Sandeep Goel vs Ahuja Cotspin Pvt Ltd

24.01.2020 Mr. Sandeep Goel, 'Sole proprietor' of 'NYSA Enterprises'

moved an Application under Section 9 of the 'Insolvency and Bankruptcy Code,

2016 ('I&B Code' for short) in Form 5 for initiation of the 'corporate insolvency

resolution process' against M/s. Ahuja Cotspin Pvt. Ltd.

2. The Adjudicating Authority (National Company Law Tribunal), Chandigarh

Bench, Chandigarh by judgement dated 25th November, 2019 admitted the

Application on the ground that there is a pre-existing dispute. Learned counsel

for the Appellant submitted that the dispute as raised by the 'Corporate Debtor'

cannot be held to be a pre-existing dispute. He placed reliance on the decision

of the Hon'ble Supreme Court in 'Mobilox Innovations Pvt. Ltd. vs. Kirusa

Software Pvt. Ltd. - (2018) 1 SCC 353.

3. From the record, we find that the notice was issued on 'M/s. Ahuja Cotspin

Pvt. Ltd.' (Corporate Debtor). They took plea that the Demand Notice under

Section 8(1) was issued on 8th September, 2017. In reply dated 21st December, 2

2017 to the Demand Notice, the 'Corporate Debtor' has pointed out the 'pre-

existence' of the dispute.

4. From the record, we notice that the Appellant 'Nysa Enterprises" issued a

notice under Section 434(1)(a) of the Companies Act, 1956 for winding up which

was sent on 27th February, 2017 relating to clearance of the outstanding liability.

In response thereto, by reply dated 31st March, 2017 'M/s. Ahuja Cotspin Pvt.

Ltd.' specifically disputed regarding the delivery of goods. 'M/s. Ahuja Cotspin

Pvt. Ltd.' sent message to Nysa that Nysa should first send the remaining booked

material as per the contract and promise made thereafter. It was also highlighted

that ultimately 'M/s. Ahuja Cotspin Pvt. Ltd.' resolved the matter through one

Mr. Rakesh Rathi and after bargain, it was settled with Nysa that it will supply

the material of 325 MT only to 'M/s. Ahuja Cotspin Pvt. Ltd.' with the previous

booking rates but Nysa failed to make supply to 'M/s. Ahuja Cotspin Pvt. Ltd.'

which resulted in huge loss of Rs. 4,00,00,000.

5. Learned counsel for the Appellant submitted that the Respondent duly

admitted their liabilities to the tune of Rs. 28,17,421/- and once the liability was

accepted, they cannot referred to any reply earlier sent. In 'Mobilox Innovations

Pvt. Ltd. vs. Kirusa Software Pvt. Ltd. - (2018) 1 SCC 353, the Hon'ble

Supreme observed and held :

"51. It is clear, therefore, that once the operational creditor

has filed an application, which is otherwise complete,

the adjudicating authority must reject the application

under Section 9(5)(2)(d) if notice of dispute has been

received by the operational creditor or there is a

Company Appeal (AT) (Insolvency) No. 108 of 2020 3

record of dispute in the information utility. It is clear

that such notice must bring to the notice of the

operational creditor the "existence" of a dispute or the

fact that a suit or arbitration proceeding relating to a

dispute is pending between the parties. Therefore, all

that the adjudicating authority is to see at this stage

is whether there is a plausible contention which

requires further investigation and that the "dispute"

is not a patently feeble legal argument or an

assertion of fact unsupported by evidence. It is

important to separate the grain from the chaff and to

reject a spurious defence which is mere bluster.

However, in doing so, the Court does not need to be

satisfied that the defence is likely to succeed. The

Court does not at this stage examine the merits of the

dispute except to the extent indicated above. So long

as a dispute truly exists in fact and is not spurious,

hypothetical or illusory, the adjudicating authority

has to reject the application.

6. The aforesaid observation of the Hon'ble Supreme Court has also relied

upon by the learned counsel for the Appellant to suggest that it must bring to

the notice that there is an existence of dispute or the fact that a suit or

arbitration proceedings is pending between the parties.

Company Appeal (AT) (Insolvency) No. 108 of 2020 4

7. All that the Adjudicating Authority is to see at this stage whether there is

a plausible contention which requires further investigation and that the dispute

is not a patently feasible legal arguments or an assertion of fact unsupported by

evidence. It is important to separate the grain from the chaff and to reject a

spurious defence which is mere bluster.

8. It is not in dispute that in reply to the earlier notice of 27.2.2017 issued

by NYSA to 'M/s. Ahuja Cotspin Pvt. Ltd.' has alleged that on failure to supply

the material to the extent of quality etc. has resulted in huge losses to the tune

of Rupees Four Crores to 'M/s. Ahuja Cotspin Pvt. Ltd.' In one hand, the

'Corporate Debtor' has claimed loss of Rupees Four Crores, on the other hand

has admitted the claim to the extent of Rs. 28,17,421/-, such being the position,

it is difficult to find out whether there is a default or not. Admittedly, it is not in

dispute that winding up notice sent by the Appellant on 27th February, 2017 and

the aforesaid issue was raised by the 'Corporate Debtor' and they claimed the

huge losses to the tune of Rupees Four Crores.

In the circumstances while we condone the delay of 15 days, we dismiss

the appeal. No orders as to costs.

[Justice S.J. Mukhopadhaya] Chairperson

[ Shreesha Merla ] Member (Technical)

/ns/gc/

Company Appeal (AT) (Insolvency) No. 108 of 2020