Page 18 - IBC Orders us 7-CA Mukesh Mohan

Order Passed by Sec 7
Hon’ble NCLT Principal Bench
(2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of

the invoice mentioned in sub-section (1) bring to the notice of the operational creditor—

(a) existence of a dispute, if any, and record of the pendency of the suit or arbitration proceedings filed

before the receipt of such notice or invoice in relation to such dispute; (b) the repayment of unpaid
operational debt--

0) by sending an attested copy of the record of electronic transfer of the
unpaid amount from the bank account of the corporate debtor; or

(ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by
the corporate debtor.

Explanation.—For the purposes of this section, a "demand notice" means a notice served by an
operational creditor to the corporate debtor demanding repayment of the operational debt in respect of
which the default has occurred.

21. A co-joint perusal of the aforesaid provisions makes it clear that a corporate debtor has option
available under section 8(2) of the Code. The corporate debtor could either place on record material

disclosing the existence of a dispute or to pay the unpaid debt. According to section 5(b) of the Code the
expression dispute includes a suit or arbitration proceedings relating to (a) the existence of the amount

due; (b) the quality of goods or service or (c) the breach of representation or warranty. The definition of
the word 'dispute' is not exhaustive but is, in fact illustrative. In other words a 'corporate debtor' is not left
with the only option of showing the existence of dispute by way of a pending suit, arbitration or to show

the breach of representation or warranty. The corporate debtor would be well within his right to show that
'goods' and services were not supplied at all or the supply was far from satisfactory in case of demand
raised by an 'operational creditor'. Hence a corporate debtor would be well within his rights to reject the

demand on any sustainable grounds. It would therefore, depend on the facts and circumstances of each
case.

22. In the instant case an arbitral award has been announced on 9.9.2016 and the application for
setting aside the award filed under section 34 of the Arbitration Act has been rejected on 19.12.2016. It
has been mentioned by the respondent in its reply dated 27.01.2017 sent under section 8(2) of the Code to

the notice issued under section 8(1) of the Code by the applicant that the debt is disputed and appeal
under section 37 of the Arbitration Act is pending. The reply dated 27.1.2017 reads as under:-

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