CIRP u/s 9 Rejected Due to Architect Engaging Another Entity for Delayed Project, Considered a Pre-existing Dispute

  • Blog|News|Insolvency and Bankruptcy Code|
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 26 June, 2023

Recent Posts

Blog, News, Income Tax

No TDS on Payments to Credit Guarantee Fund Trust for MSEs Referred in Section 10(46B) | CBDT

Blog

Assessee to Pursue Pending Proceedings Before Appellate Authority Instead of Filing Writ Petition | HC

Latest from Taxmann

Initiation of CIRP

Case Details: R.K. & Associates v. Suwalka & Suwalka Properties & Builders (P.) Ltd. - [2023] 151 taxmann.com 123 (NCLT-Jaipur)

Judiciary and Counsel Details

    • Deep Chandra Joshi, Judicial Member & Prasanta Kumar Mohanty, Technical Member
    • Archit Bohra, Adv. for the Applicant.
    • Amol Vyas, Adv. for the Respondent.

Facts of the Case

In the instant case, the corporate debtor issued a work order wherein the operational creditor was appointed as an architect for the project developed by the corporate debtor. The operational creditor undertook the said work and payment was to be released to the operational creditor on completion as per the work order.

However, the corporate debtor failed to make payment as per the statement raised by the operational creditor after the completion of work. Subsequently, the operational creditor issued a demand notice to the corporate debtor u/s 8 of the IBC, to which the corporate debtor responded, claiming the existence of a dispute between the parties.

Thereafter, the operational creditor filed an application u/s 9 of the IBC, seeking to initiate the CIRP against the corporate debtor for the alleged default in the repayment of debt.

It was observed that the operational creditor had undertaken to deliver drawings on various occasions, however failed to abide by same, resulting in a delay of the said project.

Further, the corporate debtor had to engage the services of another entity so as to complete the work of the said project which amounted to a dispute between the parties. The correspondence between the parties to the case clearly indicated dissatisfaction on the part of the corporate debtor with the services provided by the operational creditor, thereby creating a dispute.

NCLT Held

The NCLT held that since there was a clear pre-existing dispute between the parties, the conditions laid down under section 9 were not fulfilled and thus, the instant application was to be rejected.

List of Cases Referred to

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

«
»

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied