The National Company Law Appellate Tribunal (NCLAT) New Delhi, recently pronounced a judgment in the case of NTT Data Business Solutions Pvt. Ltd. v/s Trident Ltd.; Company Appeal (AT) (Insolvency) No. 1228 of 2023, wherein the Tribunal held that the response of the Operational Creditor to a notice invoking arbitration stating the absence of disputes, wouldn’t necessarily deter the NCLT from recognizing existing disputes based on the material on record.
The case involved a contract between NTT Data Business Solutions Pvt. Ltd. (“Operational Creditor/Appellant”) and Trident Ltd. (“Corporate Debtor”), with the latter issuing a notice invoking arbitration under Section 21 of the Arbitration and Conciliation Act, 1996. In response to such notice, the Operational Creditor denied any existing disputes. Subsequently, the Operational Creditor issued a Demand Notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) to the Corporate Debtor and filed a petition seeking initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the IBC. The NCLT dismissed the petition, citing a pre-existing dispute between the parties. Subsequently, the Operational Creditor appealed this decision before the NCLAT.
The NCLAT in its judgement highlighted that arbitration had been invoked and an arbitrator was appointed even before the Demand Notice was issued. The notice from the Corporate Debtor detailed deficiencies in services and urged dispute resolution through arbitration. Therefore, the response of the Operational Creditor denying the existence of any prior dispute, would not preclude the Tribunal from acknowledging the detailed dispute raised in the Corporate Debtor’s arbitration notice.
The NCLAT also emphasized that merely replying to the arbitration invocation notice by stating the absence of disputes couldn’t be the sole reason to overlook the elaborate and detailed issues outlined in the Corporate Debtor’s notice.
Author of this article:
Adv. Ravish Bhatt,
Partner, R&D Law Chambers,
Dual Qualified Lawyer Solicitor | International Tax Affiliate
Connect with Mr. Bhatt on Linkedin: https://www.linkedin.com/in/adit-ravishbhatt/
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