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TMI Blog2019 (2) TMI 1570X X X X Extracts X X X X X X X X Extracts X X X X ..... was there since long before the initiation of present proceeding. Resultantly, this proceeding is dismissed for the reasons aforementioned. - Dy. No. 3(081) of 2018. - - - Dated:- 17-9-2018 - P. K. Saikia Judicial Member For the Operational Creditor : Purshotam Gaggar , CA For the Corporate debtor : Dr. Ashok Saraf , Senior Advocate assisted by Suman Chetia ORDER P. K. SAIKIA (JUDICIAL MEMBER). - 1. This is an application under sections 8 and 9 of the Insolvency and Bankruptcy Code, 2016, read with rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, has been filed by M/s. Hillview Coals P. Ltd., hereinafter referred to as the operational creditor or OC seeking initiation of corporate insolvency resolution process against M/s. Super Infratech P. Ltd., hereinafter referred to as the corporate debtor or CD . 2. Heard Mr. Purshotam Gaggar, CA, learned legal representative appearing for the operational creditor. Also heard Dr. Ashok Saraf, learned senior advocate assisted by Mr. Suman, Chetia, advocate appearing for the CD. 3. It may be stated that M/s. Hillview Coals P. Ltd. is having its registered o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CD did not pay the amount which became due on and from March, 2010. In such a situation, the OC filed a money suit, same being Money Suit No. 115 of 2013 on arraying the CD as one of the defendants therein and such suit was instituted before the civil judge, Senior Division at Kamrup, Guwahati seeking a decree in respect of dues due to the OC together with interest accrued thereon. 8. The CD entered appearance and contended that the Civil Judge, Senior Division at Kamrup, Guwahati had no territorial jurisdiction to try such a suit. However, the trial court on hearing the parties was pleased to dismiss such a plea. The matter was thereafter carried to the hon'ble Gauhati High Court and the hon'ble High Court, on hearing the parties, set aside the order of the trial court holding that the court at Gauhati had no territorial jurisdiction to try such a suit and directed the trial court to render necessary order as indicated in the order dated September 16, 2017 in C. R. P. No. 130 of 2014. 9. Having found no other way out, the OC was forced to issue a demand notice dated January 11, 2018 in Form No. 4 as required under section 8(1) of the Code of 2016, which was served ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had owed a debt to the OC. In other words, there was a pre-existing dispute regarding the debt aforesaid. In support of such contention, it has been argued that the CD was awarded the contract in question by BCPL in 2008, the value of which was estimated at ₹ 26,19,75,550.00 (rupees twenty-six crore, nineteen lakh, seventy-five thousand five hundred and fifty only). Such work was to be executed within a certain time frame. 15. CD allotted a part of such work to the applicant (OC) vide agreement dated November 10, 2008. As per the agreement dated November 10, 2008, the OC was to complete the work within the stipulated time period as per the Department's instructions and in the event of failure to complete the work-in-time, the OC had to bear the penalty, if any, as imposed by the Department, unless such delay in execution of the work occurred due to the default on the part of the Department. 16. The OC could not complete the work as per the agreement dated November 10, 2008. Rather it abandoned the work mid-way and left the site for which the CD had to engage another contractor, same being Ch. Sethpal Construction Co., for doing the leftover work which was earlier a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted work. The OC by letter dated January 21, 2013 had disputed such demand and reiterated claim made in its earlier notice vide notice dated September 6, 2012. 21. Soon thereafter, the OC filed a money suit before the Civil Judge, Sr. Division, Kamrup at Guwahati, vide Money Suit No. 115 of 2013 for recovery of an amount to the tune of ₹ 2,78,48,325. (rupees two crore seventyeight lakh forty-eight thousand three hundred twenty-five and paise fifty only) from the CD along with pendente lite interest at 18 per cent. Per annum till realisation of the same. In the said money suit, as stated above, the question of jurisdiction was raised and ultimately, the hon'ble Gauhati High Court upheld the claim of the CD and ordered the trial court to render necessary order for retuning the plaint to the plaintiff to be presented to the proper court. 22. The Civil Judge, Sr. Division, Guwahati thereafter, passed necessary order returning the plaint to the plaintiff (the OC herein) for filing the same before the appropriate court at Dibrugarh. However, instead of pursuing its claim before the civil court at Dibrugarh, the OC had most illegally tried to invoke the jurisdiction of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion to consider the term dispute as contemplated in section 5(6) of the Code. On considering the term dispute from various angles, the hon'ble apex court gave its finding on the term dispute in the following manner (page 119 of 4 Comp CasOL) : A reading of section 9(5)(ii)(d) would show that an application under section 8 must be rejected if notice of a dispute has been received by the operational creditor. In the present case, it is clear on facts that the entire basis for the notice under section 8 of the Code is the fact that an arbitral award was passed on July 21, 2017 against the appellant. As has been pointed out by us, this clearly appears from the gist of the case that was filed along with the insolvency petition. The fact that the reply of February 16, 2017 to the notice given under section 8 was within 10 days, and raised the existence of a dispute, also cannot be doubted. However, learned counsel appearing on behalf of the respondent strongly relied on the fact that this is not an ordinary case inasmuch as the amount of ₹ 1.71 crores which was awarded was admitted by