R.A.J. Krishna Construction Company Private limited Vs Newera Solutions Private Limited (NCLAT Delhi)
NCLAT Delhi held that arbitration notice evidences a pre-existing dispute, thus, section 9 application filed by Operational Creditor for initiation of Corporate Insolvency Resolution Process (CIRP) rightly rejected.
Facts- The present appeal filed u/s. 61 of Insolvency and Bankruptcy Code 2016 by the Appellant arises out of the Order dated 26.10.2023 passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi, Bench-II).
By the impugned order, the Adjudicating Authority has dismissed the Section 9 application filed by the Operational Creditor for initiating Corporate Insolvency Resolution Process against the Corporate Debtor-New Era Solutions Private Limited. Aggrieved by the said impugned order, the present appeal has been filed by the Appellant-R.A.J. Krishna Construction Private Limited.
Conclusion- The pre-existing dispute must relate to the transaction or debt that forms the basis of the Section 9 application. Clearly the debt in this case arises out of RA Bills relating to the original work order of 12.10.2018. When an arbitration notice is served in respect of disputes stemming from the original work order and the arbitration notice was issued before the Section 8 demand notice, clearly it signifies that a dispute already existed between the parties. As an arbitration notice is a formal communication from one party to the other, initiating arbitration proceedings, the arbitration notice evidences a pre-existing dispute. This therefore constitutes sufficient ground for rejection of a Section 9 application.
