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    Sudhi Sachdev

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    Megha Sharma
    The National Company Law Appellate Tribunal dismissed an appeal challenging an order admitting an insolvency application against a corporate debtor. The appellant, a promoter of the corporate debtor, argued that a pending case under section 138/441 of the Negotiable Instruments Act for recovery of debt constituted a dispute. However, the tribunal held that such a pending case amounted to an admission of debt, not a genuine dispute. As there was no dispute over the debt owed to the operational creditor and a default by the corporate debtor, the insolvency application was correctly admitted.

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    Sudhi Sachdev

    Uploaded by

    Megha Sharma
    40 views2 pages
    The National Company Law Appellate Tribunal dismissed an appeal challenging an order admitting an insolvency application against a corporate debtor. The appellant, a promoter of the corporate debtor, argued that a pending case under section 138/441 of the Negotiable Instruments Act for recovery of debt constituted a dispute. However, the tribunal held that such a pending case amounted to an admission of debt, not a genuine dispute. As there was no dispute over the debt owed to the operational creditor and a default by the corporate debtor, the insolvency application was correctly admitted.

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    The National Company Law Appellate Tribunal dismissed an appeal challenging an order admitting an insolvency application against a corporate debtor. The appellant, a promoter of the corporate debtor, argued that a pending case under section 138/441 of the Negotiable Instruments Act for recovery of debt constituted a dispute. However, the tribunal held that such a pending case amounted to an admission of debt, not a genuine dispute. As there was no dispute over the debt owed to the operational creditor and a default by the corporate debtor, the insolvency application was correctly admitted.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    40 views2 pages

    Sudhi Sachdev

    Uploaded by

    Megha Sharma
    The National Company Law Appellate Tribunal dismissed an appeal challenging an order admitting an insolvency application against a corporate debtor. The appellant, a promoter of the corporate debtor, argued that a pending case under section 138/441 of the Negotiable Instruments Act for recovery of debt constituted a dispute. However, the tribunal held that such a pending case amounted to an admission of debt, not a genuine dispute. As there was no dispute over the debt owed to the operational creditor and a default by the corporate debtor, the insolvency application was correctly admitted.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI

    Company Appeal (AT) (Insolvency) No. 623 of 2018

    IN THE MATTER OF:


    Sudhi Sachdev …Appellant
    Vs
    APPL Industries Ltd. ….Respondent
    Present:
    For Appellant: Mr. M. P. Sahay, Advocate.
    For Respondent:
    ORDER

    13.11.2018: This appeal has been preferred by ‘Sudhi Sachdev’, Promoter


    of ‘M/s Auto Décor Pvt. Ltd.’ (Corporate Debtor) against order dated 2nd August,
    2018 passed by the Adjudicating Authority (National Company Law Tribunal),
    New Delhi Bench whereby application under Section 9 of I&B Code preferred by
    Respondent – ‘APPL Industries Ltd.’ (Operational Creditor) has been admitted
    and order of moratorium has been passed.

    2. Learned counsel appearing on behalf of the Appellant submits that there


    was an existence of dispute in view of the fact that the Respondent has instituted
    cases under Section 138/441 of Negotiable Instruments Act, 1881, which are
    pending in the court of Metropolitan Magistrate, Gurgaon. During the
    proceeding, the Corporate Debtor has paid Rs.31,85,525/-, reducing the
    outstanding balance to Rs.34,25,251/-. The last payment was made on 18th
    March, 2016.

    3. Referring to the decision of Hon’ble Supreme Court in ‘R. Vijayan Vs. Baby
    and Anr.’, (2012) 1 Supreme Court Cases 260, learned counsel for the Appellant
    submitted that the proceeding under Section 138 is really a civil cases of recovery
    of the money, therefore, in view of the pendency of such case, application under
    section 9 of I&B Code is not maintainable.

    4. Having heard learned counsel for the Appellant and perusal of records, we
    are not inclined to accept the submission made on behalf of the Appellant.
    -2-

    5. In “Innoventive Industries Ltd. Vs. ICICI Bank and Ors.” – (2018)1 SCC 407,
    the Hon’ble Supreme Court observed as follows:-

    29. The scheme of Section 7 stands in contrast with the scheme


    under Section 8 where an operational creditor is, on the
    occurrence of a default, to first deliver a demand notice of the
    unpaid debt to the operational debtor in the manner provided
    in Section 8(1) of the Code. Under Section 8(2), the corporate
    debtor can, within a period of 10 days of receipt of the
    demand notice or copy of the invoice mentioned in sub-section
    (1), bring to the notice of the operational creditor the existence
    of a dispute or the record of the pendency of a suit or
    arbitration proceedings, which is pre-existing – i.e. before
    such notice or invoice was received by the corporate debtor.
    The moment there is existence of such a dispute, the
    operational creditor gets out of the clutches of the Code.”

    6. In the present case, it is not in dispute that there is a debt payable to the
    Operational Creditor and default on the part of the Corporate Debtor. The
    pendency of the case under Section 138/441 of the Negotiable Instruments Act,
    1881, even if accepted as recovery proceeding, it cannot be held to be a dispute
    pending before a court of law. Thereby we hold that the pendency of the case
    under Section 138/441 of Negotiable Instruments Act, 1881 actually amounts
    to admission of debt and not an existence of dispute. We find no merit in this
    appeal. It is accordingly dismissed. No Costs.

    [Justice S. J. Mukhopadhaya]
    Chairperson

    [Justice Bansi Lal Bhat]


    Member (Judicial)
    am/uk
    Company Appeal (AT) (Insolvency) No. 623 of 2018

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