National Company Law Appellate Tribunal
Virtuaal Retail Pvt Ltd vs Bmi Wholesale Trading Pvt Ltd on 3 January, 2023
Author: Ashok Bhushan
Bench: Ashok Bhushan
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Company Appeal (AT) (Ins.) No. 1498 of 2022 &
I.A. No. 4749 of 2022
IN THE MATTER OF:
Virtuaal Retail Pvt. Ltd. ....Appellant
Vs.
BMI Wholesale Trading Pvt. Ltd. ....Respondents
Present:
For Appellant: Mr. MKS Menon, Mr. Vikash Verma and Ms. Avi
Leuna, Advocates
For Respondents: Mr. Rohan Thawani, Advocate
ORDER
03.01.2023: Heard Learned Counsel for the Appellant as well as Learned Counsel appearing for the Respondent.
2. This appeal has been filed against the order dated 04.10.2022 passed by National Company Law Tribunal, Mumbai Bench, Court-III in C.P. No. 3677/IBC/MB/2018 by which order the application filed under Section 9 of the Insolvency & Bankruptcy Code, 2016 by the appellant has been rejected. There was a franchisee agreement entered between the appellant and BMI Wholesale Trading Pvt. Ltd. on 05.11.2012. A dispute arose between the parties in the year 2014. Thereafter, in the year 2017, legal notice was issued by the Appellant to the Respondent praying for making payment of Rs. 1,10,38,999.24. Legal notice contained following prayer:
"You are hereby called upon to pay the amount of Rs. 1,10,38,999.24 INR, alongwith the interest @ of 15% to my client, within one month from the receipt of the present notice, failing which my client shall lodge a 2 complaint under Section 420 of Indian Penal Code and further shall take other necessary legal action against you at your risk and cost."
3. Subsequently, a notice under Section 8 of the Insolvency & Bankruptcy Code, 2016 was issued on 16.08.2018 claiming an amount of Rs. 94,44,041/- as total amount of debt. The demand notice was replied by letter dated 07.09.2018 by the respondent refuting the claim. In the reply notice detailed facts have been pleaded refuting the claim and it was categorically mentioned that the respondent do not owe any amount of debt to the appellant.
4. Subsequently, the appellant filed Section 9 application on 25.08.2018 which was also replied by the respondent and Adjudicating Authority after hearing the parties rejected the application on two grounds: (i) there has been pre-existing dispute between the parties since 2014 (ii) the application is barred by limitation.
5. Learned Counsel for the appellant challenging the order of the Adjudicating Authority contends that the Adjudicating Authority committed error in recording the finding that there was pre-existing dispute. It is submitted that there was pre-deposit which was never returned nor at any point of time any communication has been received from the respondent as to what is the amount which is due.
6. It is submitted that the dispute which was raised by the respondent in reply notice as well as reply affidavit of section 9 application was not genuine dispute and application ought not to be rejected. He further submits that the Adjudicating Authority committed error in rejecting application on the ground of limitation whereas the limitation is mixed question of law and facts and Company Appeal (AT) (Ins.) No. 1498 of 2022 3 there has to be appropriate opportunity given for deciding the issue of limitation.
7. Learned Counsel for the respondent refuting the submission of the counsel for the appellant contends that as per the clause V the agreement lease stood terminated and in the reply notice which was filed by the respondent details facts were mentioned which clearly indicates that there was a pre- existing dispute between the parties and respondent did not owe any debt to the appellant. It is submitted that according to own pleadings of the appellant, the possession of store was taken on 21.09.2014 and the legal notice for the first time was issued through advocate on 18.09.2017 which itself speaks that owing to dispute no claim was ever raised by the appellant. He further submits that the cause of action according to own showing of the appellant arose on 21.09.2014 and application having filed more than three years was clearly barred by time.
8. Learned Counsel for the appellant in the rejoinder submitted that there has been acknowledgement in the year 2017 and 2019 by the respondent, hence, the application was not barred by time.
9. We have considered the submission of the counsel for the parties and perused the record.
10. When demand notice was issued by the operational creditor dated 16.08.2018 which was replied on 07.09.2018 where it was categorically mentioned that the respondent do not owe any debt to the appellant, details of franchisee agreement and subsequent events were mentioned and in paragraphs 10 and 11, following was specifically stated:-
Company Appeal (AT) (Ins.) No. 1498 of 2022 4 "10. Our client states that till date, our client is not in possession of any inventory, furniture and fixtures etc. since you prevented our client from taking possession by confiscating the keys to the said premises as stated above and your claim for payment for inventory taken by our client in your notice under reply is completely false, fabricated, malafide and is denied by our client.
11. Our client states that on termination of the said lease deed, the Franchise Agreement was terminated on 20th September 2014 as per Clause 5.1 of the Franchise Agreement. Our client states that to our client's surprise, almost 3 years after the termination of the Franchise Agreement, you addressed a legal notice dated 18 th September 2017 through your erstwhile advocates to our client allegedly calling upon our client to pay an amount of Rs.1,10,38,999.24 (Rupees One Crore Ten Lacs Thirty Eight Thousand Nine Hundred and Ninety Nine and 24 paise only) along with an interest at 15% p.a. towards inventory deposit, investment in fixed assets etc."
11. The reply notice clearly amounted to the notice of dispute. After filing of section 9 application the reply affidavit was also filed elaborating the pleas which have been taken in the reply notice. The Adjudicating Authority has rightly come to the conclusion that there was a pre-existing dispute between the parties since 2014 which finding is based on the materials on record.
According to own pleading of the appellant, the possession of the store was taken on 21.09.2014, hence, the dispute had arisen between the parties at least from 21.09.2014. We thus are of the view that Adjudicating Authority has rightly held that the application is liable to be dismissed on the ground of pre- existing dispute.
Company Appeal (AT) (Ins.) No. 1498 of 2022 5
12. Now coming to the submission on question of limitation when the the Adjudicating Authority was satisfied that application is liable to be dismissed on account of the pre-existing dispute it was not necessary to enter into the issue.
13. In view of the aforesaid, we observe that in event the appellant seeks remedy before the appropriate forum, it shall be open for the appellant to raise all pleas as permissible in law.
14. With these observations, the appeal is dismissed.
[Justice Ashok Bhushan] Chairperson [Mr. Barun Mitra] Member (Technical) sa/nn Company Appeal (AT) (Ins.) No. 1498 of 2022