Mr. Banerji's client in the arbitral proceedings to be a debt due, and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that the existence of the dispute and/or a suit or arbitration proceeding must be pre-existing, i.e., it must exist before the receipt of the demand notice or invoice, as the case may be. The Adjudicating Authority, therefore, when examining an application under section 9 of the Act, will have to determine the following : (i) Whether there is an 'operational debt' as defined exceeding ₹ 1 lakh ? (see section 4 of the Act) (ii) Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid ? and (iii) Whether there is existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute ? If any one of the aforesaid conditions is lacking, the application would have to be rejected. Apart from the above, the adjudicating authority must follow the mandate of section 9, as outlined above, and in particular the mandate of section 9(5) of the Act, and admit or reject the application, as the case may be, depending upon the factors mentioned i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ace. 28. It is, thus, evident from the aforesaid decision that once the corporate debtor succeeds in showing that there is a pre-existing dispute regarding the debt which is not spurious, hypothetical or illusory the Adjudicating Authority has no other option but to dismiss the application seeking initiation of CIRP. 29. In the aforesaid backdrop, let us see if the dispute in respect of debt, so alleged by CD, comes within the purview of dispute as contemplated in section 5(6) of the Code of 2016 which was further explained by the hon'ble Supreme Court in the case of K. Kishan v. Vijay Nirman Co. P. Ltd. reported in [2018] 4 Comp Cas-OL 112 (SC) ; 2018 SCC Online SC 1013. In order to appreciate the above question, I find it necessary to have a look at the pleaders notice dated September 6, 2012 from operational creditor addressed to CD as well as pleaders notice dated October 20, 2012 from CD addressed to operational creditor. For ready reference those two letters are reproduced below : Date : September 6, 2012 By Speed Post with A/D To, M/S. Super Infratech PTE Ltd., (A Company registered under the Companies Act, 1956) Regd. Office : T. R. Phukan Road ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Super Infratech PTE. Ltd., I beg to state as follows : That sir, my above named client denies the statements made in your notice effect that your client had completed the work in time frame in March 2010 but still ₹ 1,80,83,328.50 is outstanding which my above named client have most unjustly refraining from making said payment together with 18 per cent. per annum interest. The statements are vague and baseless. Be it stated herein that the contractual work was not completed by your client within the stipulated time frame set by the M/s. Brahmaputra Cracker and Polymer Ltd. (BCPL), however, the work was completed only on March 5, 2012. The delay in completion of the contractual work has attracted penalty imposed by M/s. Brahmaputra Cracker and Polymer Ltd. (BCPL) upon my above named client. As per Clause 05 of the agreement dated November 10, 2008 entered by and between your client and my above named client, your client is liable to bear the penalty imposed by the M/s. Brahmaputra Cracker and Polymer Ltd. for delay in completion of the work. My above named client reserves its rights to initiate appropriate steps for realization of the amount of penalty and other dues f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... throw more and more weight behind the above conclusion of mine that there was a pre-existing dispute in respect of debt under consideration. 33. Here, it deserves a mention that the Insolvency and Bankruptcy Code of 2016 is a special legislation basically designed, among other things, to revive an ailing enterprise/organisation. It is not a medium or measure to recover the dues from the defaulting entities although there is always chance to get back to the debt or part thereof in the event the enterprise is forced to go on liquidation. In other words, the IBC is not at all a substitute for civil law dealing with recovery of dues from the defaulting persons/ institutions/organisations. 34. However, the applicant seems to have approached this Authority solely for the purpose of getting back its alleged dues from the CD since when the applicant was enquired as to why it did not approach court of competent jurisdiction to institute a suit to get back its alleged dues from the CD as directed by the civil court at Guwahati, the learned legal representative appearing for the applicant submits that by the time the plaint was returned to the plaintiff for being presented to the court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and such dispute came into being as early as 2012-2013. Such revelations, in my firm view, show that the lapses on the part of CD in not complying with the direction in section 8(2)(a) of the Code of 2016 cannot be allowed to grow beyond its size so as to come in the way of accepting the prayer of the CD made in the counter affidavit. 39. On considering the pleadings of the parties in their totality having regard to the submissions, advanced by learned legal representative appearing for OC as well as learned senior advocate appearing for the CD, I have found reason to conclude that the CD could establish that there is a dispute between the parties hereto regarding the debt in question which is not spurious, hypothetical or illusory and such dispute was there since long before the initiation of present proceeding. 40. Resultantly, this proceeding is dismissed for the reasons aforementioned. 41. I make it clear here that any observation made in this order shall not be construed as expression of opinion on the merit on the controversy in any other suit or proceeding and the right of the applicant before any other forum shall not be prejudiced on account of dismissal of instan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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