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Harish Amilineni Versus M/s Rajkumar Brothers and Production Pvt. Ltd. and Anr.


Court / Forum : National Company Law Appellate Tribunal
Citation : Company Appeal (AT) (Insolvency) No. 212 of 2020
Coram :Justice A.I.S. Cheema, Member (Judicial), Justice Anant Bijay Singh, Member (Judicial), Justice Kanthi Narahari, Member (Technical)
Subject : Section 8 and 9 of the Insolvency and Bankruptcy Code, 2016
Date of Decision : Aug 10, 2020

Brief Facts

  • On the basis of Master Services Agreement, M/s Rajkumar Brothers and Productions Pvt. Ltd. (“Operational Creditor”) claimed that goods and services were supplied to M/s Amilionn Technologies Pvt. Ltd. (“Corporate Debtor”) from July 2016 till first week of November, 2016.
  • The Corporate Debtor had issued work/purchase order and vide email dated November 17, 2016 addressed to the Operational Creditor terminated the work order on the ground of non-completion of work within time and non-furnishing of bank guarantee.
  • The Operational Creditor had sent demand notice to the Corporate Debtor on January 14, 2019 under section 8 of the Insolvency and Bankruptcy Code, 2016 (“Code”) the which was duly replied by the Corporate Debtor raising disputes.
  • Thereafter, the Operational Creditor had filed application under section 9 of the Code for initiation of corporate insolvency resolution process against the Corporate Debtor. The Hon’ble Adjudicating Authority held that there was an undisputed operational debt and admitted the application under section 9 of the Code.
  • Aggrieved by the admission of application under section 9(5)(i) of the Code, the Appellant preferred Appeal before Hon’ble National Company Law Appellate Tribunal (“NCLAT”).

Issues

  1. Whether there was existence of dispute between the parties before filing the application under section 9 of the Code?

Decision

  • The Corporate Debtor was not represented before Adjudicating Authority. The Appellant showed copy of proceedings dated December 23, 2019 before the Adjudicating Authority and pointed out that the Operational Creditor had filed memo and notice was not served to the Corporate Debtor with an endorsement ‘Left without instructions’. Further, the order mentioned that notice was served through email, but no such email was received by the Appellant. The Adjudicating Authority had not given adequate opportunity to the Corporate Debtor to defend the case.
  • The Corporate Debtor had sent reply to the demand notice under section 8 of the Code in which certain deficiencies were raised in the service which led to the termination of work order. Even if the Appellant had not appeared, it was apparent from the application filed under section 9 that there was a pre-existing dispute. The Operational Creditor had not completed the work.
  • The Appellant had submitted various emails which showed that there were disputes with respect to workmanship and time factor because of such aspects the work order was terminated on 17th November, 2016.
  • Due to pre-existing disputes between the parties, it was inappropriate for the Adjudicating Authority to admit application under section 9 of the Code.
  • Accordingly, the Hon’ble NCLAT allowed the Appeal.