1. Application under Section 9 of the Insolvency and Bankruptcy Code — Dispute over outstanding payment — Appeal against NCLAT order remanding matter to NCLT. (Para 2 , 3 )
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2023 Supreme(SC) 1233
SUPREME COURT OF INDIA
A.S. BOPANNA, DIPANKAR DATTA, JJ.
Compack Enterprises India Private Limited – Appellant
Versus
Jitendra Impex Private Limited – Respondent
Civil Appeal No. 3119 of 2020
Decided On : 18-04-2023
Important Points
The Supreme Court held that when a corporate debtor admits a specific debt and is ready to pay it, the NCLAT must determine if any amount beyond that admitted sum is due before initiating IBC proceedings, rather than relying solely on the admission of the minimum threshold amount.
Subject
Insolvency Law - Disputed Debt
Act Referred
Headnote
Insolvency and Bankruptcy Code - Disputed Debt - The court held that the National Company Law Appellate Tribunal (NCLAT) erred in remanding the matter based on the admitted amount being more than Rs. 1,00,000. The appellant had admitted to a due amount of Rs. 22,56,833 and had already deposited the same before the NCLT. The NCLAT was directed to determine if any amount more than Rs. 22,56,833 was due and to consider the principles laid down in the case of Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd. regarding pre-existing disputes.
Fact of the Case:
The appellant contested the application under Section 9 of the Insolvency and Bankruptcy Code (IBC) filed by the respondent, claiming that the amount due was not as claimed.
Finding of the Court:
The court found that the NCLAT erred in remanding the matter based on the admitted amount being more than Rs. 1,00,000. The appellant had admitted to a due amount of Rs. 22,56,833 and had already deposited the same before the NCLT.
Issues: Dispute over the amount due under the application filed under Section 9 of the IBC.
Ratio Decidendi: The NCLAT erred in remanding the matter based on the admitted amount being more than Rs. 1,00,000. The court directed the NCLAT to determine if any amount more than Rs. 22,56,833 was due and to consider the principles laid down in the case of Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd. regarding pre-existing disputes.
Final Decision: The judgment dated 10.08.2020 was set aside, and the matter was remitted to the NCLAT to determine if any amount more than Rs. 22,56,833 was due and to consider the principles laid down in the case of Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd. regarding pre-existing disputes.
Legal Category Hierarchy
Advocates:
Advocate Appeared:
For the Appellants : Mahesh Agarwal, Rajesh Banati, Ashish Sareen, Vikram P. Singh, Aanchal Mullick, Ankit Banati, E.C. Agrawala.
For the Respondents: Dhruv Mehta, Pooja Dhar, Vikas Mishra, Arihant Jain, Sachit Gawri, Aayush Garg, Vidushi Chaudhary.
Advocate Appeared:
For the Appellants : Mahesh Agarwal, Rajesh Banati, Ashish Sareen, Vikram P. Singh, Aanchal Mullick, Ankit Banati, E.C. Agrawala.
For the Respondents: Dhruv Mehta, Pooja Dhar, Vikas Mishra, Arihant Jain, Sachit Gawri, Aayush Garg, Vidushi Chaudhary.
Table of Contents
2. Respondent claims full outstanding amount based on balance confirmation; Appellant disputes document genuineness and contends only a partial amount is due and offered for payment. (Para 4 , 5 , 6 )
3. Admission of a partial debt and willingness to pay does not automatically sustain an IBC application if the remaining claimed amount is disputed. (Para 6 , 7 )
4. Where a partial debt is admitted and offered for payment, the tribunal must determine if any amount beyond the admitted sum is due before initiating IBC proceedings. (Para 7 , 8 , 9 )
5. Judgment set aside — Matter remitted to NCLAT to determine if any amount exceeding the admitted and deposited sum is due, applying pre-existing dispute principles. (Para 8 , 9 , 11 )
6. Does the admission of a partial debt exceeding the statutory threshold automatically justify the sustainability of a Section 9 IBC application?
