The law is clear on the issue of multiplicity of suits wherein multiple suits cannot be filed in case a dispute of a similar nature is already pending before another court of law. However, in case of pendency of cases for dishonour of cheque for the same disputed amount is already pending, the question before the NCLAT arose in Sudhi Sachdev Versus APPL Industries Ltd was whether such existence of cases would be considered as a dispute pending before another court of law thereby being a ground for rejection of an application under Section 9 fo the IBC?

Section 9 of the Insolvency and Bankruptcy Code (IBC) grants the right to an Operational Creditor to file an application for insolvency before the NCLT against the Corporate Debtor in case of failure to pay the unpaid operational debt. In the present appeal, the Appellant referred to the judgment of the Hon’ble Supreme Court in R. Vijayan Vs. Baby and Anr. (2012) 1 SCC 260, and submitted that

“……the proceeding under Section 138 is really a civil cases of recovery of the money, therefore, in view of the pendency of such case, application under section 9 of I&B Code is not maintainable”

The Bench of Chairperson Justice SJ Mukhopadhyaya and Member Justice Bansi Lal Bhat, however, laid reference to the decision of the Hon’ble Supreme Court in Innoventive Industries Ltd. Vs. ICICI Bank and Ors (2018)1 SCC 407 which stated as follows:

“29. The scheme of Section 7 stands in contrast with the scheme under Section 8 where an operational creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the operational debtor in the manner provided in Section 8(1) of the Code. Under Section 8(2), the corporate debtor can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned in sub-section (1), bring to the notice of the operational creditor the existence of a dispute or the record of the pendency of a suit or arbitration proceedings, which is pre-existing – i.e. before such notice or invoice was received by the corporate debtor. The moment there is existence of such a dispute, the operational creditor gets out of the clutches of the Code.”

The NCLAT, in the present appeal, observed that pendency of Section 138 cases would not be considered as an existing dispute in lieu of Section 9 of IBC but would merely be considered as the existence of a debt and dismissed the appeal.

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Order: Sudhi Sachdev Versus APPL Industries Ltd