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NCLAT: ‘Claim’ means a right to payment even if it is disputed

In Company Appeal (AT) (Insolvency) No. 703 of 2018, Ahluwalia Contracts (India) Limited vs Raheja Developers Limited, the plaintiff had filed an application under Section 9 as Operational Debtor which was rejected by the NCLT citing existence of dispute and an arbitration proceeding  against the claim.

On appeal, the NCLAT referring to the judgements of the Supreme Court in Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software (P) Limited− 2017 & Innoventive Industries Ltd. v. ICICI Bank and Anr., observed that from the aforesaid findings, it is clear that ‘claim’ means a right to payment even if it is disputed. Therefore, 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. In the present case, it is not in dispute that the arbitration proceeding was initiated by the Respondent after about one month from the date of issuance of demand notice under Section 8(1). Therefore, the ‘Corporate Debtor’ cannot rely on arbitration proceeding to suggest a preexisting dispute. There is nothing on the record to suggest that the ‘Corporate Debtor’ raised any pre-existing dispute relating to quality of work performed by Appellant. The ground of delay in execution of work cannot be noticed to deny admission of application under Section 9, the ‘Corporate Debtor’ having allowed the Appellant to execute the work and certified all the bills.


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