Adjudicating Authority did not commit any error in rejecting Section 9 application on the ground of pre-existing dispute - there is no merit in the Appeal - appeal dismissed. Issues Involved:The judgment involves the rejection of a Section 9 application by the Adjudicating Authority due to a pre-existing dispute between the parties, as per the agreement terms and subsequent communications.Details of the Judgment:1. Issue 1 - Rejection of Section 9 Application:The Appellant filed an application under Section 9 claiming a specific amount, which was rejected by the Adjudicating Authority citing a pre-existing dispute between the parties. The Authority relied on the judgment in 'Mobilox Innovations Private Limited vs. Kirusa Software Private Limited.'2. Issue 2 - Challenge to the Order:The Appellant challenged the rejection order, arguing that payments were to be made on a stage basis as per the agreement, and there was no fault on their part in providing designs. Despite a reply to the Demand Notice, a Rejoinder was filed in the Section 9 application to explain all issues.3. Discussion and Decision:Upon considering the submissions and records, it was noted that the Demand Notice was promptly replied to, refuting the Appellant's claim. The reply highlighted technical issues at the Appellant's end causing delays in work completion, leading to a request for a refund. The Adjudicating Authority found no error in rejecting the Section 9 application due to the pre-existing dispute raised by the Corporate Debtor.4. Conclusion:The Adjudicating Authority's decision to reject the Section 9 application based on the existence of a dispute prior to the Demand Notice was upheld. The Appeal was dismissed as the pre-existing dispute was deemed valid and supported by the material presented in the case.