M/s. Sri Bajrang Wind Park Developers vs M/s Inox Wind Infrastructure Services Limited

The application is rejected. CP(IB) 212 of 2021 is disposed off.”

[Emphasis supplied] Appellants Case:

Appellant avers that the impugned order dismissed the Petition under Section 9 of the Code without taking into consideration the intricate facts of the case. The outstanding amount claimed against the invoices raised were duly acknowledged and accepted by the Respondent/ Corporate Debtor in as much as is unequivocally reflected by the emails of 17.08.2018, 13.11.2018 and 22.11.2018 addressed to the Appellant/ Operational Creditor by the Respondent/ Corporate Debtor. The Corporate Debtor in its Reply to the Company Petition at para 30 and 31 only rejected invoices at Page 83 to 103 of the Petition, which in total amounts to INR 3,60,71,169. The remaining invoices have not been disputed by the Corporate Debtor.

A discrepancy in the invoices was alleged in the email of 13.11.2018 but no discrepancy was pointed in the email of 22.11.2018 issued after 09 days. The only issue raised was that the invoices and quantity are accepted but final amount is subject to certain costs which is to be discussed at the time of final reconciliation. Such costs were extraneous costs such as LD, generation loss and idle charges unconnected with the invoices. None of this qualifies as any defence with respect to the proceedings initiated through Form 4 of the Code which is based on invoices for work done and accepted. Additionally, the proceedings of arbitration initiated against SJVNL the Respondent/ Corporate Debtor did not put any blame on the Appellant/ Operational Creditor for Liquidated Damages, generation loss / idle charges but rather these costs were blamed solely on SJVNL, the project owner and thus clearly implying that no delay was attributable to the Appellant/ Operational Creditor and therefore all claims of Liquidated.

Appellant further states that the mention of a reconciliation in the email dated 22nd November 2018 is insignificant primarily because the invoices are firstly, accepted and therefore the reconciliation is irrelevant and secondly, the Respondent/ Corporate Debtor in its Statement of Claim filed in the arbitration between the Corporate Debtor and SJVNL at Para 85 summarizes the reasons for delay, which were not attributable to the Appellant/ Operational Creditor and further at Para 96 admits the completion of work by 18.04.2019. Further at Para 22- 23 of Reply filed by the Respondent/ Corporate Debtor to the Section 9 IBC application also accepts the completion of the project.

Appellant further submits that admittedly vide email dated 19.06.2019, the Appellant/ Operational Creditor had sought payments towards the outstanding invoices. Despite the receipt of the said email, the Respondent/ Corporate Debtor chose neither to respond nor to comply the same. The Respondent/ Corporate Debtor did neither dispute the amount claimed by the Appellant/ Operational Creditor nor questioned the nature and the quality of the work done.

The Respondent/ Corporate Debtor instead of complying with the Demand notice issued under IBC, as an afterthought, responded to the same via an interim Reply dated 17.07.2019 wherein the Respondent/ Corporate Debtor denied in totality any debts being due and on the contrary, illegally and arbitrarily, for the first time demanded from the Appellant/ Operational Creditor a sum of Rs 54,50,00,000/- in addition to other losses yet to be quantified only with the ultimate objective of conveying a semblance of dispute between the parties. The Corporate Debtor in the said reply does not refer to any existing dispute but only alleges dispute. Additionally, in furtherance to a modus operandi, the Respondent/ Corporate Debtor maliciously and as an afterthought, also issued a legal notice dated 04.02.2020 claiming a false and baseless amount of Rs. 54,50,00,000/-(Rupees Fifty-four Crores Fifty Lakhs Only) from the Appellant/ Operational Creditor and by way of the same legal notice, sought to invoke arbitration.

In the interim reply of 17.07.2019, the Respondent/ Corporate Debtor mentioned that it is yet to quantify other claims but in the notice of arbitration sent on 4.2.2020 still continued to claim the same amount and repeated the same statement that it is quantifying the same which clearly shows the frivolous nature of dispute raised and a clear after thought.

