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TMI Blog2019 (9) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... tional Company Law Tribunal), Hyderabad Bench, Hyderabad by virtue of order dated 12th February, 2019 and certain directions including imposition of moratorium in regard to the assets of 'Corporate Debtor' and appointment of Respondent No. 3 as 'Interim Resolution Professional' came to be passed. Aggrieved thereof 'Shri P. Vijay Kumar', claiming to be the erstwhile Chairman and Managing Director as also a shareholder of the 'Corporate Debtor' holding more than 45% of the total shareholding, has preferred the instant appeal assailing the impugned order on the ground that there was no privity of contract between the 'Operational Creditor' and the 'Corporate Debtor' and that Insolvency Resolution Process could not be triggered in wake of a pre-existing dispute interse the parties to the proceedings before the Adjudicating Authority. 2. An 'Operational Creditor' may initiate Corporate Insolvency Resolution Process against the 'Corporate Debtor' having committed a default in respect of 'operational debt' in the manner provided under Section 9 of the I&B Code. However, prior to filing of an application in the prescribed form before the Adjudicating Authority, the 'Operational Creditor' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application." 3. It is in the backdrop of aforestated legal proposition that the contentions raised in the instant appeal are required to be appreciated. Before noticing the rival contentions and the arguments advanced on behalf of the parties it is apt to notice the factual matrix culminating in passing of the impugned order. We accordingly proceed to notice the facts briefly. 4. The 'Operational Creditor' supplied broken rice and coal to the 'Corporate Debtor' in pursuance of 'Raw Material Supply Agreement' dated 9th April, 2018 (hereinafter referred to as 'Agreement'). Invoices were raised by it upon the 'Corporate Debtor' for supply of such materials. According to 'Operational Creditor', the 'Corporate Debtor' failed to pay the amount of pending invoices of the 'Operational Creditor' even after deduction of shortages. Further according to the 'Operational Creditor', the coal and broken rice (for short 'raw material') supplied and delivered to the 'Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a party to Raw Material Supply Agreement and the 'Corporate Debtor' has raised a dispute in reply to the Demand Notice. Therefore, 'Priya Trading Company' claiming to be the 'Operational Creditor' was not eligible to trigger Corporate Insolvency Resolution Process. Per contra it is argued by learned counsel for the Operational Creditor that the facts in regard to the material particulars as regards liability arising out of supply of raw material by 'Operational Creditor' to the 'Corporate Debtor' are not at all disputed by the 'Corporate Debtor'. Besides, there is admission of the fact that Arun Agrawal and Annapurna Agrawal are carrying on business under the name and style of 'Priya Trading Company' and had supplied the raw material to the 'Corporate Debtor' in respect of which 'Operational Creditor' raised invoices and claimed outstanding amount as specified in the Demand Notice, liability in regard to the same being an admitted fact. 6. After hearing learned counsel for the parties and wading through the record, we find that the Raw Material Supply Agreement at page 50 of the Appeal Paper Book was executed interse the 'Corporate Debtor' of the one part and Arun Agrawal and Anna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt claimed to be in default is payable in law and in fact. Default in operational debt of an amount of Rupees One Lakh or more is enough for triggering of the Corporate Insolvency Resolution Process. The stand taken by the 'Corporate Debtor' in regard to the outstanding liability is not that the debt is not an operational debt or that the same is not payable in law or in fact. In this regard, it would be appropriate to refer to admission on the part of 'Corporate Debtor' as emerging from his Reply to the Demand Notice dated 14th July, 2018, para no. 6 relevant in this regard being extracted hereinunder:- "6. My client states that according to their accounts my client has to pay an amount of Rs. 2,96,54,219.00 only, and that amounts to be paid to 1) Arun Agrawal, and 2) Annapurna Agrawal only, but not to you, after clearing all the disputes as mentioned in notice, dated 16-6-2018 and reply notice, dated 2-7-2018. As such the notice under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 is invalid and untenable." It is manifestly clear that there is a crystal clear admission of liability of 'Corporate Debtor' to pay an amount of Rs. 2,96 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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