TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Pre-existing dispute in insolvency petition upheld; petition rejected where debtors substantiated reply demonstrated a bona fide dispute.</h1> Pre-existing dispute raised by the corporate debtor in response to a demand notice was treated as a bona fide factual defence supported by documentary ... Pre-existing dispute - notice of dispute - operational creditor - Rejection of Section 9 application for pre-existing dispute - HELD THAT:- When notice of dispute has been issued by the corporate debtor u/s 9(5)(ii)(d) Adjudicating Authority is obliged to reject the application. The submission appellant that letter which was written by one Director of the corporate debtor does not bind other Directors and atleast that was a dispute interse between company and cannot be basis for reliance by the Adjudicating Authority. When the letter which was written by one Director of the operational creditor to the corporate debtor and has been referred to and relied in reply to the demand notice, the contents of the reply to the demand notice cannot be said to be a moonshine defence and the reply to demand notice is based on facts and is not unsupported by materials and in the present case Adjudicating Authority having relied on the reply to the demand notice has come to the conclusion that there is a pre-existing dispute. We thus do not find any error in the order warranting interference by this Appellate Tribunal. We, however, make it clear that dismissal of Section 9 application shall not preclude the appellant to claim its dues, if any, against the corporate debtor in accordance with law. We dismiss the appeal. Issues: Whether the Adjudicating Authority was correct in rejecting the Section 9 application on the ground of a pre-existing dispute raised by the corporate debtor in reply to the demand notice.Analysis: The Appellate Tribunal examined the reply to the demand notice issued by the corporate debtor and the letter dated 16.08.2024 referenced therein. The letter, signed by a director of the operational creditor, acknowledged that most invoices had been settled and quantified a remaining outstanding amount. The Tribunal treated the corporate debtor's reply as a valid notice of dispute within the meaning of Sections 8 and 9 of the Insolvency and Bankruptcy Code, 2016. The Tribunal observed that where such a notice of dispute exists, Section 9(5)(ii)(d) requires the Adjudicating Authority to reject the Section 9 application. The Tribunal found that the reply was supported by material (the director's letter) and was not a frivolous or sham defence; therefore the Adjudicating Authority's conclusion of a pre-existing dispute was sustainabl e.Conclusion: The Adjudicating Authority's rejection of the Section 9 application on the ground of a pre-existing dispute is upheld; decision is in favour of the Respondent.
TaxTMI 
TaxTMI 