Merely because the ‘Corporate Debtor’ has disputed the claim by showing that there is certain counter claim, it cannot be held that there is pre-existence of dispute, in absence of any evidence to suggest that dispute was raised prior to the issuance of demand notice under Section 8(1) or invoice.

The Respondent/ Corporate Debtor with a fraudulent intention invoked the arbitration only as a counter blast to the proceedings initiated by the Appellant/ Operational Creditor under Section 9 the Code.

Respondent/ Corporate Debtor never sent any notice or email to the Appellant/ Operational Creditor alleging any delay or deficiencies in the work prior to the issuance of the demand notice.

NCLT also failed to consider that the Respondent/ Corporate Debtor has made a frivolous attempt to raise sham, vague and moonshine defence to establish a pre-existing dispute amongst parties to present matter.

NCLT while observing in the impugned order that the date of default was not mentioned by the Appellant/ Operational Creditor erred in not considering that the Demand Notice was sent under Section 8 of the IBC, 2016 as per Form 4 mentioned in Rule 5(1)(b) of Rules 2016 which prescribes the Form of Notice with which invoice demanding payment is to be attached. NCLT failed to consider that as per the prescribed Form 4 of IBC the date of default is not required to be mentioned when the notice u/s 8 IBC is being sent for unpaid invoices according to the provisions of the Act. NCLT, while dismissing the company petition on grounds that no date of default was mentioned, failed to consider that fact that non-mentioning of the date of default does not affect the merits of the case. NCLT vide the impugned order erred in dismissing the petition wrongly on the ground that the claim raised by the Appellant/ Operational Creditor falls within the ambit of disputed claim in complete disregard to the settled law that merely disputing a claim cannot be a ground as a claim means a right to payment even it is disputed.

Adjudicating Authority, in its Impugned Order, has rightly dismissed the Company Petition filed by the Appellant, on grounds of pre-existing disputes, ongoing arbitration and default having not occurred and such petition was not maintainable under Section 9 of the Code. Thus, the Appeal under reply is completely devoid of merits and liable to be set aside.

Appellant herein had issued demand notice dated 02.07.2019, and the Answering Respondent No. l has on 17.07.2019 raised notice of dispute under Section 8 (2) (a) of the Code referring to various disputes within the parties. Once notice of dispute was served upon the appellant herein the petition filed under Section 9 of the Code was rightly rejected in accordance with Section 9 (5) (ii) (d) of the Code The proceedings under Section 9 were summary proceedings and thus, the Hon'ble Adjudicating Authority has rightly rejected the petition based on pre-existing disputes between the parties.

The Respondent No.1 by Email dated 17.08.2018, had requested the Appellant herein to submit invoice along with work certificates against Sadia Project and to resolve the Tax Issues alongwith request to make a personal visit for following agendas to the discussed during the meeting: -

a. Invoice submission issue.

b. Tax issue to release revise order as per mutual agreement.

c. Balance sub lease schedule to be provided.

d. ROW issue relate to SDLT- 119 Firm Action Plant. As the WTG is erected long back.

e. Completion of balance feeder work.

f. Balance work completion schedule.

g. All pending document submission schedule related to Road & Line ROW.

Thereafter, even on 13.11.2018, on account of discrepancies in the invoices the Respondent No. l had communicated to the Appellant. Thereafter, on 22.11.2018, the Respondent No.1 have shared comments on the invoices submitted by the Appellant with specific note stating "the comments and acceptance of qty is based on the invoices submitted. This is not the final amount considered as we have not considered LD, Generation loss and ideal charges which lnox has paid to its customer. This needs to be discussed separately at the time of final reconciliation". Respondent No.1 had suffered various losses by way of liquidated damages and arbitration award by the customers on account of delay in work by the Appellant. Further the reconciliation was pending, and the deduction of LD was to be discussed with the Appellant.

