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of <h1>NCLAT upholds dismissal of Section 9 IBC application due to pre-existing dispute over software services</h1> <h3>M/s Kellton Tech Solutions Limited Versus M/s Actas Technologies Private Limited</h3> M/s Kellton Tech Solutions Limited Versus M/s Actas Technologies Private Limited - TMI Issues Involved:1. Whether there is a pre-existing dispute between the parties.2. Whether the appeal can be allowed.Summary:Issue 1: Pre-existing DisputeThe Appellant, M/s Kellton Tech Solutions Limited, entered into a 'Software Development and Service Agreement' with the Respondent, M/s Actas Technologies Private Limited, for developing a customized e-wallet platform. The Appellant provided services and raised invoices, but the Respondent failed to pay the last two invoices. The Appellant claimed no pre-existing dispute existed as per the agreed mechanism in Clause 3.4 of the agreement. However, the Respondent argued there was a genuine pre-existing dispute regarding the quality and delivery of the work, supported by various emails and an indemnity notice. The Tribunal noted several key events indicating disputes, such as emails from the Respondent and the end client raising concerns about the quality and delay of the project. The Tribunal concluded there was sufficient evidence of a pre-existing dispute, citing the judgment of the Hon'ble Apex Court in Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited.Issue 2: Allowance of AppealThe Appellant claimed the Adjudicating Authority wrongly dismissed their application under Section 9 of the IBC. However, the Tribunal found no error in the Adjudicating Authority's decision, which was based on the evidence of pre-existing disputes. The Tribunal emphasized that the Appellant's participation in pre-institution mediation proceedings further supported the existence of a dispute. Consequently, the Tribunal upheld the dismissal of the application under Section 9(5)(ii)(d) of the IBC and dismissed the appeal.Conclusion:The Tribunal dismissed the appeal, affirming the Adjudicating Authority's finding of a pre-existing dispute and the dismissal of the Company Petition filed by the Operational Creditor.
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