The National Company Law Appellate Tribunal (NCLAT) on Thursday upheld the NCLT Chandigarh Bench’s decision, dismissing Drilltech Engineers’ appeal challenging the rejection of its insolvency petition against real estate giant DLF.
Drilltech Engineers had filed a Section 9 plea before the NCLT seeking insolvency proceedings against DLF over unpaid dues for piling work at a Goa project. However, the NCLT rejected the petition on January 10, citing a pre-existing dispute. DLF had raised concerns about defective work and delays as early as December 2021 and even issued a show cause notice before Drilltech's demand notice. The Tribunal held that the existence of a genuine dispute barred the initiation of insolvency proceedings.
A bench led by Chairperson Justice Ashok Bhushan, along with Technical Members Barun Mitra and Arun Baroka, held, “we find that there is lot of communication exchanged between the two parties indicating pre-existing dispute, which cannot be ignored and which cannot be said to be moonshine or spurious and it is much prior in time to the issuance of demand notice by the Operational Creditor – Drilltech Engineers. The final SCN dated 21.06.2022 issued by Corporate Debtor, prior to the demand notice of the Operational Creditor dated 01.07.2022 succinctly captures the pre-existing dispute. We therefore conclude that these are pre-existing disputes which cannot be adjudicated by NCLT and this need to be settled at appropriate forum. The law is very clear that as per Section 9(5)(ii)(d) of the Code, on existence of pre-existing dispute, the application is not maintainable.”
The NCLAT upheld the NCLT's decision rejecting Drilltech Engineers' Section 9 application, citing a clear pre-existing dispute between the parties before the issuance of the demand notice. It found no fault in the NCLT’s order and dismissed the appeal, allowing the appellant to pursue other legal remedies.
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