FACTS OF THE CASE

Krishna Hi-tech pvt. Ltd (operational creditor) was given a work contract by Bengal Shelter Housing Development (corporate debtor).
The operational creditor did not receive the payments and issued a Demand notice under the provision of section 8 of the IBC on 13.07.2019.

CONTENTIONS OF THE APPLICANT IN THE CASE

Since the operational creditor did not receive the payment due, they filed a petition as per the provisions of Section 9 of the code so as to seek the initiation of corporate insolvency resolution process against the corporate debtor.
On 22.09.2022, the adjudicating authority rejected the petition.
The Operational creditor appealed the order before NCLAT.

CONTENTIONS OF THE RESPONDENT IN THE CASE

The respondent contended that the disputes came into existence way before the issuance of the Demand notice.
They submitted that they had raised disputes via emails to the operational creditor regarding shortcomings in work, defective material.
The adjudicating authority took these contentions into consideration and ruled in their favour.

OBSERVATIONS AND JUDGEMENT

The bench observed that disputes arise between the parties are not supposed to be dealt with in an IBC proceeding. The mode of dispute resolution in case of such scenarios is dealt by the contract.
It was further observed that the corporate debtor did in fact raise the issues pertaining to quality of work and materials way before the demand notice was filed.
The operational creditor contended that their mails were not taken into consideration by the adjudicating authority.
It was observed that if the adjudicating authority was satisfied by the corporate debtor’s emails to come to a conclusion that there was in fact a pre existing dispute, then they are not required to peruse the operational creditor’s response regarding the same.
The Bench upheld the Adjudicating authority’s decision.
The plea was dismissed.