R. S. Fuel Pvt. Ltd vs Ankit Metal & Power Ltd
- CitationCompany Appeal (AT) (Insolvency) No. 95 of 2020
Ratio decidendi
The rule this decision rests on
Where a corporate debtor has, before the issuance of a demand notice under Section 8(1) of the Insolvency and Bankruptcy Code, 2016, raised a dispute concerning the quality of goods supplied or the delay in their supply, and that dispute was already in existence before the demand notice and before the commencement of the Code, such a pre-existing dispute bars the admission of an application under Section 9, because the particulars of the goods and whether they were substandard or delayed are questions which the Adjudicating Authority cannot decide in insolvency proceedings and the application therefore cannot be entertained.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
R. S. Fuel Pvt. Ltd. ...Appellant
Vs
Ankit Metal & Power Ltd. ....Respondent
Present: For Appellant: Mr. Ramji Srinivasan, Sr. Advocate. For Respondent: Mr. Abhijeet Sinha, Mr. Jeevan B. Panda, Mr. Satish Padhi, Ms. Meher Tandon and Mr. Saikat Sarkar, Advocates.
ORDER
20.01.2020: Appellant - 'M/s R. S. Fuel (P) Ltd.' moved application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'I&B Code') for initiation of Corporate Insolvency Resolution Process against 'M/s Ankit Metal & Power Limited' (Corporate Debtor). The Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, Kolkata by impugned order dated 21st November, 2019 dismissed the application on the ground of pre-existing dispute.
2. Learned counsel for the Appellant submits that Appellant has already accepted that that the amount is payable and referred to letter issued on behalf of the Corporate Debtor to the Advocate of the Appellant dated 22nd September, 2016.
3. Having gone through the aforesaid advocate's reply dated 22nd September, 2016, we find that there is a pre-existing dispute since August, 2016 relating to supply of coal which was not in accordance with the description in the purchase order. From the said letter it appears that legal notice was issued on behalf of the Appellant on 29th August, 2016, which the Advocate of Corporate Debtor replied in letter dated 22nd September, 2016, which is as follows:-
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Company Appeal (AT) (Insolvency) No. 95 of 2020 -4-
4. Therefore, it is clear that much prior to issuance of demand notice, the disputes regarding the quality of goods/coal and delayed supply were continuing, such letter having already issued. We find that the letter of dispute was issued much prior to the issuance of demand notice under Section 8(1) issued on 30th September, 2017. The dispute was even before the commencement of Insolvency and Bankruptcy Code. What are the particulars of the goods, whether they were of substandard quality or delayed are not the matters which can be decided by the Adjudicating Authority (National Company Law Tribunal), therefore, such dispute cannot be decided and application under Section 9 cannot be entertained. The appeal is dismissed with aforesaid observations. No costs.
[Justice S. J. Mukhopadhaya] Chairperson
[Justice Bansi Lal Bhat] Member (Judicial)
am/sk
Company Appeal (AT) (Insolvency) No. 95 of 2020
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