Time Barred Appeal Against Decree Does Not Amount Pre -Existing Dispute Under Insolvency And Bankruptcy Code, 2016: NCLAT

The National Company Law Appellate Tribunal (NCLAT) bench comprising of Justice Rakesh Kumar and Dr. Alok Srivastava held that a time barred appeal against the decree filed after the issuance of demand notice under Section 8 of the Insolvency & Bankruptcy Code, 2016 (IBC/Code) will not amount to a pre-existing dispute. NCLT, Kolkata dismissed the application filed by the Operational Creditor under Section 9 of the ground that there is a pre-existing dispute between the parties as the appeal against the decree of recovery of amount is pending. Brief Facts The Operational Creditor sold and supplied fire safety materials to the Respondent and raised a bill of INR 1.25 Crores and on non-payment of the same, the Operational Creditor filed a suit for recovery before the Gurugram District Court in 2014. The Suit was decreed in favor of the Operational Creditor on 07.12.2018. The Operational Creditor issued a demand notice dated 06.02.2019 under Section 8 of the Code the Respondent and the same remained unanswered. Subsequently, the Operational Creditor filed a petition under Section 9 of the Code on 18.04.2019 against the Respondent. Contentions Of Operational Creditor It was contended on behalf of the Operational Creditor that there is was pre-existing dispute between the parties on the date of the issuance of the demand notice and even on the date of filing of Section 9 Petition. It was also submitted by the Operational Creditor that the limitation period for filing an appeal against the decree dated 07.12.2018 was expired on 05.02.2019 and no appeal was filed by the Respondent within such period and it is only after four months of the filing of the Section 9 petition, the Respondent informed that it has filed an appeal and did not even disclose the date of filing of appeal. Contentions Of Respondent It was contended on behalf of the Respondent that the pendency of an appeal will amount to the continuation of the suit and without adjudication of such appeal by the Appellate Court, it cannot be ruled out that there is no pre-existing dispute between the parties. Analysis/Decision By NCLAT NCLAT noted that the even after the issuance of the demand notice dated 06.02.2019, the Respondent did not raise any pre-existing dispute and also the notice was not even replied by the Respondent. It was further held by the bench at the time of issuance of notice dated 15.05.2019 in the Section 9 Petition, no appeal was pending against the decree dated 07.12.2018 and therefore, there was no pre-existing dispute even at the time of filing of the Section 9 petition by the Operational Creditor. The Appellate Tribunal also observed that if there was any dispute in respect of the decree, the Respondent would have immediately filed the appeal against the same which was not done by the Respondent. NCLAT allowed the appeal filed by the Operational Creditor and directed the NCLAT to pass appropriate order in accordance of law. Case Details: Jangsher Singh Choudhary v. Ram Kripal Singh Construction Pvt. ltd. Counsel for Appellant: Ms. Saloni Nagoria & Mr. DK Bhalla Counsel for Respondent: Mr Sameer Rastogi, Mr. Dhrubajit Saikia and Ms. Suigdha Verma Click Here To Read/Download Order

Time Barred Appeal Against Decree Does Not Amount Pre -Existing Dispute Under Insolvency And Bankruptcy Code, 2016: NCLAT

Akshay Sharma

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