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Citicare Super Specialty Hospital v. Vighnaharta Health Visionaries Pvt. Ltd. .
Summary of Opinion — Company Appeal (AT) (Insolvency) No. 414 of 2019
Factual and Procedural Background
The Appellant, M/s. Citicare Super Specialty Hospital (Operational Creditor), filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of the Corporate Insolvency Resolution Process against M/s. Vighnaharta Health Visionaries Pvt. Ltd. (Corporate Debtor). The Adjudicating Authority (NCLT, Mumbai Bench) rejected the Section 9 application by an order dated 11th March, 2019. The Appellant challenged that rejection by filing the present appeal, listed as Company Appeal (AT) (Insolvency) No. 414 of 2019.
Legal Issues Presented
- Whether a Section 9 application for initiation of Corporate Insolvency Resolution Process can be entertained where there exists a dispute between the parties as to amounts to be adjusted pursuant to a prior agreement (including adjustment against a deposit and other dues).
- Whether alleged "admitted dues" by the Respondent preclude the existence of a dispute sufficient to block admission of a Section 9 application.
Arguments of the Parties
Appellant's Arguments
- The Respondent admitted that rent for certain periods is due and that other dues have not been paid; these amounts are reflected in the Respondent's books of account.
Respondent's Arguments
- The Respondent's counsel contended that there exists a dispute between the parties.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The court examined the sequence of events and documentary material on record. The Demand Notice in the matter was issued by the Appellant on 28th February, 2018. Prior to that, on 22nd February, 2018, the Respondent had sent an e-mail to the Appellant. The e-mail recorded that, at a meeting held on 31st March, 2017, the parties had mutually agreed that the remaining rent would be adjusted against a sum of Rs. 40 lakhs deposited with the Appellant and that other dues (for example, electricity bills paid by the Corporate Debtor) would also be adjusted. The e-mail also reflected that the parties had discussed settlement through an arbitrator.
Based on these facts, the court reasoned that even if certain amounts were admitted to be due, there was a contemporaneous and genuine dispute regarding calculation and adjustment of the sums payable—specifically, whether amounts should be adjusted against the deposited Rs. 40 lakhs and other payments. The existence of that dispute meant the Section 9 application could not be entertained.
Holding and Implications
Holding: Appeal dismissed.
Direct effect: The appeal against the Adjudicating Authority's rejection of the Section 9 application was dismissed and the Section 9 application was not admitted. The court recorded "No costs."
Broader implications: The opinion applies the principle that a Section 9 application cannot be admitted where a genuine dispute exists as to the amounts claimed (here, an adjustment agreement and proposed arbitration were on record). The opinion does not purport to lay down new precedent beyond the case-specific conclusion and does not state any broader novel legal principle.
18.10.2019 The Appellant- M/s. Citicare Super Specialty Hospital- (Operational Creditor) filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (I&B Code for short) for initiation of the Corporate Insolvency Resolution Process against M/s. Vighnaharta Health Visionaries Pvt. Ltd.- (Corporate Debtor). It having been rejected by the impugned order dated 11th March, 2019 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Mumbai, the present appeal has been preferred.
2. Learned counsel for the Appellant submits that the Respondent has admitted the rent of certain periods to be due and that other dues have not been paid and they are also reflected in the Books of Accounts. Company Appeal (AT) (Insolvency) No. 414 of 2019
3. On the other hand, according to learned counsel for the Respondent, there is an existence of dispute.
4. From the record, we find that the Demand Notice was issued by the Appellant on 28th February, 2018. Prior to the issuance of the Demand Notice, the Respondent sent e-mail to the Appellant on 22nd February, 2018, which is as follows: Company Appeal (AT) (Insolvency) No. 414 of 2019
5. From the aforesaid e-mail, we find that both the parties in the meeting held on 31st March, 2017 have mutually agreed that the remaining rent will be adjusted against Rs.40 lacs deposited with the Appellant and some other dues like electricity bill etc. to be adjusted which was paid by the Corporate Debtor. It further stated that they have discussed for a Settlement through an Arbitrator.
6. In view of the aforesaid fact, even if it is argued that there are admitted dues, the application under Section 9 cannot be entertained, Company Appeal (AT) (Insolvency) No. 414 of 2019 there being an existence of dispute relating to amount which is to be adjusted from the amount payable by the Appellant with the Respondent. In absence of any merit, the appeal is accordingly, dismissed. No costs. (Justice S.J. Mukhopadhaya) Chairperson (Justice A.I.S. Cheema) Member(Judicial) (Kanthi Narahari) Member(Technical) Ar/g
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