New Delhi, March 9 The National Company Law Tribunal (NCLAT), the corporate dispute appellate tribunal, has dismissed Reliance Realty's appeal seeking insolvency proceedings against Altruist Customer Management.
A three-member bench of the appellate tribunal upheld the order of the National Company Law Tribunal (NCLT) based in Delhi, which had rejected the insolvency plea after observing a pre-existing dispute between the parties.
The NCLT, on October 5, 2024, dismissed the plea after observing a dispute of over Rs 24.34 crore.
"Therefore, we find no flaw in the conclusions and findings of the Adjudicating Authority (NCLT). The Adjudicating Authority correctly rejected the Section 9 petition due to the existence of a genuine dispute," the appellate tribunal said.
Reliance Realty, as an operational creditor, had filed a Section 9 Petition based on operational debt, which is rental dues owed by Altruist Customer Management for the period between May 2019 and September 2022 for possession and occupation of a property located in the TTC Industrial area in Thane, Maharashtra, comprising a ground floor plus three upper floors, each measuring 11,566 square metres.
The NCLT, Delhi, dismissed the application based on a pre-existing dispute regarding the percentage of debt that Altruist Customer Management was liable to pay to Reliance Realty, as per the licensing agreement.
This was subsequently challenged by Reliance Realty before the National Company Law Appellate Tribunal (NCLAT).
However, NCLAT also rejected it, stating: "We find that this dispute is not fictitious or illusory and cannot be determined within the framework of insolvency proceedings."
According to NCLAT, the dispute predates the issuance of the demand notice under Section 8 of the IBC, thereby triggering the provisions under Section 9(5)(ii) of the Code, which mandates the rejection of the Section 9 petition.
"In this case, we find that a disputed fact needs to be assessed based on evidence under the Indian Evidence Act, and in such a situation, the adjudicating authority's role is limited to ascertaining whether a genuine dispute exists or not," the NCLAT said.
Even evidence such as an arbitration notice or a termination notice, or a reply to a termination notice, are indicators of pre-existing disputes, and this Tribunal should not get involved in sifting through complex arguments to render a judgment on the merits of the dispute, said NCLAT.
"Accordingly, the appeal filed by appellant Reliance Realty Limited is dismissed with no costs," said NCLAT in its 53-page-long order.