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2025 Supreme(Online)(NCLT) 439
NATIONAL COMPANY LAW TRIBUNAL
Shri Rajeev Bhardwaj, Shri Sanjay Puri, JJ
ISTHARA PARKS PRIVATE LIMITED – Appellant
Versus
VALMAR PROJECTS LLP – Respondent
C.P. (IB) - 216/2023
For the Petitioner:DR PUNDLA BHASKARA MOHAN
For the Respondent:Sai Sanjay Suraneni
Genuine disputes regarding service quality preclude the admission of a petition under Section 9 of the Insolvency & Bankruptcy Code, 2016.
Headnote:(A) Insolvency & Bankruptcy Code, 2016 - Section 9 - Operational debt - Petition filed by operational creditor against corporate debtor for default in payment of Rs.5,69,65,755/- - Respondent claimed existence of pre-existing disputes regarding service deficiencies - Court emphasized that genuine disputes must exist prior to demand notice under Section 8(1) - Evidence of complaints and contract breaches established a genuine dispute - Application under Section 9 dismissed. (Paras 8, 9, 23, 25)
(B) Pre-existing Dispute - Definition and requirements - Genuine disputes must be substantiated by evidence and not merely hypothetical or illusory - Adjudicating authority must assess whether a plausible contention exists requiring further investigation without delving into merits. (Paras 10, 11, 12, 21)
Facts of the case:
The petitioner, engaged in hostel operations, claimed unpaid dues from the respondent, who acknowledged some liability but cited service deficiencies as grounds for non-payment. The respondent raised multiple complaints regarding service quality, leading to contract termination.
Findings of Court:
The court found that the respondent had consistently raised valid complaints regarding the petitioner's performance, establishing a genuine pre-existing dispute that precluded the admission of the petitioner's application under Section 9 of the IBC.
Issues: The main issues included whether the petitioner's claim constituted an operational debt under the IBC and the existence of a pre-existing dispute.
Ratio Decidendi: The court ruled that the existence of genuine disputes must be established before a petition under Section 9 can be admitted, emphasizing that such disputes should not be spurious or hypothetical.
Result: Petition dismissed.
ORDER
1. This Petition has been filed under Section 9 of the Insolvency & Bankruptcy Code, 2016 r/w Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 by M/s.Isthara Parks Private Limited, Operational Creditor (OC/Petitioner) against M/s.Valmar Projects LLP, Corporate Debtor (CD/Respondent) for the alleged default in payment of debt amounting to Rs.5,69,65,755/- (principal being Rs.5,35,15,084/- and interest Rs.34,50,671) as on 05.08.2023.
2. Case of the Petitioner
a) The Petitioner is a Private Limited Company incorporated under the Companies Act, 2013, engaged in operating hostel facilities, providing catering and food services, and managing executive and student housing facilities.
b) The Respondent is also a Company registered under the Companies Act, 2013, engaged in managing and maintaining school, college, and university hostel facilities.
c) The Petitioner entered into a Facilities Service Agreement (FSA) with the Respondent on 23rd February 2022 for operating hostel facilities, including housekeeping services.
d) A Catering Service Agreement (CSA) was executed with the Respondent on 16th March 2022 for providing food and catering services to day scholars and hostel residents.
e) The Petitioner raised invoices for services rendered from April 2022 to May 2023. The Respondent made part payments on some invoices. Details of these invoices are provided in paragraphs 5 and 9 of the Petition.
f) It is alleged that the Respondent violated the agreement by failing to clear invoice amounts within the stipulated time. The Petitioner raised the issue via email on 12.10.2022. In reply, dated 13.01.2023, the Respondent admitted the dues and provided a ledger account statement (18.03.2022 to 06.06.2023) showing an admitted liability of Rs.3,34,09,564.88, excluding Rs.1.00 crore as a security deposit.
g) Subsequent correspondence occurred on multiple occasions (16.02.2023, 31.03.2023, 04.04.2023, 05.04.2023, 09.04.2023, 22.04.2023, 24.04.2023, 18.05.2023, and 23.05.2023). In an email dated 24.04.2023, the Respondent stated that it would not continue with the agreements, citing reasons described as false and untenable. Nevertheless, the Respondent sent emails on 17.05.2023 and 18.05.2023 with further business proposals.
h) The Respondent has also breached the contract by taking the entire supporting staff of the Petitioner, which is highly deprecated and uncalled for. Further, cooking equipment etc., were also forcibly retained by the Respondent.
i) Despite being asked to make the payment of the remaining amount, the Respondent has not paid any heed, but has admitted its liability to pay the amount of Rs.4,80,64,953/- till June, 2023.
3. Case of the Respondent
i. There is no operational debt within the meaning of Section 5(21) of the Insolvency and Bankruptcy Code (IBC), and the Petitioner has withheld and suppressed details of pre-existing disputes between the parties. Reliance is placed on the decisions in Amrop India Private Limited vs. The Hi-Tech Gears Limited, Company Appeal (AT) (Insolvency) No.1251 of 2023, Anshul Vashistha vs. M/s. Jayhind Steel Traders and Others in Company Appeal (AT) (Insolvency) No.656 of 2020, and Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd. , (2018) 1 SCC 353
ii. The Petitioner’s significant deficiencies in services were repeatedly highlighted via WhatsApp messages and emails dated 02.08.2022, 03.09.2022, 08.09.2022, 17.10.2022, 19.10.2022, 04.04.2023, and 21.04.2023.
iii. The Petitioner failed to provide sufficient manpower, good-quality food, required technology, CCTV cameras, and other deliverables, as stipulated in the agreement.
iv. These deficiencies were first brought to the Petitioner’s attention within 2-3 months of the agreement's execution via emails dated 11.07.2022 and 02.08.2022.
v. The Petitioner assured the Respondent that it would address the issues raised. Vide email dated 05.09.2022 proposed a meeting on 07.09.2022 to discuss these concerns.
