Dispute Raised To Application U/S 9 IBC Over Telephone Inadmissible: NCLT, Allahabad [Read Order]

Akshita Saxena
11 Feb 2020 2:42 AM GMT
Dispute Raised To Application U/S 9 IBC Over Telephone Inadmissible: NCLT, Allahabad [Read Order]
Your free access to Live Law has expired
To read the article, get a premium account.
    Your Subscription Supports Independent Journalism
Subscription starts from
(For 6 Months)
Premium account gives you:
  • Unlimited access to Live Law Archives, Weekly/Monthly Digest, Exclusive Notifications, Comments.
  • Reading experience of Ad Free Version, Petition Copies, Judgement/Order Copies.
Already a subscriber?

In its recent order the Allahabad bench of the NCLT has decided that 'notice of dispute' to a claim under Section 9 of the Insolvency and Bankruptcy Code, 2016 is not admissible if made over a telephonic communication, not supported by phone records.

The observations have been made in a company petition filed under Section 9 of the Code for initiation of Corporate Insolvency Resolution Process.

While passing the order, the Tribunal observed that the corporate debtor had admitted its financial liability towards the operational creditor.

However, the corporate debtor argued before the tribunal that he had raised a dispute with respect to the claim of the operational creditor and that the same was communicated to the creditor through telephonic communication.

Section 9(5)(ii)(d) of the Code states that if notice of a dispute has been received by the operational creditor, the tribunal will not allow the application of initiation of the CIRP.

Further, Section 8(2)(a) of the Code stipulates that the burden of communicating the existence of a dispute is on the corporate debtor. Naturally, the corporate debtor is also expected to prove the communication of the dispute before the tribunal with proper evidentiary documents.

The Code does not prescribe the manner in which the proof of such communication is to be produced before the tribunal, so the appropriate method will be a document that certifies the occurrence of that communication. In the present, a phone record would have been such appropriate evidence.

In absence of the call records, the court allowed the application for initiation CIRP and declared Moratorium in respect of the corporate debtor.

Case Title:
Case Title: Magpet Polymers Private Limited v. M/s Hansraj Agrofresh Private Limited
Case No.: Company Petition (IB) No. 40/ALD/2019
Quorum: Justice (Retd.) Rajesh Dayal Khare (Judicial Member)
Appearance: Advocate Abhinav Gaur (For Applicant); Advocate Dewarshi Kumar (For Respondent)

Click Here To Download Order

Read Order

Next Story
Share it