JUDGEMENT

(Hybrid Mode) [Per: Arun Baroka, Member (Technical)] This is an appeal under Section 61 of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred as “IBC”) filed by M/s Kellton Tech Solutions Limited against the order (Impugned Order) passed by the National Company Company Appeal (AT) (Insolvency) No. 1569 of 2023 2 of 14 Law Tribunal, Allahabad Bench (Adjudicating Authority) dated 04.09.2023 in Company Petition (IB) No. 06/ALD/2022, by which the Adjudicating Authority has dismissed the Application filed by the Appellant under Section 9 of the IBC, 2016 on the ground that there is a pre-existing dispute between the parties.

2. Heard the Counsels for both the parties and perused the documents placed before us.

Case of the Appellant viz. M/s Kellton Tech Solutions Limited

3. The Appellant is an IT company providing IT services such as development of software, technology consulting, outsourced product development etc. The Appellant had entered into a “Software Development and Service Agreement” (Agreement) dated 17.09.2020 with the Respondent namely, M/s Actas Technologies Private Limited for the development of customized e-wallet platform.

4. The Appellant submits that it provided the services as per the agreement and after the completion of the work, up to the User Acceptance Testing (UAT) stage, it duly raised the invoices for said services. Out of the total invoices raised by the Appellant, the Respondent failed to make the payment for the last two invoices of Rs 29,50,000 dated 11.12.2020 and Rs 1,46,32,000 dated 21.07.2021, even though it paid earlier three invoices dated 24.09.2020, 28.09.2029 and 29.10.2020. Appellant issued Demand Notice under section 8 the Code on 8.10.2021 which was replied to by the Respondent on 19.10.2021, but failed to raise existence of dispute within the statutory period.

Company Appeal (AT) (Insolvency) No. 1569 of 2023 3 of 14

5. On 12.11.2021 the Appellant filed an application under section 9 of the IBC 2016 before the Adjudicating Authority. The Appellant submits that the Adjudicating Authority has wrongly applied the e-mail exchanged between the Appellant and Respondent to arrive at a conclusion that there is a pre-existing dispute between the parties and therefore rejected the application filed by the Appellant under Section 9 of the IBC on 4.9.2023.

6. Appellant further claims that when the Operational Creditor and the Corporate Debtor had devised a mechanism by incorporating a clause in the agreement to raise a dispute regarding debt and no dispute as per the agreed procedure is ever raised by the Corporate Debtor, then whether it can be said that there is a pre-existing dispute. The Appellant submits that Clause 3.4 of the agreement provides for the mechanism for raising the dispute which reads as follows:

“3.4 Disputes. In case of any issue in the Services provided or error in the amount raised in the invoice, PAYMONK shall bring the same to the notice of the Service Provider within 15 (Fifteen) Business Days of receipt of the invoice (“Disputed Service Fees”). Both the parties shall then provide the other with such necessary information to enable them to reconcile the issues and upon amicable settlement, PAYMONK shall make payment towards the said disputed invoice within 5 (Five) Business Days thereafter (“Agreed Due Date”). In the event that a dispute in relation to the Disputed Service Fees has not been settled within 21 (Twenty One) days of the Service Provider being notified about the Disputed Service Fees by PAYMONK, the parties shall refer such disputes to Arbitration in compliance with Clause 16 of this Agreement. Notwithstanding the above, PAYMONK shall however make payments to the undisputed portion of the invoices, if any, within the Agreed Due Date.” Company Appeal (AT) (Insolvency