TaxTMI 
TaxTMI 
2017 (7) TMI 1
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....ng provisions of Section 9 of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'I & B Code) against one Respondent - Corporate Debtor "Goodwill Hospital and Research Centre Limited" and another Corporate Debtor, "Karma Healthcare Private Limited". Both the applications under Section 9 were rejected by impugned common judgement passed by 'Adjudicating Authority' with observations that the remedy of the Appellant/ Applicant lies elsewhere and not under the provisions of 'I & B Code'. 3. The brief fact of the case are as follows: - The appellant entered into a Comprehensive Annual Maintenance Contract with respondent 'Goodwill Hospitals and Research Centre' on 2' August 2011 and 11th May 2012 for the period from 1St September 2011 to 31st August 2012 and 1st September 2012 to 31St August 2013 respectively in respect of maintenance of Allum FD 20C. 4. Another Comprehensive Annual Maintenance Contract was reached between Appellant and the Respondent 'Karma Healthcare Private Limited' on 14th March 2010 for maintenance of installed machine Brilliance 64 without MRC tube coverage but with UPS, battery, injector for the perio....
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....39;I & B Code'. 8. At this stage it is desirable to state that the Appellant - Operational Creditor issues a notice under Section 433(e) read with Section 434(1)(a) of the Companies Act on 9th March 2016 to the respondent 'Goodwill Hospital and Research Centre Ltd'. Referring to earlier notice it was pointed out that 'Operational Creditor' will be left with no alternative but to call upon the said 'Corporate Debtor' to forthwith and without any further delay make the outstanding payment or otherwise the 'Operational Creditor' have been constrained to initiate appropriate proceedings, both under Civil and Criminal law, including winding up. Similar notice under Section 433(e) read with Section 434(1)(a) dated 9th March 2016 was issued on respondent Karma Healthcare (P) Limited. 9. Learned Adjudicating Authority to appreciate the nature of the dispute while noticed the aforesaid facts, also noticed the reply dated 30th march 2016 filed by both 'Corporate Debtors' with similar plea, as apparent from impugned order and quoted below: - "To appreciate the nature of dispute, it would be profitable to read the following part of the....
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....- "dispute" includes a suit or arbitration proceedings relating to- (a) The existence of the amount of debt; (b) The quality of goods or service; or (c) The breach of a representation or warranty; A bare perusal of the above provision of the 'IBC' shows that a dispute could be proved by showing that a suit has been filed or Arbitration proceedings are pending. It further elaborates that the suitor arbitration should be in respect of the existence of the amount of debt, quality of goods or services, or for a breach of a representation or a warranty. Obviously, it is not an exhaustive definition but an illustrative one. It becomes evident from the expression 'includes' which immediately succeeds the word 'dispute'. Moreover, under Section 8(1) of the Code adequate room has been provided for the 'NCLT' to ascertain the existence of a dispute. A demand notice by 'operational creditor' to an 'operational debtor' must be sent who has not paid operational dues and has committed default. Sub-section (2) of Section 8 further clarifies that the corporate debtor is obliged to bring to the notice of th....
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....it or arbitration...' by reading the conjunctive 'and' as disjunctive 'or'. Such a reading would render the second part otiose for the following reasons: (i) There is no limitation of time for the first part i.e. to notify 'existence of a dispute'. Whereas a limitation is prescribed for the second part i.e. to notify 'record of suit or arbitration', by the words 'filed before the receipt of notice'. (ii) The second part 'suit or arbitration' is ordinarily covered by the first pait 'dispute' rendering the second part surplus age. (iii) It creates this discrimination without any reasonable basis. 13. Reliance was also placed on meaning of 'dispute' as per Oxford English Dictionary means a dis-agreement or argument. 14. Learned counsel for the appellant made much stress on the word 'includes' and placed reliance on decision of Hon'ble Supreme Court in Namboodripad vs. Union of India, (2007) 4 SCC 502; Godfray Phillips Ltd. vs. State of UP & Others ( 2005) 2 SCC 515; The South Gujarat Roofing Tiles Manufacturers Association & Anr. Vs. The State of Gujarat, (1976) 4 SCC 601 w....
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....a) has been received by a Corporate Debtor. Further as per submission of the Respondent, no negative burden of filing a suit or arbitration could be casted upon operational creditor in view of the above submission. The word 'includes' is a very wide term and creates extensive meaning to the word and covers within its ambit all other aspects as well apart from the ones mentioned in the section 5(6) of the IBC Code 2016. 17. The question as to what does "dispute" and "existence of dispute" means for the purpose of determination of an application under Section 9 of the 'I & B Code' fell for consideration before this Appellate Tribunal in "Kirusa Software (P) Limited Vs. Mobilox Innovations Pvt. Ltd. - Company Appeal(AT)(Insol.) 06/2017". By judgement dated 24th May 2017, the Appellate Tribunal observed and held as follows: - "25. The true meaning of sub-section (2)(a) of Section 8 read with sub-section (6) of Section 5 of the 'I& B Code' clearly brings out the intent of the Code, namely the Corporate Debtor must raise a dispute with sufficient particulars. And in case a dispute is being raised by simply showing a record of dispute in a pending arbit....
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....proceeding should relate to matters (a)-(c) in sub-section (6) of Section 5 and in this case, showing a record of pendency of a suit or arbitral proceedings on a dispute is enough and to intent of the Legislature is clear, i.e. once the dispute (on matters relating to 3 classes in subsection (6) of Section 5 of the 'I & B Code') is pending adjudication, that in itself would bring it within the ambit of sub-section (6) of Section 5 of the 'I & B Code'. 29. The definition of 'dispute'for the purpose of Section 9 must be read alongwith expression operational debt as defined in Section 5(2 1) of I&B Code, 2016 means: (21) "operational debt" means a claim in respect of the provision of goods or services including employment or a debt in respect of the repayment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority;" Thus the definition of 'dispute 'operational debt' is read together for the purpose of Section 9 is clear that the intention of legislature to lay down the nature of 'dispute' has not been limited to suit or arbitration proceedi....