The said issue of reconciliation was explained by the Answering Respondent No.1 by Email dated 05.12.2018 from Respondent No.4 herein wherein the entire dispute between the parties was summarized and a polite request to resolve was communicated to the Appellant stating that:

"Please come and reconcile as there are many anomalies as regards to your account in totality. Same has to be discussed with Project Development and Project execution along with settlement and reconciliation of Maharashtra invoices which are pending for years together. As Maruti, Bajrang are one and same companies, hence complete reconciliation for Gujarat and Maharashtra is must to do and which will require a good amount of time. This will certainly include pending points of Maharashtra and Gujarat both which being pending from years together. So please come prepared with your team for Gujarat and Maharashtra both commercial and technical pendencies from both side. Please take confirmation from us before coming to our Noida office. Also please reply first to our mails as regards to pendencies of Maharashtra documents balance land to be transferred, NA permissions 7112 permissions, WTGs left out for commissioning in Maharashtra because of reasons and short coming of Maruti. Hope to clear all issues in totality. We are ready to Co-operate on all fronts to resolve the same ".

The Answering Respondent No. 1 had referred and produced relevant evidence showing losses suffered by the Answering Respondent No.1 on default of the Appellant. In the Sadla Project Respondent No.1 had suffered liquidated damages to the tune of Rs.33,20,76,452/- and GST on such LD to the tune of Rs.6,95,72,580/- from SNN Ltd. and the Answering Respondent No.1 has filed arbitration proceedings wherein SJVN Ltd. had filed counter claim around Rs.500 Cr. against the parent company of Answering Respondent No. Further Answering Respondent No.1 had suffered LD of Rs.3.15 Cr. from ReNew from Sadla Project. The Answering Respondent No.1 had suffered LD of Rs.7,34,00,000/- from Green Infrawind Energy Ltd. Answering Respondent No.1 had suffered LD of Rs.3,22,77,1 I6/- from DJ Malpani Group.

With respect to Maharashtra Project Answering Respondent No.1 and its parent company faced arbitration award of Rs.26,96,61,926/- alongwith 9% interest from Surbhi Textile Mills Pvt. Ltd. and SJP Construction Pvt. Ltd.

Further the Answering Respondent No.1 has approx. recovery from the Appellant and its Associates to the tune of Rs.3,83,34,3 8,000/- Evidently the Appellant has claimed invoices for the Sadla Project and further, on the basis of MOUs between the parties the liquidated damages of Maharashtra Projects was to be recovered from Sadla Project. Thus, even otherwise the invoices claimed in Section 9 petition could not be claimed prior to reconciliation of accounts.

The Answering Respondent No.1 had time and again communicated to the appellant herein for reconciliation since it had huge receivables against the appellant herein and the Answering Respondent No.1 had suffered liquidated damages. The Adjudicating Authority had considered these communications between the parties and have referred in the impugned order. That, the Answering Respondent No. l had time and again requested the appellant herein for reconciliation of the accounts as well as pending points however, the Appellant herein had opted for issuing demand notice instead on reconciliation. The Hon'ble Apex Court in the case of Sabarmati Gas Ltd. vs. Shah Alloys Ltd. reported in AIR 2023 SC 288 has interpreted the term reconciliation and has held that a communication for reconciliation would reveal existence of pre-existing dispute between the parties. In view of the above it is evident that there was pre-existing disputes between the parties and the Hon'ble Ld. Adjudicating Authority has rightly referred to the above communications and relied on the judgment of Hon'ble Apex Court passed in Sabarmati Gas Ltd. vs. Shah Alloys Ltd. while dismissing the petition under Section 9 for pre-existing disputes

Respondent further avers that the Appellant had not mentioned any date of default in its Form 5. The Appellant was aware that the invoices claimed under the Section 9 petition was not in default as per the work orders. That the invoices are from 20.07.20I8 to I4.05.20I9 and as per the Clause 38 named as under payment terms Clause the default would occur after period of 365 days from the due date. Clause 38 is reproduced herewith: -

As per Clause 38 the default date of the invoices would be after 365 days of its due date. Without prejudice, that even considering the date of invoice as due date then also default if any would occur from 20.07.2019 to 14.05.2020. However, the date of demand notice of the Appellant is 02.07.2019 which is prior to the default of first invoice. Thus, on the date of issuance of demand notice none of the invoices claimed in Section 9 petition were under the term 'default'. Thus, the Section 9 petition was even otherwise premature and not maintainable.

