TaxTMI 
TaxTMI 
2023 (1) TMI 349
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....('IBC' in short) by the Appellant arising out of the Order dated 13.09.2022 (hereinafter referred to as 'Impugned Order') passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench-II, New Delhi) in CP(IB) No.314/ND/2019. By the Impugned Order, the Adjudicating Authority has dismissed the Section 9 petition filed by the Appellant seeking to bring the Corporate Debtor under the rigours of Corporate Insolvency Resolution Proceedings ('CIRP' in short). Aggrieved by this impugned order, the present appeal has been preferred. 2. The Learned Counsel for the Appellant submitted that Apavarga Trading Company, present Appellant /Operational Creditor is a partnership firm engaged in the business of trading of kirana goods....
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.... made by the Appellant stated that in their reply before the Adjudicating Authority it was submitted that no default had occurred in the discharge of their liabilities and that the claim of the Operational Creditor contained disputed question of facts which require investigation by civil courts. It is further submitted that one Shri Moti Kumar was working as an accountant with the Corporate Debtor from 12.08.2002 till 08.10.2016. However, without their prior permission and knowledge, Shri Moti Kumar during this period had joined as a partner in the partnership firm of the Operational Creditor. The Learned Counsel for the Respondent contended that Shri Moti Kumar in connivance with the Operational Creditor manipulated and forged records to s....
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....r, the complaint having been lodged with the police much after the Section 9 application was filed before the Adjudicating Authority, this police complaint has to be rejected as a spurious defence. 7. We note that the Adjudicating Authority took cognisance of the fact that Shri Kumar joined the Corporate Debtor as an accountant on 12.08.2002 and continued to work there until he resigned on 08.10.2016. The impugned order has also taken note of the fact that Clause 4 of the letter of appointment of Shri Moti Kumar as accountant with the Corporate Debtor stipulated that he shall not take up directly or indirectly any outside duties, works or consultancy while in employment of the company without express written permission from the managemen....
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....ctions under reference have occurred between the parties. The Adjudicating Authority has therefore come to the conclusion that this dual employment of Shri Moti Kumar not only casts serious doubt on the transactions carried out between the Operational Creditor and the Corporate Debtor during the period of February 2014 to May 2016 but also points towards possible manipulation. 9. While analysing the dispute raised by the Corporate Debtor, it has also been noted by the Adjudicating Authority that the appointment letter and resignation letter of Shri Moti Kumar and the relevant invoices pertain to a date prior to issuance of the demand notice. 10. The Learned Counsel for the Respondent further submitted that the Respondent in their repl....
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....been created by fraudulent means. 11. We note that the Adjudicating Authority having noted the material concealment of the fact by the Operational Creditor regarding the fact that Shri Moti Kumar was working concurrently in both the entities i.e. the partnership firm of the Operational Creditor and the Corporate Debtor at the time of transactions and after having considered the rival submissions and after seeing the documents on record have held that it raises serious doubts as to whether the Respondent really committed any default or there is an element of fraud in the transactions. It has therefore held that the dispute needs more investigation and beyond the scope of the Adjudicating Authority in terms of the judgement of the Hon'ble ....
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....Authority. Accordingly, the present petition is Dismissed with no order to costs." 12. It is well settled that in section 9 proceeding, the Adjudicating Authority is not to enter into final adjudication with regard to existence of dispute between the parties regarding the operational debt. What has to be looked into is whether the defence raises a dispute which needs further adjudication by a competent court. If we apply the above cited test laid down in Mobilox by the Hon'ble Supreme Court to the facts of the present case, it is clear that defence was raised by the Corporate Debtor in their detailed reply filed in Section 9 application which in our considered view is not illusory or moonshine and that the nature of dispute raised was su....