NCLT Ahmedabad (10.08.2020) in Raghuvir Buildcon Private Limited Vs. Ketan Construction Limited.[C.P. (I.B.) No.57/9/NCLT/AHM/2019 With IA 201 of 2020 IA 123 of 2020] held that; it may not be out of place to state that the first core aspect of admission of an application u/s 9 is prima facie whether there is any dispute or otherwise. If it is shown that there exists a dispute between the Operational Creditor and Corporate Debtor prior to service of notice u/s 8 of IBC, 2016 then the Adjudicating Authority may reject the Application filed u/s 9 of Code.
Excerpts of the order;
# 18 Thus, the parameter to ascertain as to whether there is a dispute or otherwise can be summarized as under:
i) The dispute should have prima facie bona fide and exists naturally in a given fact;
ii) The grounds for alleging the existence of a dispute should not be spurious, hypothetical, illusory or misconceived;
iii) The existence of a dispute need not require further to be proved;
iv) The dispute should be natural and not a made to believe dispute.
The extent of ascertainment/ examination of such parameters defines the scope of exercise of jurisdiction by the Adjudicating Authority. It has been pleaded that the Adjudicating Authority has limited jurisdiction as compared to a Trial Court and Civil Court. We do not have any quarrel or dispute with this proposition. However, intensity of the examination would depend upon the facts and documentary evidence produced by each of the parties in support of their claims. Having said so, it would also be an endeavor of the Corporate Debtor to prove that there is a pre-existing dispute to avoid its obligation. The Hon’ble Supreme Court has said that such defense should not be a feeble legal argument or an assertion of fact unsupported by evidence. Further, such defence should not be spurious or merely bluster, frivolous or vexatious. It should not be a made to believe story. However, the merits of the case need not to be a factor to decide the matter. These observations itself define the scope that the Adjudicating Authority has to look into the material produced before it and to analyze the same to reach some conclusion. It can neither be precluded from doing so nor it is precluded by these observations, hence, the Adjudicating Authority is well within its jurisdiction when it analyzes the accounting records, correspondences, contract etc. as produced by the parties to arrive at a conclusion as regard to nature and existence of dispute. This exercise may require some deep analysis in some case or in some cases it may be a very minor examination based upon the facts of each case and material produced by the parties. In cases, in our considered view, where greater analysis is required then in that situation, such analysis would not amount to roving inquiries or exercise beyond jurisdiction as it would be the demand of the situation.
# 19. Apart from the above legal position, the question which comes to our mind is that in what circumstances a fact situation can be categorized as dispute i.e. when does a disagreement or difference of opinion become a dispute. As observed earlier that the term ‘dispute’ has been defined inclusively in IBC, 2016, however, basic meaning of the term ‘dispute’ has not defined, hence, we would have to look for the meaning of this term as per law dictionaries/other legal forums.
19.1.The Black’s Law Dictionary defines the term ‘dispute’ as under:
A conflict or controversy, esp. one that has given rise to a particular law suit.
19.2. West’s Encyclopedia of American Law, edition 2 describes the term “dispute” as under:
A conflict or controversy; a conflict of claims or rights; an assertion of a right, claim, or demand on one side, met by contrary claims or allegations on the other. The subject of litigation; the matter for which a suit is brought and upon which issue is joined, and in relation to which jurors are called and witnesses examined. A labor dispute is any disagreement between an employer and his or her employees concerning anything job-related, such as tenure, hours, wages, fringe benefits, and employment conditions.
19.3. The term ‘dispute’ as per U.S Legal.com is described as under:
“Dispute means a controversy. It refers to an allegation of fact by one person denied by another person, both acting with some show of reason.”
# 20. Thus, at a glance itself, it can be said that a threshold or stage is to be crossed to convert a difference /disagreement into dispute. In other words, normally commercial / legal differences per se are not dispute unless such differences are ascertained into a claim on which both the parties have opposite /different views and want to settle the same through some legal process or otherwise. Thus, in our view, routine correspondence in commercial relationships cannot automatically or necessarily be considered and admitted as a dispute unless such stage is reached.
#25. ....................Thus the Hon'ble Supreme Court has reiterated time and again that adherence to the time line of 10 days for reply to demand notice is a must. Thus , any reply beyond the period of 10 days will not save the Corporate Debtor from the consequences as mentioned in Section 9(5)(ii)(c) of IBC, 2016.
--------------------------------------------------------
Blog; Disputed Claim in Insolvency Proceedings (CIRP) - Creditor’s perspective
No comments:
Post a Comment