Supreme Court resolves disputes over ‘dispute’

A UN legislative guide states that insolvency law “should be transparent and predictable”. In India, different interpretations of the definition of “dispute” under the Insolvency and Bankruptcy Code, 2016, had led to disputes and uncertainty. That uncertainly was put to rest by the Supreme Court in Mobilox Innovations Pvt Ltd v Kirusa Software Pvt Ltd.

Mobilox had engaged the services of Kirusa in relation to a television programme. To this end, the parties had also executed a non-disclosure agreement (NDA). Disputes arose as Kirusa claimed that Mobilox was withholding payments against its invoices and Mobilox contended that it was entitled to do so because Kirusa had breached the NDA.

Kirusa then issued a demand notice under section 8(1) of the Insolvency and Bankruptcy Code. Mobilox, in reply to that notice, disputed the liability, claiming that nothing was due to Kirusa owing to Kirusa’s breaches of the NDA and that the notice was aimed at putting pressure on Mobilox.

Sneha Jaisingh and Shreya Gupta are senior associates at Bharucha & Partners.