CIRP-I Initiation-OC-Existence of Dispute [Sec. 5(6)]

When the contract is oral, its enforceability will come into question if there is dispute | Mere fact that a reply to 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 latter to bring pre-existing dispute before NCLT – German Solar Asia Pte Ltd. Vs. Zytech Solar India Pvt. Ltd. – NCLT Hyderabad Bench

The Hon’ble NCLT Hyderabad Bench held that:
(i) The contract can be either oral or written. When the contract is oral, its enforceability will come into question if there is dispute.
(ii) Mere fact that a 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 latter to bring relevant materials before the adjudicating authority to establish that there is pre-existing dispute which may lead to the rejection of Section 9 application.
(iii) Pre-existing dispute employed under the IBC cannot be equated with even the principle of preponderance of probability which guides a civil court at the stage of finally decreeing a suit.
(iv) The IBC is not intended to be a substitute for a recovery forum.

When the contract is oral, its enforceability will come into question if there is dispute | Mere fact that a reply to 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 latter to bring pre-existing dispute before NCLT – German Solar Asia Pte Ltd. Vs. Zytech Solar India Pvt. Ltd. – NCLT Hyderabad Bench Read Post »

Claim pertains to a breach of contract/ a claim for liquidated damages requires adjudication before a competent civil court and can not be pursued under the insolvency resolution process – Akshay Kumar Bhatia Vs. Cue Learn Pvt. Ltd. – NCLT New Delhi Bench

In this case, Akshay Kumar Bhatia, an actor in the Indian film industry, file Section 9 application under Insolvency and Bankruptcy Code, 2016 (IBC) against M/s. Cue Learn Pvt. Ltd. (Corporate Debtor), for default amount of Rs. 4,83,24,201/-
The Hon’ble NCLT New Delhi Bench has rejected the application holding that claims for damages, however, do not fall within the ambit of operational debt as defined under the IBC. While there may exist a claim for a monetary amount due to the Respondent’s alleged default, this claim does not qualify as operational debt under the provisions of the IBC. The claim pertains to a breach of contract and is, at best, a claim for liquidated damages as provided under Clause 7.2(c) of the Agreement. Such claims require adjudication before a competent civil court and do not constitute crystallized debts that can be pursued under the insolvency resolution process.

Claim pertains to a breach of contract/ a claim for liquidated damages requires adjudication before a competent civil court and can not be pursued under the insolvency resolution process – Akshay Kumar Bhatia Vs. Cue Learn Pvt. Ltd. – NCLT New Delhi Bench Read Post »

The pre-existing dispute must relate to the transaction or debt that forms the basis of the Section 9 application under IBC | The dispute raised must be truly existing at the time of filing a reply to notice of demand as contemplated by Section 8(2) of IBC or at the time of filing the Section 9 application – R.A.J. Krishna Construction Company Pvt. Ltd. Vs. Newera Solutions Pvt. Ltd. – NCLAT New Delhi

The Hon’ble NCLAT held that:

(i) The existence of dispute and its communication to the Operational Creditor is statutorily provided for in Section 8.
(ii) It is also a well settled proposition of law that for a pre-existing dispute to be a ground to nullify an application under Section 9, the dispute raised must be truly existing at the time of filing a reply to notice of demand as contemplated by Section 8(2) of IBC or at the time of filing the Section 9 application.
(iii)The pre-existing dispute must relate to the transaction or debt that forms the basis of the Section 9 application.
(iv) As an arbitration notice is a formal communication from one party to the other, initiating arbitration proceedings, the arbitration notice evidences a pre-existing dispute. This therefore constitutes sufficient ground for rejection of a Section 9 application.

