Poaching Of Employees By The Operational Creditor Does Not Fall Within The Ambit Of Pre-Existing Dispute: NCLT Kolkata

The National Company Law Tribunal, Kolkata Bench, comprising Shri Rohit Kapoor and Shri Balraj Joshi, while adjudicating an application under Section 9 of Insolvency and Bankruptcy Code, 2016 in India Medtronic Private Limited vs Healthcare Associates Private Limited has refused to term poaching of employees by the Operational Creditor as a pre-existing dispute. Background Facts India Medtronic Private limited and Healthcare Associates Private Limited entered entered into a Non-exclusive Distribution Agreement effective from 25.04.2015 until 28.04.2017 vide which the Corporate Debtor was appointed the non-exclusive distributor for sale of the products of the Operational Creditor in Eastern and North Eastern India. However, the Corporate Debtor filed a Money Suit after the issuance of the Demand Notice contending that the Corporate Debtor was unable to recover its dues from the market due to absence of employees poached by the Operational Creditor It was submitted by the Operational Creditor that the Corporate Debtor had given an undertaking dated 17.08.2018 whereunder the Operational Creditor had agreed to assist the Corporate Debtor in recovering its dues in exchange of the right to adjust 50% of the amount recovered from the market. However the Operational Creditor breached the reciprocal obligations laid down in the undertaking by not taking any steps to assist the Corporate Debtor in recovery of dues from the market. Even though the Corporate Debtor had blamed the Operational Creditor for causing business losses due to poaching of its employees, this action cannot be called a pre-existing dispute as it did not fit the definition of genuine dispute given under the Supreme Court judgment of Mobilox Innovations Private Limited v. Kirusa Software Private Limited.