Respondent avers that there is an ongoing arbitration between the Appellant and Answering Respondent No.1. The Answering Respondent No. 1 and the Operational Creditor are before the Arbitration Tribunal · compromising of Sole Arbitrator Hon'ble Mr. Justice D.K. Jain Former Judge of Supreme Court of India. The Answering Respondent No. 1 had invoked arbitration by notice of invocation dated 04.02.2020. Answering Respondent No. 1 had filed Arbitration Petition No.1094 of 2022 before the Hon'ble High Court of New Delhi under Section 11(3) and (4) of the Arbitration and Conciliation Act, I996 and by an order dated 24.01.2023, the Hon'ble High Court of New Delhi on request by both the parties have agreed for sole arbitrator instead of 3 Members Arbitral Tribunal. The Answering Respondent No. l herein had filed claim of Rs.95,98,08,670/- against the Appellant and these aspects were brought on record of Section 9 petition by an additional affidavit dated 10.07.2023.

Further the Appellant had filed counter claim of Rs.61,87,59,500/-, before the above arbitration proceedings which included the claim made in the Section 9 Petition. This aspect was brought to the notice of the Hon'ble Ld. Adjudicating Authority in the written arguments filed by the Corporate Debtor.

Adjudicating Authority had heard both the parties and reserved Section 9 Petition on 22.11.2023 and on 24.11.2023 the Arbitration Tribunal comprising of Hon'ble Sole Arbitrator Mr. Justice D.K. Jain, Former Judge Supreme Court of India had terminated the counter claims filed by the Appellant herein by a detailed order. The Appellant herein had filed an application dated 19.02.2024 for recall of order dated 24.11.2023 and revival of its counter claim before the Arbitration Tribunal comprising of Hon'ble Sole Arbitrator Mr. Justice D.K. Jain, Former Judge Supreme Court of India. However, by an order dated 15.03.2024 Arbitration Tribunal dismissed the application for reviving the counter claim of the Appellant. The Arbitration Tribunal while passing the order dated 15.03.2024 as recorded the arguments of the Ld. Counsel of the Appellant herein wherein it is the argument of the Appellant that the Counter Claim arises out of the 'dispute' is the relevant para of the order recording the arguments of the Appellant is incorporated herein below:-

Mr. Aslam Ahmed, Ld. Counsel for the Respondent/Applicant, reiterating the Respondent’s stand in the Application, contended that having regard to the provisions contained in Section 23 (2A) read with Section 21 of the Act, the arbitral proceedings are to be taken as a whole, as counter claim also arises out of the "disputes" within the remit of the agreement between the parties. It was asserted that the Claim and Counter Claim being interlinked with each other, cannot be segregated and are to be adjudicated together. In support of the proposition that a narrow approach of assuming that "dispute" means only the Claims does not subserve the ends of scheme of the Act, the decision rendered by the Hon'ble High Court of Delhi in SSMP Industries Ltd. v. Perkan Food, 2019 SCC Online Del. 9339, was pressed into service."

Being aggrieved by the order dated 15.03.2024 passed the Arbitration Tribunal, the Appellant herein had approached the Hon'ble High Court of New Delhi by way of Writ Petition (Civil) No.5058 of 2024, which had admitted the said Writ Petition (Civil) No.5058 of 2024. Thus, the counter claim of the Appellant, being rejected by the Arbitral Tribunal, the very same amount claimed in present Section 9 Petition was already dismissed by Arbitration Tribunal comprising of Hon'ble Sole Arbitrator. These aspects are deliberately not brought by the Appellant herein before this Hon'ble Appellant Tribunal.

