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2022 (5) TMI 1312 - AT - Insolvency and BankruptcyInitiation of CIRP - existence of debt and dispute or not - whether the Demand Notice was either delivered or rejected ? - NCLT admitted the application - HELD THAT - It is an admitted fact that the Operational Creditor and the Corporate Debtor entered into a Fuel Supply Agreement (FSA) on 14.10.2015 whereunder the Corporate Debtor had agreed to purchase Biomass Fuel form the Operational Creditor on the terms and conditions stated in the said Agreement. It is seen from the FSA that five types of fuel Cotton Stalk, Cane Trash, Corn Cob, Soya Hush and Juliflora were agreed to be supplied individually or in a combination thereof. A perusal of the invoices raised by the Operational Creditor from 01.06.2016 to 26.04.2016 show that the total amount was Rs.1,79,13,261/- for Biomass Fuel, Cane Trash and Cotton Chip. The material on record establishes that this amount has been acknowledged by the Corporate Debtor in their ledger and in the confirmation letter dated 01.04.2016 and 01.05.2016. The amounts were repeatedly requested to be paid by the Operational Creditor vide emails dated 09.04.2016, 19.04.2016 and 17.08.2016 - Article 6.1 of the Fuel Supply Agreement that Fuel would be supplied by the Operational Creditor, the rate whereof, would be agreed by and between the parties as per mutual discussions in the yearly collection and supply plan. To state that the Application was non-compliant of Section 8 of the Code and deserves to be dismissed, is unsustainable. Having regard to the admission of the liability in the correspondences and in the ledger confirmation letters read with the invoices raised over a period of time from 2016 onwards for supply of both Cane Trash and Cotton Stalk, this Tribunal is of the earnest view that the dispute raised by the Appellant at this belated stage, having accepted the fuel over a duration of time, is a patently feeble argument, unsupported by any substantial evidence. Appeal is devoid of any merit and is dismissed.
Issues Involved:
1. Pre-existing dispute regarding the quality and type of fuel supplied under the Fuel Supply Agreement (FSA). 2. Compliance with the service of Demand Notice under Section 8 of the Insolvency and Bankruptcy Code (IBC). 3. Admission of liability by the Corporate Debtor. 4. Adjudicating Authority's handling of the counter-petition filed by the Corporate Debtor. Detailed Analysis: 1. Pre-existing Dispute Regarding Quality and Type of Fuel: The Appellant contended that the Operational Creditor supplied Cotton Stalk instead of Cane Trash, violating the terms of the FSA. The Corporate Debtor highlighted that Cotton Stalk has a higher moisture content, resulting in lower calorific value, and demanded compensation for non-supply of Cane Trash. However, the Tribunal found this argument untenable, noting that the FSA allowed for the supply of various types of biomass fuel, including Cotton Stalk. The Corporate Debtor neither returned the fuel nor invoked the cancellation clause of the FSA, indicating acceptance of the supplied fuel. The Tribunal concluded that the dispute raised was a "patently feeble argument, unsupported by any substantial evidence." 2. Compliance with the Service of Demand Notice: The Appellant argued that the Demand Notice dated 23.02.2018 was not received at the registered office address, thus non-compliant with Section 8 of the IBC. The Tribunal, however, noted that the Postal Department confirmed delivery of the Notice to "Shingvetukai BO," which is the location of the Corporate Debtor's registered office. The Tribunal found the Appellant's claim unsustainable and emphasized that the Demand Notice was duly served. 3. Admission of Liability by the Corporate Debtor: The Tribunal observed that the Corporate Debtor acknowledged the debt in ledger confirmation letters dated 01.04.2016 and 01.05.2016. The invoices raised by the Operational Creditor from 01.06.2016 to 26.04.2016, amounting to Rs. 1,79,13,261/-, were acknowledged by the Corporate Debtor. The Tribunal found that the Corporate Debtor's subsequent legal notices were an afterthought to avoid liability, especially since the fuel was accepted and consumed without invoking any contractual remedies. 4. Adjudicating Authority's Handling of the Counter-Petition: The Appellant criticized the Adjudicating Authority for not disposing of the counter-petition (C.P. No. 3741 of 2019) along with the Section 9 Petition. The Tribunal clarified that the counter-petition was dismissed for non-prosecution. It emphasized that the Appellant's liability was evident from the correspondences and ledger confirmations, and the dispute raised was not substantial enough to affect the outcome. Conclusion: The Tribunal concluded that the Appellant's arguments were unsupported by substantial evidence and dismissed the appeal. The Tribunal applied the ratio of the Hon’ble Supreme Court in 'Mobilox Innovations Private Limited Vs. Kirusa Software Private Ltd.', emphasizing that the dispute raised was not genuine and was merely a tactic to evade liability. The appeal was found devoid of merit and dismissed accordingly.
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