Rohini Industrial Electricals Ltd vs National Textiles Corporation Ltd

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI Company Appeal (AT) (Insolvency) No. 420 of 2020 In the matter of: Rohini Industrial Electricals Ltd. ....Appellant

Vs.

National Textiles Corporation Ltd. ....Respondent

Present: Appellant: Mr. K. Dutta, Mr. Rohit Gandhi and Ms. Mehak Khurana, Advocates. Respondent:

ORDER

13.03.2020: 'Rohini Industrial Electricals Ltd.' (Operational Creditor)

moved application under Section 9 of the Insolvency and Bankruptcy Code, 2016

for initiation of Corporate Insolvency Resolution Process against 'National

Textiles Corporation Ltd.' (Corporate Debtor). The Adjudicating Authority

(National Company Law Tribunal), New Delhi (Court No. IV) by impugned order

dated 10th January, 2020 rejected the application on the ground of pre-existing

dispute.

2. Learned counsel for the Appellant submits that the work was completed

in the year 2014 and completion certificate was handed over to the Respondent.

He further submitted that the Respondent acknowledged the liability through

letters from time to time including letters dated 5th April, 2017 and 15th

December, 2018. The Master Data of the Corporate Debtor has also been

enclosed to suggest that the debt is due. We are not going in the issue as to

whether application under Section 9 was barred by limitation or not, as -2-

Appellant has brought on record certain correspondences to suggest

acknowledgment by the Corporate Debtor. The question as noticed is whether

there is a pre-existing dispute or not.

3. From the record we find that invoice for the value of Rs.13,18,35,161/-

was raised by the Appellant, against which Corporate Debtor paid a sum of

Rs.11,34,03,966/-. According to the Appellant a sum of Rs.1,84,31,195/-

remained due and payable. Demand notice under Section 8(1) of the I&B Code

was issued by the Appellant on 4th December, 2018. The Corporate Debtor in

reply pointed out the existence of dispute between the parties. The Adjudicating

Authority noticed that by letter dated 20th October, 2012, the Appellant was

informed by the Corporate Debtor to complete the work and submit the final bill.

The payment of balance amount is pending on account of non-fulfilment of

contractual obligations. The emails regarding deficiencies in services and their

rectification were communicated between the parties including email dated 28th

December, 2013 and 6th January, 2014. This apart letter dated 29th June, 2017

was also forwarded for rectification of certain works. Learned counsel for the

Appellant submits that letter dated 23rd June, 2018 was written by the Appellant

and it has wrongly been relied upon by the Adjudicating Authority. All the works

about which deficient service was alleged were rectified and subsequently, the

Corporate Debtor accepted the liability of payment.

Company Appeal (AT) (Insolvency) No. 420 of 2020 -3-

4. On hearing learned counsel for the Appellant and perusal of the record,

we are of the view that Adjudicating Authority is not in a position to determine

the dispute on question of fact as to work completed or not completed or rectified

or not. The question as to whether on rectification of the work, the Corporate

Debtor accepted the liability and thereby there was no existence of dispute is a

question of fact which can be determined only by Court of competent jurisdiction

and not in an application under Section 9 of the I&B Code. Once evidence are

brought on record to show pre-existing dispute raised prior to issuance of

demand notice under Section 8(1), the Adjudicating Authority cannot entertain

the application under Section 9. We find no merit in this appeal, it is accordingly

dismissed. However, order passed by the Adjudicating Authority or this

Appellate Tribunal will not come in the way of the Appellant to move before the

appropriate forum for appropriate relief.

[Justice S. J. Mukhopadhaya] Chairperson

[Justice Bansi Lal Bhat] Member (Judicial)

[Alok Srivastava] Member (Technical) am/gc

Company Appeal (AT) (Insolvency) No. 420 of 2020