The pre-existing dispute must relate to the transaction or debt that forms the basis of the Section 9 application under IBC | The dispute raised must be truly existing at the time of filing a reply to notice of demand as contemplated by Section 8(2) of IBC or at the time of filing the Section 9 application – R.A.J. Krishna Construction Company Pvt. Ltd. Vs. Newera Solutions Pvt. Ltd. – NCLAT New Delhi Read Post »

Once Arbitral Award is challenged under Section 34 of Arbitration and Conciliation Act, 1996, a petition under Section 9 of IBC is not maintainable – Bharat Industrial Projects Pvt. Ltd. Vs. Anupam Industries Ltd. – NCLT Ahmedabad Bench

The Hon’ble Ahmedabad Bench held that it is well-settled position of law that once the Arbitral Award is challenged in Section 34 of the Arbitration and Conciliation Act, 1996, the Petition under Section 9 of IBC is not maintainable. Even though there is not stay on the Arbitral Award, still the IBC Petition filed on the basis of such Award is not to be admitted.

Once Arbitral Award is challenged under Section 34 of Arbitration and Conciliation Act, 1996, a petition under Section 9 of IBC is not maintainable – Bharat Industrial Projects Pvt. Ltd. Vs. Anupam Industries Ltd. – NCLT Ahmedabad Bench Read Post »

Can WhatsApp conversations between parties be used as evidence to establish a dispute under Section 9 of the IBC? – Straw Commodities LLP Vs. Anram Agro Trading Pvt. Ltd. – NCLAT New Delhi

The Hon’ble NCLAT held that once there is no dispute that there has been conversation between the Parties, even on WhatsApp which is a common mode of communication these days, it does not lie in the mouth of the Appellant to contradict the same on the basis of the Judgment in the case of Kashyap lnfraprojects Pvt. Ltd. v. Hi-Tech Sweet Water Technologies Pvt. Ltd. (2024) ibclaw.in 787 NCLAT.

Can WhatsApp conversations between parties be used as evidence to establish a dispute under Section 9 of the IBC? – Straw Commodities LLP Vs. Anram Agro Trading Pvt. Ltd. – NCLAT New Delhi Read Post »

WhatsApp messages cannot be admitted as evidence to establish pre-existing disputes under IBC, unless they meet the requirement outlined in section 65B of the Evidence Act – Kashyap lnfraprojects Pvt. Ltd. Vs. Hi-Tech Sweet Water Technologies Pvt. Ltd. – NCLAT New Delhi

Hon’ble NCLAT held that:
(i) The Adjudicating Authority cannot be faulted for having exercised caution in not taking any informed decision on the issue of whether WhatsApp messages evidenced pre-existing disputes by merely relying on the credibility of these WhatsApp messages.
(ii) Merely because a meeting was held between the two parties to overcome the shortcomings in the meeting the obligations of supply and installation of pump-sets cannot be taken to imply that all disputes between the parties had subsided without the parties being at ad idem on whether the obligations stood discharged on a mutually satisfactory basis.

WhatsApp messages cannot be admitted as evidence to establish pre-existing disputes under IBC, unless they meet the requirement outlined in section 65B of the Evidence Act – Kashyap lnfraprojects Pvt. Ltd. Vs. Hi-Tech Sweet Water Technologies Pvt. Ltd. – NCLAT New Delhi Read Post »

IBC does not contemplate adjudication of disputes relating to forgery and fabrication | Cut-off date for considering the existence of pre-existing dispute in case of multiple demand notices issued under Section 8 of the IBC – Sandeep Behl Vs. Nirmal Trading Company and Ors. – NCLAT New Delhi

The Hon’ble NCLAT held that:

(i) The IBC does not contemplate adjudication of disputes relating to forgery and fabrication as that would require calling for evidence which cannot be done under IBC.
(ii) In both the Notice of Dispute, the Operational Creditor was advised to take up reconciliation of accounts. It is sufficient to notice that the Corporate Debtor in the reply to statutory Demand notice made a categorical statement that nothing was due and payable by them.
(iii) The ratio of Naresh Sevantilal Shah v. Malharshanti Enterprises (2021) ibclaw.in 19 NCLAT judgment to set the cut-off date of the date of issue of first demand notice for taking cognisance of the notice of dispute is not applicable in the present case.

IBC does not contemplate adjudication of disputes relating to forgery and fabrication | Cut-off date for considering the existence of pre-existing dispute in case of multiple demand notices issued under Section 8 of the IBC – Sandeep Behl Vs. Nirmal Trading Company and Ors. – NCLAT New Delhi Read Post »

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