No. If the corporate debtor admits a partial amount and is ready to pay it, the tribunal must determine whether any amount beyond that admitted sum is actually due before concluding the application is sustainable. (Para 6 , 7 , 8 )
7. How should a tribunal treat the portion of a claim that exceeds an admitted and paid amount under the IBC?
The tribunal must determine if the amount beyond the admitted sum is due and apply the principles regarding pre-existing disputes, as established in the Mobilox Innovations case. (Para 9 )
ORDER :
1. Heard learned counsel for the appellant as also learned senior counsel for the respondent and perused the appeal papers.
2. The appellant is before this Court assailing the judgment dated 10.08.2020 passed by the National Company Law Appellate Tribunal, New Delhi (NCLAT). The respondent herein had filed an application under Section 9 of the Insolvency and Bankruptcy Code (IBC) since according to the respondent, the appellant was due to pay the amount as claimed and stated in the application. The appellant herein were termed as the Corporate debtors.
3. The National Company Law Tribunal (NCLT) through its order dated 23.08.2019, after taking note of the rival contentions, had arrived at the conclusion that the claim as made was not justified and the proceedings under IBC was not sustainable. The respondent herein claiming to be aggrieved by the said order was before the NCLAT. It is in that circumstance, the NCLAT had passed the judgment dated 10.08.2020 which is impugned herein.
4. Having heard learned counsel for the appellant as also learned senior counsel for the respondent at some length, we notice that the NCLAT having referred to the nature of the claim made has taken note that the amount as claimed by the appellant herein was to the extent of Rs. 1,81,45,943/-. The appellant herein however contended that the claim as made is not sustainable but according to the statement of accounts maintained by the appellant herein only a sum of Rs. 22,56,833/- was due to be paid. In that context, the NCLAT having taken note that in any event since the appellant herein had stated that they are due in a sum of Rs. 22,56,833/- which amounts to admission and such amount in any event being more than Rs. 1,00,000/- had pressed into service the decision of this Court in the case of Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd., (2018) 1 SCC 353 and in that context was of the opinion that the application filed before the NCLT under Section 9 of IBC was sustainable and has accordingly remanded the matter.
5. Presently, we note that in the rival contentions which are urged before us though reliance is placed by the respondent herein to the confirmation of balance through the e-mail dated 17.05.2018, the appellant herein is disputing the same to be a genuine document. It is no doubt true that as contended by the learned senior counsel for the respondent a mere denial would not suffice.
6. Be that as it may, in the present circumstance when the claim as put forth by the respondent is to the tune of Rs. 1,81,45,943/- after referring to the earlier deductions and the appellant herein is presently contending that only a sum of Rs. 22,56,833/- was due and was offered to be paid but declined to be received by the respondent, the said amount itself was made the basis by the NCLAT to arrive at its conclusion that in any event, the due admitted is more than Rs. 1,00,000/-.
7. The said reasoning in this context would not be justified inasmuch the appellant having admitted that the amount of Rs. 22,56,833/- was due, were also ready to pay the said amount. According to them that was the only amount due. Therefore, what was required of the NCLAT was to arrive at the conclusion as to whether any amount over and above Rs. 22,56,833/- was due and if the conclusion was to the effect that the amount above Rs. 22,56,833/- was due, the NCLAT would have been justified in remitting the matter to the NCLAT.
8. Presently, it is not in dispute that insofar as the said amount of Rs. 22,56,833/- the appellant have already deposited the same before the NCLT. Therefore, in the present circumstance we are of the opinion that the judgment dated 10.08.2020 is liable to be set aside and the matter is to be remitted to the NCLAT to undertake the said exercise to find out as to whether any amount more than Rs. 22,56,833/- is due as claimed by the respondent herein and thereafter arrive at its conclusion in accordance with law.
9. Needles to mention that on the sa
