M/S. Laina Power Engineering vs Sokeo Power Private Limited
- CitationCompany Appeal (AT) (Insolvency) No. 452 of 2018
Ratio decidendi
The rule this decision rests on
Where an operational creditor's application under Section 9 of the Insolvency and Bankruptcy Code, 2016 is met by a pre-demand-notice dispute raised in correspondence by the corporate debtor, and that dispute is shown on the record to have existed before the Section 8(1) demand notice was issued, with nothing showing that the debtor's objections were corrected or the claim reduced, the existence of a dispute is established and the application is not a fit case for admission under Section 9. Where the corporate debtor's grounds of dispute raise disputed questions of fact (such as whether scrap material was subsequently removed, or whether an inflated tonnage claim was corrected, reduced or deducted), those questions cannot be determined by the Adjudicating Authority in insolvency proceedings, and their unresolved existence supports rejection of the application.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
M/s. Laina Power Engineering ...Appellant
Versus
Sokeo Power Private Limited ...Respondent
Present: For Appellant : Mr. D. Abhinav Rao and Ms. Monalisa Kosaria, Advocates
ORDER
16.08.2018 The appellant, 'Operational Creditor' filed an application
under Section 9 of the Insolvency and Bankruptcy Code, 2016 which was
dismissed by the Adjudicating Authority (National Company Law Tribunal),
Hyderabad Bench, Hyderabad by the impugned order dated 3rd July, 2018 giving
rise to the present appeal.
2. Learned counsel appearing on behalf of the appellant submitted that
though the claim of the appellant has been admitted by the respondent, the
Adjudicating Authority wrongly relied on other evidence(s) to come to the
conclusion that there is an 'existence of dispute'. He relied on e-mail dated 12th
July, 2017 to suggest that the respondent has admitted the dues.
3. From the record we find that e-mails were exchanged between the parties
on 3rd May, 2017, 5th May, 2017, and 18th May, 2017 alleging non-submission
of work completion certificate, non-completion of work, amount deductible for 2
lead piping and non-removal of scrap material charges and exorbitant tonnage
claim made by the appellant contrary to existing industry practices. All these
disputes were raised by the respondent much prior to issuance of demand notice
under Section 8(1) issued on 7th July, 2017. There is nothing on record to
suggest any correctional measure was taken by the appellant. On the other
hand, respondent pleaded before the Adjudicating Authority that there is an
'existence of dispute'.
4. There being disputed question of facts as to whether subsequently the
scrap material were removed and exorbitant tonnage claim by the appellant was
corrected or amount deducted or reduced, and as such issues cannot be
determined by the Adjudicating Authority, we hold that the Adjudicating
Authority rightly held that it was not a fit case for admission of application under
Section 9. We find no merit in the appeal. It is accordingly dismissed.
[Justice S.J. Mukhopadhaya] Chairperson
[ Justice Bansi Lal Bhat ] Member (Judicial)
/ns/uk/
Company Appeal (AT) (Insolvency) No. 452 of 2018
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