The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench comprising Justice Ashok Bhushan, Chairperson and Barun Mitra, Technical Member was recently hearing an appeal and held that the dispute which has been raised as a genuine dispute which required further investigation and cannot be subject to a Section 9 Proceeding.
The present Appeal has been filed against the Order passed by the Adjudicating Authority, National Company Law Tribunal, Kolkata Bench. Wherein the Adjudicating Authority dismissed the Application filed under Section 9 of the Insolvency and Bankruptcy Code.
Facts:
The Appellant’s claim was based on an Agreement with the Corporate Debtor to receive ten per cent (10%) of the commission on the sale of goods to M/s. Shapoorji Pallonji & Co. Ltd. Appellant’s case was that payments which were due under the commission, ten per cent were not paid hence notice under Section 8 was issued demanding the amount on 07.09.2019. Thereafter, The reply was also received on 25.09.2019. Another Demand Notice has been issued on 12.10.2020 under Section 8 of the Code claiming an amount of Rs.1,26,50,000/- as a debt due. The Corporate Debtor issued a notice of dispute dated 04.11.2020 denying the claim and it was submitted in the Reply Notice that the Appellant is not entitled to any payment since the project was never awarded by M/s. Shapoorji and Pallonji & Co. Ltd.. The Adjudicating Authority issued notice and after hearing the parties, dismissed the Section 9 Application.
Appellant's Submission:
Learned Counsel for the Appellant challenging the Order contended that The Appellant was entitled to receive a ten per cent commission by virtue of the contract between the parties and further, there was an acknowledgement issued on 20th February 2019 by email where five per cent of the commission was offered to be paid. Learned Counsel for the Appellant submitted that contract which was awarded by the new Company M/s. Niveshan, New Delhi was a related company and hence Appellant was entitled to a ten per cent commission.
NCLAT's Analysis:
The Appellate Authority considered the submissions of Learned Counsel for the Appellant and perused the record. The Demand Notice dated 12.10.2020 which was issued under Section 8 of the Code claiming an amount of 1,26,50,000/- was based on the Memorandum of Understanding dated 1st June 2018 entitling the Appellant to claim a commission of ten per cent on the sale of goods to the end client M/s. Shapoorji and Pallonji & Co. Ltd.. The notice given under Section 8 captures the agreement and all the contents thereof. The notice was replied to by the Corporate Debtor giving notice of dispute on 04.11.2020. In the Reply Notice, which was a notice of dispute.
The Appellate Tribunal observed that under the scheme of the Code when a Notice of Dispute has been issued and the dispute raised was supported by any evidence and was not a moonshine defence, the Adjudicating Authority is not to entertain Section 9 Application and reject the Section 9 Application.
The Appellate Authority noted that the Notice of Dispute clearly held that no material was sold to M/s. Shapporji and Pallonji & Co. Ltd. The dispute which has been raised is a genuine dispute which required further investigation, and cannot be subject to a Section 9 Proceeding. It is always open for the Appellant to seek his remedy in law for recovery of dues, if any, in accordance with law but for such disputed issues, Section 9 Proceeding cannot be invoked at the instance of an Operational Creditor.
The Appeal was dismissed.