Case Note & Summary
The appeal was filed by Sanjay Sharma, Partner of MA Jagadamba Enterprises (Operational Creditor), against the order dated 30.11.2023 passed by the National Company Law Tribunal, Division Bench, Court – II, Kolkata, in Company Petition (IB) No. 314/KB/2022. The Adjudicating Authority had rejected the Section 9 application filed by the Appellant under the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process against Super Iron Foundry Pvt. Ltd. (Corporate Debtor). The rejection was based on two primary grounds: first, the invoices annexed with the application showed tampering, as the interest rate was altered from 2% to 24% per annum and the payment period from 7 days to 30 days by pen; second, the Corporate Debtor had paid Rs. 10 Lakh on 16.08.2022 at 08:19 PM, after the demand notice was issued at 06:37 PM on the same day but before its delivery on 18.08.2022, thereby reducing the debt below the threshold limit under Section 4 of the I&B Code. The Appellant argued that the payment was intentionally made to reduce the threshold, but the Adjudicating Authority found this averment bald and without merit. The NCLAT, after hearing the Counsel for the Appellant, found no error in the impugned order and dismissed the appeal, along with pending interlocutory applications. The court held that the tampered invoices and the payment after the demand notice constituted a pre-existing dispute, justifying the rejection of the Section 9 application.
Headnote
A) Insolvency and Bankruptcy Code - Operational Creditor - Section 9 Application - Pre-existing Dispute - The Adjudicating Authority rejected the Section 9 application on the ground that there was a pre-existing dispute regarding the tampered invoices and the payment of Rs. 10 Lakh after the demand notice. The NCLAT upheld the rejection, finding no error in the impugned order. (Paras 2-4) B) Insolvency and Bankruptcy Code - Operational Debt - Tampered Invoices - Interest Rate - The invoices showed that the interest rate was altered from 2% to 24% and the payment period from 7 days to 30 days by pen, indicating tampering. This raised a genuine dispute regarding the existence of the debt. (Paras 3-4) C) Insolvency and Bankruptcy Code - Demand Notice - Payment After Notice - Threshold Limit - The Corporate Debtor paid Rs. 10 Lakh after receiving the demand notice but before its delivery, reducing the debt below the threshold limit under Section 4 of the I&B Code. The NCLAT held that this payment created a pre-existing dispute and the appellant's allegation of intentional reduction was bald. (Paras 3-4)
Issue of Consideration
Whether the Adjudicating Authority was correct in rejecting the Section 9 application under the Insolvency and Bankruptcy Code, 2016 on the grounds of pre-existing dispute and tampered invoices.
Final Decision
The appeal is dismissed. The impugned order dated 30.11.2023 passed by the Adjudicating Authority (NCLT, Kolkata) rejecting the Section 9 application is upheld. Pending interlocutory applications, if any, are disposed of.
Law Points
- Pre-existing dispute
- tampered invoices
- operational debt
- Section 9 application
- threshold limit
- payment after demand notice
