NCLT Judgement on Section 8, 9, 9(5)(2)(d), 65 of the Insolvency And Bankruptcy Code, 2016 and Section 41A of the Code Of Criminal Procedure, 1973 (CrPC)


Freebie Solutions Private Ltd Vs. Zaggle Prepaid Ocean Services Private Limited, (2020) 08 NCLT CK 0033

NCLT dismissed the petition filed by the petitioner filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of Corporate Insolvency Resolution Process for an amount of Rs.10,28,69,811/-. The claim has been slashed to Rs.6,11,10,000/- by way of Affidavit dated 17.10.2019 for amendment, as dealt with during the course of the order. While dismissing the petition NCLT held that when there was a prior dispute between the parties, a petition under section 9 of the I&B Code cannot be admitted. Business transactions worth several hundreds of crores of rupees took place between the operational creditor and the corporate debtor. Therefore, the dispute raised by the corporate debtor cannot be said to be spurious, hypothetical or illusory. The next contention of the corporate debtor, in the alternative, is that the amount given as advance does not fall under the definition of operational debt. The case of the operational creditor is that money was given as an advance for supply of gift cards. The advance does not come within the definition of operational debt. In this connection the learned counsel for the corporate debtor relied on the decisions cited above. It is true that advance, if any, given, does not come under the definition of operational debt. The case of the corporate debtor is that money was given for supply of gift cards after uploading the cards at Rs.10,000/-per card. The money is given for uploading gift cards. Therefore, it cannot be said in the strict sense that it was an advance. We are unable to understand that money to be treated as advance of money. Money is intended for uploading cards and only after uploading cards delivery is to be effected. So in the strict sense, money given is not an advance in the nature of transaction carried between the operational creditor and the corporate debtor. However, there was prior dispute and as such the petition cannot be admitted.

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