M/s Brand Realty Services Ltd. Vs. M/s Sir John Bakeries India Pvt. Ltd.

Reply to Demand Notice under Section 8(1) of IBC having not been given within 10 days or no reply to demand notice having been filed by the Corporate Debtor does not preclude the Corporate Debtor to raise the issue of Pre-Existing Dispute before the Adjudicating Authority – M/s. Brand Realty Services Ltd. Vs. M/s. Sir John Bakeries India Pvt. Ltd. – NCLAT New Delhi

NCLAT holds that even in absence of notice of dispute, Adjudicating Authority can reject the Application if there is record of dispute in the Information Utility. It goes without saying that record of dispute in the Information Utility can very well be pointed out by the Corporate Debtor before the Adjudicating Authority when notice is issued under Section 9. Further in Reply to Section 9 Corporate Debtor can bring the material to indicate that there are pre-existing disputes in existence prior to issuance of demand notice under Section 8. Mere fact that Reply to notice under Section 8 (1) having not been given within 10 days or no reply to demand notice having been filed by the Corporate Debtor does not preclude the Corporate Debtor to bring relevant materials before the Adjudicating Authority to establish that there are pre-existing dispute which may lead to the rejection of Section 9 application.

Reply to Demand Notice under Section 8(1) of IBC having not been given within 10 days or no reply to demand notice having been filed by the Corporate Debtor does not preclude the Corporate Debtor to raise the issue of Pre-Existing Dispute before the Adjudicating Authority – M/s. Brand Realty Services Ltd. Vs. M/s. Sir John Bakeries India Pvt. Ltd. – NCLAT New Delhi Read Post »

Definition of debt as defined under the IBC does not mean the operational debt only rather it includes financial debt as well as liability or obligation in respect of a claim which is due from any person and default means non payment of debt – M/s Brand Realty Services Ltd. Vs. M/s Sir John Bakeries India Pvt. Ltd. – NCLT

NCLT held that when we shall read all three definition, Sec. 5(21), 3(11) and 3(12) together then it can be said that definition of debt as defined under the IBC does not mean the operational debt only rather it includes financial debt as well as liability or obligation in respect of a claim which is due from any person and default means non payment of debt, but in order to trigger Section 9 of IBC an Operational Creditor is required to establish a default for non payment of Operational debt as defined in Section 5(21) of IBC , which means a claim in respect of the provision of goods Or services including employment or a debt in respect of the 6[payment] of dues arising under any law for the time being in force and if a person fails to establish that, then they can not initiate CIRP under Section 9 of the IBC.

Now it is the settled principle of law that National Company Law Tribunal is not recovery court rather when a default of either financial debt or Operational debt occurred in that case, financial creditor or operational creditor may file an application for initiating corporate insolvency resolution process u/ s 7 or section 9 respectively.

Definition of debt as defined under the IBC does not mean the operational debt only rather it includes financial debt as well as liability or obligation in respect of a claim which is due from any person and default means non payment of debt – M/s Brand Realty Services Ltd. Vs. M/s Sir John Bakeries India Pvt. Ltd. – NCLT Read Post »

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