NCLAT held that the cyber fraud does not necessarily constitute a pre-existing dispute between the Operational Creditor and Corporate Debtor under the IBC.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) was hearing an appeal and clarified that the cyber fraud, perpetrated by unknown third parties and acknowledged as such by the Respondent in their police complaint, does not constitute a pre-existing dispute between the Operational Creditor and the Corporate Debtor under the Insolvency and Bankruptcy Code (IBC).
The National Company Law Appellate Tribunal (NCLAT) heard an appeal under Section 61 of the Insolvency and Bankruptcy Code 2016 (IBC) filed by Optinova AB against Bio-Med Health Care Products Private Ltd. The appeal stemmed from the rejection of Optinova's Section 9 application by the Adjudicating Authority. Optinova claimed outstanding dues of Euro 320,406 from Bio-Med for medical tubing supplied, while Bio-Med alleged cyber fraud and disputed the debt.
During the proceedings, Mr. Aditya Dewan, Learned Counsel for the Appellant, and Mr. Nikhil Verma, Learned Counsel for the Respondent, presented their arguments. The Appellant contended that despite reminders, the dues were not cleared by the Corporate Debtor, who had acknowledged their liabilities. They argued that the cyber fraud committed by a third party cannot be a basis for a pre-existing dispute and highlighted an amount acknowledged by the Respondent to be due and payable.
The appellant further argued that even if the disputed amount is excluded, a significant sum remained payable, meeting the threshold for IBC. They cited relevant judgments to support their stance.
The Respondent countered, stating that the cyber fraud indicated a pre-existing dispute and that it had made payments to Optinova's incorrect bank account due to fraudulent emails. Bio-Med contended that they never attempted to evade their liability and had already made payments, although a portion was subjected to cyber fraud. They argued that the cyber fraud indicated a pre-existing dispute, as acknowledged by both parties in their communication and police complaint. They emphasized their cooperation with investigations and readiness to pay the remaining amount.
The NCLAT examined the evidence and found that the cyber fraud did not necessarily constitute a dispute between the parties. They noted Bio-Med's admission of debt and failure to pay, concluding that the Adjudicating Authority erred in dismissing Optinova's application under Section 9. The Appellate Tribunal Set aside the Adjudicating Authority's decision, emphasizing the absence of a pre-existing dispute.
The NCLAT directed Bio-Med to pay the outstanding debt to Optinova within 30 days, failing which Bio-Med would face initiation of the Corporate Insolvency Resolution Process (CIRP).
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