CIL Australia North Pty. Ltd. v. Sharp Corp Ltd.

INSOLVENCY AND BANKRUPTCY CODE, 2016,

--Appeals and Appellate Authority --Appeal against rejection of application under section 9 by Adjudicating Authority Pre-existence of dispute --Suit filed by corporate debtor prior to issuance of demand notice--Though suit was filed by corporate debtor prior to issuance of demand notice under section 8 by operational creditor, therefore, there was pre-existence of dispute between the parties, thus, Adjudicating Authority rightly rejected application under section 9, which was filed by the operational creditor. --Adjudicating Authority rejected application under section 9 on the ground of pre-existence of dispute, as corporate debtor had filed suit prior to issuance of demand notice under section 8. Therefore, operational creditor filed an appeal against the order on the ground that the notice was issued on 5-10-2018 and the suit was filed on 16-10-2018, therefore, it could not be stated to be a pre-existence of dispute. Held: The notice dated 5-10-2018 was a general notice for arbitration, which did not amount to demand notice under section 8. The demand notice was issued by the operational creditor subsequent to filing of suit on 30-10-2018. The suit had been filed by the corporate debtor on 16-10-2018, which was prior to issuance of the demand notice. Therefore, there was pre-existence of dispute. Thus, the Adjudicating Authority rightly rejected the application under section 9 filed by the operational creditor.