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Insolvency and BankruptcyAugust 8, 2024Case LawsAT
The case assesses the statutory construct of IBC regarding demand notices u/s 9. A dispute arose over payment to Respondent No. 2 by the Corporate Debtor, with a notice of dispute issued. The disputes, including changes in roles and responsibilities, impacted the debt claimed by Respondent No. 2. Pre-existing disputes surrounding the debt indicated it was not undisputed, making CIRP initiation inappropriate. The Adjudicating Authority erred by not considering the plausibility of disputes. The Section 9 application was wrongly admitted, leading to the release of the Corporate Debtor from CIRP. The Resolution Professional's fees are upheld, and the deposited amount is to be refunded. NCLAT allowed the appeal.
The case assesses the statutory construct of IBC regarding demand notices u/s 9. A dispute arose over payment to Respondent No. 2 by the Corporate Debtor, with a notice of dispute issued. The disputes, including changes in roles and responsibilities, impacted the debt claimed by Respondent No. 2. Pre-existing disputes surrounding the debt indicated it was not undisputed, making CIRP initiation inappropriate. The Adjudicating Authority erred by not considering the plausibility of disputes. The Section 9 application was wrongly admitted, leading to the release of the Corporate Debtor from CIRP. The Resolution Professional's fees are upheld, and the deposited amount is to be refunded. NCLAT allowed the appeal.
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