Application for initiation of CIRP cannot be accepted with pre-existing dispute : NCLAT

Proceeding ex parte against the corporate debtor based on substituted service through the newspaper is permissible only when it is shown that the corporate debtor is purposefully avoiding service. The judgment passed by the NCLAT New Delhi (principle bench), in its decision in Prakash Kalash v. Apeejay Surrendra Park Hotels (Company Appeal (AT) (Insolvency) No. 1462 of 2019) by Hon’ble Shri Justice Jarat Kumar Jain.

The facts of the case were such that – The Appellant, filed the Appeal against Apeejay Surrendra Park Hotels Ltd., and Umesh Chandra Sahoo, under Section 61(1) of the I&B Code. The Appellant is a company incorporated under the Companies Act, 1956 having its registered office at Maharshi Valmiki, Ward No.28,Telibandha, Raipur, and Chhattisgarh. Apeejay Surrendra Park Hotels Ltd. (Respondent No. 1) had started the proceedings under Section 9 of the I&B Code for supposed neglected duty emerging out of the administrations performed under the „MTSA‟ between the Appellant and the Respondent.

It was contended by the respondent that the Appeal is at risk to be excused on the ground that the equivalent is documented past 30 days from the date of passing of the reprimanded request, which is past the legal period as endorsed under area 61(2) of the I&B Code. The reproved request dated fourteenth November 2019 and Appeal is documented on 05.12.2019, which inside 30 days from the date of request. Consequently, Appeal is documented inside the legal time of Limitation as endorsed under Section 61(2) of the Code.

The demand notice was given against the Corporate Debtor by enlisted post, which couldn’t be served by virtue of inadequate location. From that point onward, the demand notice was again sent through speed post. On scrutiny of the email dated fourteenth July 2018, apparently, the Corporate Debtor protested the posting of wrong income on bargain ledgers‟. It likewise shows up from scrutiny of email correspondence dated seventeenth October 2018 that the Corporate Debtor protested delivering a post-dated check of Rs.73 lakhs without keeping it educated to the Corporate Debtor. It is additionally expressed in the email that administration expenses will be paid after the bargain compromise issue is settled. On examination of the email dated fourteenth March 2019, apparently, the Corporate Debtor raised the issue in regards to support delivered by the Operational Creditor. It likewise shows that the Corporate Debtor educated the operational Creditor regarding assuming control over the total administration in its own hands as a result of being disappointed with the administrations delivered by the Operational Creditor.

If notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility, the Adjudicating Authority is to see whether there is a plausible contention that requires further investigation and 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 defense which is mere bluster.

In the instance case, it is clear that there was a pre-existing dispute, even though the Adjudicating Authority admitted the Application for initiation of Corporate Insolvency Resolution Process by the impugned order. In effect, the order passed by the Adjudicating Authority appointing Interim Resolution Professional, declaring moratorium and all other order(s) passed by the Adjudicating Authority pursuant to impugned order and actions were taken by the Resolution Professional is declared illegal and are set aside.

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