Even otherwise as per the judgment of Sabarmati Gas Limited vs. Shah Alloys Limited reported in AIR 2023 SC 288 the Hon'ble Apex Court has opined that when agreement within the parties carries arbitration clause and arbitration proceedings being pending the parties shall be left with liberty to raise all contentions before the arbitrator. That, in the case of Sabarmati Gas Limited vs. Shah Alloys Limited the demand notice was issued on 01.04.2017 while the notice of arbitration was dated 29.11.2019, however, the arbitration proceedings being pending, the Hon'ble Apex Court directed the parties for adjudication before the arbitrator. The relevant para of the said judgment is incorporated hereinbelow: -

"…..

In the contextual situation, it is also relevant to refer to the fact, rightly taken note of by the NCLT, that the Respondent herein had filed a Commercial Suit No. 92/2017 on 28.04.2017 before the Commercial Court in Ahmedabad, claiming damages for the loss suffered by it due to discontinuation of gas supply. True that on 12.07.2018, the said Commercial Civil Suit was dismissed by the Commercial Court at Ahmedabad on the ground of being barred by limitation. Annexure-B would reveal that against the judgment of dismissal in the said suit, the Respondent herein had filed First Appeal No. 3841 of 2018 before the High Court of Gujarat at Ahmedabad. It was disposed of on 11.08.2021, taking into account the joint submission that parties be permitted to settle dispute through arbitration process. In this context it is also to be noted that the notice of arbitration dated 29.11.2019 has been issued by the Appellant itself. Recording the submission, the appeal was permitted to be withdrawn leaving the parties to proceed with arbitral process. This fact is not disputed and in fact, it is indisputable in view of Annexure-B, judgment dated 11.08.2021 of the High Court of Gujarat in Misc. First Appeal No. 3841of2018. In Annexure-B, it is recorded thus:

….. Both the learned Counsel have taken instructions and have jointly submitted that let the parties get their dispute settled through the arbitration process where learned former Judge of this Court, Justice J.C. Upadhyaya (Retired) has already been appointed as the arbitrator on 29.11.2019 and since then the matter is pending here.

….. In this context, it is also relevant to note that Gas Supply Agreement (GAS) which is an agreement entered into between the Appellant and the Respondent dated 30.05.2008 in regard to the supply of natural gas, contains an arbitration Clause viz., Clause No.

When the agreement entered into between the parties carries an arbitration Clause and when the parties mutually consented and sought to proceed with arbitration before the High Court and further, when the arbitration proceedings are pending, we are of the view that the parties shall be left with the liberty to raise all contentions before the arbitrator, except the legal questions discussed and decided in this judgment.

….”

Further on 07.11.2015 and 09.11.2015 the erstwhile representatives of the Appellant had entered into discussions and drawn minutes of such discussions held with the representatives of the Answering Respondent No. 1 and agreed on deduction of LD towards delay and generation loss of Maharashtra Project to be distributed and imposed on upcoming Sadla Project. After agreeing to adjustment of LD in upcoming Sadla Project the Answering Respondent No. 1 entered into MOU dated 07.01.2016 with the Appellant for the development of Sadla Project to be concluded by 31.12.2016. On account of this aspect the Answering Respondent No. l has time and again requested the Appellant herein to reconcile the accounts of the Appellant. However, the Appellant without any reconciliation and attempt for settling the disputes between the parties straight away filed the Section 9 petition.

