Mere Statement Of Operational Creditor That No Dispute Exists, Is Not Enough : NCLAT Delhi
Pallavi Mishra
14 Oct 2023 10:00 AM GMT
The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), while adjudicating an appeal filed in NTT Data Business Solutions Pvt. Ltd. v Trident Ltd., has held that Operational Creditor merely responding to notice invoking arbitration by stating that no disputes exist, would...
The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), while adjudicating an appeal filed in NTT Data Business Solutions Pvt. Ltd. v Trident Ltd., has held that Operational Creditor merely responding to notice invoking arbitration by stating that no disputes exist, would not prevent the NCLT from concluding that disputes exist based on material on record.
Background Facts
NTT Data Business Solutions Pvt. Ltd. (“Operational Creditor/Appellant”) entered into a contract with Trident Ltd. (“Corporate Debtor”) and a bank guarantee was also issued. When disputes arose between the Parties, the Corporate Debtor issued a notice invoking arbitration dated 14.06.2021 to the Operational Creditor, under Section 21 of Arbitration and Conciliation Act, 1996. An Arbitrator was also appointed.
The Operational Creditor responded to the notice stating that there is no dispute between the parties. Subsequently, the Operational Creditor issued a Demand Notice dated 21.06.2021 to the Corporate Debtor under Section 8 of the Insolvency and Bankruptcy Code, 2016 (“IBC”).
The Operational Creditor filed a petition under Section 9 of IBC, seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor.
On 17.07.2023, the NCLT rejected the petition while holding that there is a pre-existing dispute between the Parties.
The Operational Creditor filed an appeal before the NCLAT against the order dated 17.07.2023.
NCLAT Verdict
The Bench observed that much before the issuance of Demand Notice, arbitration was invoked and an Arbitrator was appointed.
It was opined that the Notice dated 14.06.2021 pointed out deficiency in services provided by the Operational Creditor and gave notice to resolve disputes through arbitration. Mere responding to the notice invoking arbitration stating that no disputes exist would not preclude the Tribunal from taking note of the elaborate dispute raised in notice invoking arbitration by the Corporate Debtor.
“We have looked into the notice dated 14th June, 2021 which was issued by the Corporate Debtor and notice in detail points out the deficiency in service and has thus given a notice for resolving the disputes between the parties by means of arbitration. The mere fact that notice of arbitration was replied by Operational Creditor stating that there is no pre-existing dispute cannot be reason to ignore the dispute as was raised in the notice dated 14th June, 2021 which is elaborate and details the deficiency in service as per the Corporate Debtor.”
The Bench upheld the rejection of Section 9 petition by the NCLT and dismissed the appeal.
Case title: NTT Data Business Solutions Pvt. Ltd. v Trident Ltd.
Case No.: Company Appeal (AT) (Insolvency) No. 1228 of 2023
