NCLAT junks Reliance Realty's plea for insolvency against Altruist Customer Management

New Delhi, Mar 9 (PTI) Corporate dispute appellate tribunal NCLAT has set aside an appeal filed by Reliance Realty seeking insolvency proceedings against Altruist Customer Management.

A three-member bench of the appellate tribunal upheld the order of the Delhi-based National Company Law Tribunal (NCLT) which had rejected the insolvency plea after it observed a pre-existing dispute between the parties.

The NCLT, on October 5, 2024, dismissed the plea after it observed a dispute of over Rs 24.34 crore.

"We therefore don't find any infirmity in the conclusions and the findings of the Adjudicating Authority (NCLT). Adjudicating Authority correctly rejected the Section 9 petition due to the existence of a bona fide dispute," the appellate tribunal said.

Reliance Realty, as an operational creditor, had filed a Section 9 Petition on account of operational debt, which is rental dues for the period between May 2019 and September 2022 owed by Altruist Customer Management for possession and occupation of a premise situated at TTC Industrial area in Thane, Maharashtra, comprising ground plus three upper floors each admeasuring 11,566 square metres.

NCLT Delhi dismissed the application on the grounds of a pre-existing dispute relating to the percentage of debt liable to be paid to Reliance Realty by Altruist Customer Management as per the licence agreement.

This was subsequently challenged by Reliance Realty before the National Company Law Appellate Tribunal (NCLAT).

However, NCLAT also rejected it, saying: "We find this dispute is not a moonshine or illusory and cannot be determined in the insolvency proceedings." According to NCLAT, the dispute is prior to 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 mandate the rejection of the Section 9 petition.

"We find in this case that a disputed fact needs to be appreciated based on evidence under the Indian Evidence Act, and in such a situation, the adjudicating authority's role is limited to ascertaining if the genuine dispute is present or not," the NCLAT said.

Even evidence such as an arbitration notice or termination notice, or a reply to termination notice, are signals of pre-existing disputes, and this Tribunal should not get involved in sifting through complex contentions on giving a judgment on the merits of the dispute, said NCLAT.

"The appeal filed by appellant Reliance Realty Limited is accordingly dismissed with no costs," said NCLAT in its 53-page-long order. PTI KRH HVA