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2025 Supreme(Online)(NCLT) 6438
NATIONAL COMPANY LAW TRIBUNAL
Bidisha Banerjee, Member, Siddharth Mishra, Member
Total Wireless Technologies Pvt. Ltd. – Appellant
Versus
SIS Cash Services Pvt. Ltd. – Respondent
C.P. (IB) NO. 195/KB/2024
For the Appellants/Petitioners: Anupam Kishore Sinha, Saptarshi Dutta, Aniket Choudhury, Debdut Hore
Under Section 9 of the IBC, a petition by an Operational Creditor must be rejected if there is evidence of a real, substantial, and bona fide pre-existing dispute between the parties prior to the issuance of the demand notice.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 9 - Operational Creditor - Corporate Insolvency Resolution Process (CIRP) - Initiated against Corporate Debtor for outstanding rental dues under MOU - Corporate Debtor contended pre-existing disputes and limitation bar - Dispute regarding failure of Operational Creditor to provide service verification reports as per contract - Tribunal held that emails alleging unsatisfactory service and violation of agreement clauses constitute 'disputes' within the meaning of Section 8(2)(a) - Application rejected due to pre-existing disputes. (Paras 4, 5, 7)
Facts of the case:
The Operational Creditor approached the Tribunal seeking to initiate CIRP against the Corporate Debtor, claiming outstanding rental dues for surveillance systems installed in cash vans. The Corporate Debtor denied the liability, citing the claim was time-barred and that there were significant pre-existing disputes regarding the authenticity of bills and inadequate services.
Findings of Court:
The Court observed that the Operational Creditor failed to submit mandatory monthly service reports as required by the MOU for billing. The Corporate Debtor had raised objections regarding the services provided and submitted evidence of communication regarding fake or inflated bills. Thus, a real and bona fide dispute existed prior to the issuance of the demand notice.
Issues: Whether the petition is maintainable under Section 9 of the IBC given the plea of pre-existing disputes and limitation.
Ratio Decidendi: An application for initiation of CIRP by an Operational Creditor must be rejected if a 'pre-existing dispute' is shown to exist prior to the issuance of a demand notice, as held in the landmark case of Mobilox Innovations, even if the dispute is not highly meritorious but is real and substantial.
Result: Petition dismissed.
| Table of Content |
|---|
| 1. initiation of cirp by an operational creditor. (Para 1 , 2 , 3) |
| 2. operational creditor claims based on an installation and maintenance contract. (Para 4) |
| 3. defenses covering limitation and pre-existing disputes. (Para 5) |
| 4. evaluation of pre-existing disputes and contract compliance. (Para 6 , 7) |
| 5. dismissal of petition due to established pre-existing disputes. (Para 8 , 9) |
Per: Bidisha Banerjee, Member (Judicial)
1. The Court congregated through hybrid mode.
2. Heard Ld. Counsels for the parties.
3. Details of Application:
Total Wireless Technologies Private Limited, the Operational Creditor or the “OC”, filed the present Petition for initiating to seek initiation of Corporate Insolvency Resolution Process (“CIRP” in short) against Sis Cash Services Private Limited, the Corporate Debtor or the “CD” alleging CD’s failure to release the claim of Rs.3,00,15,425/- (Rupees Three Crores Fifteen Thousand Four Hundred and Twenty Five), payable to the Operational Creditor.
4. Submissions of the Operational Creditor:
a. That the Operational Creditor is well established in the field of surveillance systems since last ten years or more. It also have several reputed corporate clients like Indian Railways, Alstom, Bombardier Transportation, Siemens and other government and private enterprises.
b. That the Corporate Debtor had requested Operational Creditor for the instalment of surveillance system in its various cash vans and the Operational Creditor agreed to carry out the said work on the rental charges as agreed to by the parties.
c. The Operational Creditor was approached by the Corporate Debtor for the installation of surveillance system on rental basis, consisting of MDVR (recorder) along with 2 or 3 cameras and accessories, suitable for its cash vans.
d. The Operational Creditor entered into an Agreement dated 01.12.2014 (Annexure – B), with the Corporate Debtor which agreement cum Memorandum of Understanding was renewed from time to time.
e. The Corporate Debtor had also requested Operational Creditor to provide annual maintenance services, for the said installed surveillance systems, which belong to other engaged parties by the Corporate Debtor.
f. That the cost of the Surveillance system as on 2014, was Rs.69,73,100/-. The Corporate Debtor is still using the said systems to its benefit, without paying cost towards the rental charges. A detailed training about product was given to staff of Corporate Debtor, with respect to handling of the systems. Inspite of the same the office of the Corporate Debtor manhandled the systems.
g. The Corporate Debtor as per Clause 6 of MOU, is bound to pay monthly rental charges of systems in cash vans as mentioned in the said Clause, which is reproduced herein below:
“6. Rental Charges:
Option 1:
The Party No.2 will pay:
1. Monthly Rental Charges for Rs. 2,500/- + Applicable Tax per system (excluding SIM card) for 1st year.
2. Monthly Rental Charges for Rs. 2,650/- + Applicable Tax per system (excluding SIM card) for 2nd year.
3. Monthly Rental Charges for Rs. 2,850/- + Applicable Tax per system (excluding SIM card) for 3rd year.”
However, only Option 1 was agreed between the parties.
h. That the MOU was extended and renewed from time to time and Corporate Debtor informed the Operational Creditor about the renewal vide its email dated 05.02.2018 (Annexure – C) and dated 01.06.2018, respectively.
i. It is contended that the Corporate Debtor arbitrarily terminated the said MOU, vide its email dated 20.06.2020, without citing any reason and without paying the balance outstanding to the Operational Creditor and did not return the surveillance systems back to the Operational Creditor.
j. That the said MOU is in force till date, under the provisions of the Section 108 of the Transfer of Property Act. The Corporate Debtor Company failed to handover the possession of the said systems, to the Operational Creditor in the same condition except normal wear and tear. Hence, the Operationa