Respondent No.1 further avers that the present appeal suffers from misjoinder of parties, as the Appellant has joined directors and ex-director of the Answering Respondent No. I while challenging the dismissal of Section 9 petition. Such attempt itself demonstrate the malicious intent of the Appellant to pressurize the Answering Respondent No. l and by joining ex-director who has already left the Answering Respondent No. l in present appeal would harm the reputation of the Answering Respondent No. l. Answering Respondent No. I is a listed entity and joining individuals in an appeal before this Appellate Tribunal on an order of dismissal of Section 9 petition is itself a malafide attempt to arm twist individuals who are managing the Answering Respondent No. l in their capacity and/or holding office in their individual capacity are being dragged in the present litigation. Joining a third party i.e. Respondent No.5 herein, who has already left the Answering Respondent No. 1 and joined other company would tarnish the reputation of the Answering Respondent No. 1. The present appeal deserves to be dismissed for such malicious attempt made by the Appellant herein.

Therefore, it is evident that the Answering Respondent No.1 had raised dispute which is evident from the communications prior to issuance of demand notice and had also filed arbitration proceedings which are pending and the disputes are prima facie and genuine. Respondent No.1 places its reliance on the judgment of the Hon'ble Supreme Court in Mobilox Innovations Pvt. Ltd. versus Kirusa Software Pvt. Ltd. (Civil Appeal Np. 9405 of 2017).

Therefore, in light of the undisputed facts of the present case as well as in light of the settled position of law, it is most respectfully submitted that the Appellant herein has failed to make out any case against the Impugned Order and thus, there is absolutely no merit in the captioned Appeal and thus, liable to be rejected. It is most respectfully submitted that the Ld. Adjudicating Authority has duly considered all facts and contentions raised by the Parties herein to dismiss the Petition filed by the Appellant herein. It is submitted that the Appellant had filed Section 9 petition wherein the debts were disputed, arbitration proceedings are pending, the invoices were not in default and the reconciliation of the accounts was also pending and thus, the Ld. Adjudicating Authority, in its Impugned Order, has rightly dismissed the petition filed by the Appellant.

We have heard the counsels of both sides and also perused material placed on record.

The main issue before us is whether the Appeal is maintainable on the grounds of pre-existing disputes.

We note that Appellant – M/s Sri Bajrang Wind Park Developers had entered into an MoU on 07.01.2016 with the Respondent No.1 – M/s Inox Wind Infrastructure Services Limited. This MoU was signed between the two parties for commissioning of Wind Turbine Generators on or before 31.12.2016. Respondent No.1 issued various purchase / work orders to the Appellant. On the request of the Appellant, basis email dated 23.06.2018 amended Work orders with GST rates were issued on 15.07.2018 for a total amount of about Rs 18.92 crs. Respondent No.1 claims that work orders and purchase orders specify that the terms and conditions of MoU dated 07.01.2016 shall be deemed to be part of the work order. [@71 APB].

We are informed that as per the target commissioning period, Appellant-Operational Creditor which was executing the works for the Respondent-Corporate Debtor delayed it beyond the agreed period between the parties and there is a claim that Corporate Debtor incurred huge losses and also suffered liquidated damages from its customers. The Respondent has listed various Liquidated Damages (LD) and ongoing litigations on account of delay which are noted as below:

Furthermore, there was email exchange going on between them to settle the accounts, the brief description of which is noted as below.

The email dated 17.08.2018, which is at 208 and 209 of APB clearly brings out discrepancies in the invoices. We find so many emails exchanged between the two parties, prior to the issuance of the demand notice issued on 02.07.2019 under Section 8 of Code. Furthermore, in Reply to the Section 8 demand notice also, the Corporate Debtor sent a notice of dispute by the Corporate Debtor to the Appellant on 17.07.2019. [@page 414 and 419 of APB].

We note that prior to issuance of the demand notice lot of disputes were going on between the Appellant and the Operational Creditor and they cannot be described as moonshine or frivolous disputes. They are pre-existing and substantial disputes. Therefore, the Section 9 petition is not maintainable. Therefore, we do not find any infirmity in the orders of the Adjudicating Authority -the operative part which is at para 19 and 20 reproduced as under:

From the pleadings and particularly email exchange which is on record, one can safely come to a conclusion that these are not spurious or moonshine disputes and these were pre-existing disputes. Thus, the Company petition under Section 9 of the Code is not maintainable and cannot be allowed. Accordingly, the conclusions of the Adjudicating Authority cannot be faulted upon and the Appeal deserves to be dismissed.

