Siddharth Nahata vs Billets Elektro Werke Pvt. Ltd

Siddharth Nahata ...Appellants Director/ Shareholder of Tryst Industries Private Limited A-713, Sector-19 Noida-201301

Vs

Billets Elektro Werke Pvt. Ltd. ....Respondents 42,1st Floor, Jagat Satguru Industrial Estate, Off Aarey Road Goregaon East, Mumbai-400063

Present: For Appellants: Mr. Anish Dayal, Mr. Jaideep Maheshwari, Ms. Rupam Sharma, Mr. Arjit Pratap Singh and Mr. S.K Singh, Advocates For Respondents: Ms. Varsha Banerjee, Mr. Milan Singh Negi and Mr. Kunal Godhwani, Advocates

ORDER

03.11.2017: Heard learned counsel for the appellant as well as the

respondent.

The present appeal has been filed in view of the admission of Insolvency

proceedings filed under Section 9 of the Insolvency & Bankruptcy Code, 2016

(Code-In brief) by the Adjudicating Authority- NCLT, New Delhi Bench in

Insolvency Proceeding (IB-257(ND)/ 2017), vide orders dated 8th September,

2017. The respondent claimed to be an Operational Creditor & initiated the

insolvency resolution process against the appellant (original respondent)

Corporate Debtor on the grounds of default. The respondent claimed

outstanding debt of Rs. 33.78 lakhs including of overdue interest.

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The respondent had sent Section 8 notice dated 22nd May, 2017

(Annexure A-7) and the appellant replied raising dispute vide reply dated 7th

June, 2017. Reference was made to earlier exchange of correspondence dated

20th July, 2016 and 3rd August, 2017 and criminal complaint filed by appellant

to show that the amount was yet not due for reasons stated.

When the matter came up before the learned NCLT, parties for both sides

were heard but the learned NCLT did not find the dispute raised by the

appellant acceptable and was of the opinion that it was illusory and without

legs to stand upon. For reasons recorded the learned NCLT admitted the

Insolvency Resolution Process.

Now when this appeal has come up, learned counsel for the appellant as

well as the respondent both submit that the matter has been compromised

between the Operational Creditor and the Corporate Debtor and even the

necessary payments have been made as well as care has been taken regarding

the payments of the Insolvency Resolution Professional, who has been

appointed. Counsel for Appellant stated that there are no other Creditors there.

A Compromise has taken place would not be material for the decision of

this appeal, once the process has been set into motion. We have to consider

this appeal on its own merits.

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The learned counsel for the appellant refers to the letter dated 20th July,

2016 (Annexure-3) which was sent by the respondent claiming dues and the

reply which was sent by appellant on 3rd August, 2016, copy of which has been

filed. At that time itself the appellants had raised dispute that between the

parties there was an understanding that the appellant would be dealing in the

articles received from the respondent and when the purchase order is executed

& payment is received Appellant will pay. Dispute was raised that in spite of

such understanding the respondent had sold articles directly in the area of

operation of the appellant and because of this the stock with Appellant could

not be sold & adjustment was required to be made. It is stated that, appellant

had claimed that there was violation of agreement, principles and ethics of

business and violation of terms of dealership contract.

Similar dispute has been raised by the appellant in reply to the Section 8

notice. Learned counsel for the appellant is submitting that the understanding

between parties about the business was violated and thus dispute had arisen.

A prior existing dispute was there before Section 8 notice was sent and thus

according to him the respondent could not have resorted Insolvency

Proceeding.

The learned counsel for the respondent submits that there was no

written document of dealership executed. At this stage learned counsel for the

appellant points out Para 7(iv) from the counter filed by respondent where the

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Respondent admitted contents of Para 7(iv) of the Appeal and clearly admitted

that there was relationship between the appellant and the respondent of dealer

and principal.

Looking to the record, we find substance in the arguments of learned

counsel for Appellant that indeed there was a prior existing dispute and the

application under Section 9 should not have been admitted.

In view of the above, the appeal is allowed. The impugned order

admitting the Insolvency Resolution Process is quashed and set aside. The

further proceedings in view of the impugned order are stopped. No orders as to

costs.

(Justice A.I.S. Cheema) Member (Judicial)

(Balvinder Singh) Member (Technical) sh/nn

Company Appeal (AT) (Ins.) no.199 of 2017