# In the matter of Vipin Choudhary vs. Connect Residuary Pvt. Ltd. & Ors.

> NCLAT judgment dated 2023-08-18. Citation: TCN-2023-NCLAT-00269. The case involves an appeal against an order passed by the National Company Law Tribunal…

- **Court:** NCLAT
- **Order date:** 18 Aug 2023
- **Citation:** TCN-2023-NCLAT-00269
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/vipin-choudhary-vs-connect-residuary-pvt-ltd-ors-57a6f459

## Summary

### Background

The case involves an appeal against an order passed by the National Company Law Tribunal (NCLT), Mumbai Bench, which initiated the Corporate Insolvency Resolution Process (CIRP) against MT Educare Limited based on an application filed by Connect Residuary Pvt Ltd, an operational creditor. The operational creditor claimed that MT Educare defaulted on payments for rented IT equipment under a Master Rental Agreement (MRA). The NCLT admitted the application under Section 9 of the Insolvency and Bankruptcy Code (IBC).

## Facts

Connect Residuary Pvt Ltd (Operational Creditor) and MT Educare Limited (Corporate Debtor) entered into a Master Rental Agreement (MRA) for renting IT equipment. MT Educare started defaulting on rent payments from July/August 2019. Connect Residuary sent follow-up emails in March 2020, which were ignored. MT Educare returned some rented assets between December 2020 and January 2021, with some assets damaged. Connect Residuary claimed damage costs, which MT Educare initially concurred with but later proposed revised rent rates. Connect Residuary issued a demand notice under Section 8 of the IBC on August 26, 2021, for an operational debt of Rs. 5,37,65,669. MT Educare did not respond. MT Educare argued that the actual outstanding debt was below the threshold due to

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## Issues and analysis

### Issue 1: Whether there was a pre-existing dispute between Connect Residuary Pvt Ltd and MT Educare Limited …

**Ratio:** A pre-existing dispute must be a bona fide and genuine dispute, not a mere after-thought

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**Reasoning:** The NCLAT examined the emails exchanged between the parties and found that they did not

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**Interpretation:** The court interpreted the emails exchanged between the parties to determine

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**Application:** The NCLAT applied the ratio to the facts of the case, finding that the emails

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## Parties

- **Judges:** Rakesh…; Alok Sriv…
- **Appellants:** Vipin Cho…
- **Respondents:** MT Educar…; Connect Residuary…

## Timeline

- **2019-07-01 — Default in Rent…**: MT Educare Limited started defaulting on rent…
- **2020-03-05 — Follow-up…**: Connect Residuary Pvt Ltd sent follow-up emails to MT Educare Limited regarding the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(21) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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