We also find that apart from the notice of dispute by the Corporate Debtor on 04.02.2020 the Corporate Debtor had also sent a legal notice to the Operational Creditor – Appellant claiming an amount of Rs.54.5 Crores.

We also note that there are pending arbitration proceedings before Hon’ble Mr. Justice D.K. Jain, Former Judge, Supreme Court of India. And on 24.11.2023, an order was made rejecting the counter claim made by the Operational Creditor – Appellant, which includes the amount claimed in Section 9 Petition. Furthermore, the Arbitral Tribunal rejected the application filed by the Operational Creditor - Appellant on 15.03.2024 for recall of the order dated 24.11.2023. The Appellant has also gone to Hon’ble High Court and the proceedings are pending without any interim direction.

Furthermore, we also find that date of default is not mentioned in the invoices. These invoices were issued vide letter dated 27.03.2018 onwards and as per the terms and conditions of the work order and MoU. Respondent contends that the event of default will occur only after 365 days of the issue of the invoice. Since the invoice starts from 20.07.2018 to 14.05.2019, the default will happen from 2019 till 14.05.2020. We find that merit in the argument of the Respondent No.1 that the demand notice is premature, as it is issued before the default has occurred and there was no default at all.

Respondent No. 1 has also heavily relied upon the judgement of Hon’ble Apex Court in Sabarmati (supra) to argue that a communication for reconciliation would reveal existence of pre-existing dispute between the parties. The relevant observations made by the Hon'ble Apex Court are incorporated herein below:-

[Emphasis Supplied]

Respondent No.1 has relied on the landmark judgment of Hon'ble Supreme Court, in the matter of Mobilox Innovations Pvt. Ltd. versus Kirusa Software Pvt. Ltd. (Civil Appeal Np. 9405 of 2017) wherein it has clearly held the following with respect to pre-existing dispute between the Parties:

It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the "existence" of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the "dispute" is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application ...”

This judgement fully supports the case of the Respondent No.1 in the rejection of the Appeal.

Thus, in the facts and circumstances of the case, without relying on the arguments raised by the Respondent No1 that the event of default has not happened and also not relying on the pending arbitration as also misjoinder of parties, we find that owing to the pre-existing dispute, particularly due to pending reconciliation, Section 9 Petition under the Code is not maintainable and accordingly, the appeal deserves to be dismissed.

When the matter was taken up for pronouncement on 13.02.2026, the Counsel for the Appellant appeared and submitted that Appellant and the Respondents have settled their dispute and they have filed an IA No. 1161 of 2026 on 13.12.2025 but this IA was not yet taken on the record by the registry. On perusal of this IA No. 1161 of 2026, which was presented in the open court, we note that it has the following prayers:

It will be appropriate to note our orders dated 13.02.2026 in which we have concluded as follows:

Thereafter, when the matter was taken up again on 19.02.2026, we noted as follows:

We note that the Appellant is seeking to permit to withdraw the Appeal and also in case settlement is not complied with, it wants to revive the Appeal. The matter was not pronounced on 13.02.2026 and was taken up again on 19.02.2026, wherein a last opportunity was given to the Appellant to settle the matter by 26.02.2026, and in case the parties do not settle the matter by 26.02.2026 the judgment would be pronounced by 27.02.2026. Till date, no settlement agreement has been brought to our notice and any consent of Respondent. Accordingly, we are constrained to pronounce the judgment and accordingly, the order is being pronounced.

We do not find any infirmity in the orders of the Adjudicating Authority. Accordingly, we dismiss this Appeal. All related IAs are also dismissed. No orders as to costs.