Insolvency and Bankruptcy Code, 2016 – s.9 – Application under – Corporate Insolvency Resolution process – ‘Pre-existing dispute’ – Application filed by first respondent u/s.9 of IBC against the second respondent – Case premised on there being a sale, and a ‘debt’ owed by the second respondent under the sale – The third respondent was the Interim Resolution Professional – Appellant is an ex-director of the second respondent – NCLT rejected the version of the appellant that there existed a pre-existing dispute and admitted application filed by first respondent u/s.9 of IBC against the second respondent – Order affirmed by NCLAT – Whether the appellant raised a dispute which can be described as ‘a pre-existing dispute’ as understood by Supreme Court in the decision in Mobilox Innovations Private Limited v. Kirusa Software Private Limited case – Held: In Mobilox case, the Supreme Court took the view that one of the objects of the IBC in regard to operational debts is to ensure that the amount of such debts which is usually smaller than the financial debts does not enable the operational creditor to put the corporate debtor into the insolvency resolution process prematurely – It was further declared that it is for this reason that it is enough that a dispute exists between the parties – The standard with reference to which a case of a pre-existing dispute under the IBC must be employed cannot be equated with even the principle of preponderance of probability which guides a civil court at the stage of finally decreeing a suit – Once this subtle distinction is not overlooked, on facts, the NCLAT clearly erred in finding that there was no dispute within the meaning of the IBC – The approach of the NCLAT cannot be sustained – Application filed by the first respondent against the second respondent under s.9 accordingly rejected – Sale of Goods Act, 1930 – Doctrines/Principles – Principle of preponderance of probability.
Mobilox Innovations Private Limited v. Kirusa Software Private Limited (2018) 1 SCC 353 : [2017] 10 SCR 1006 – relied on.
Balwant Singh and Others v. Anand Kumar Sharma and Others (2003) 3 SCC 433 : [2003] 1 SCR 653;
Ahmadsahab Abdul Mulla (2) (dead) v. Bibijan and Others (2009) 5 SCC 462 : [2009] 5 SCR 476 and
Mangilal Karwa v. Shantibai AIR 1956 Nag 221 –
referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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