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TMI Blog2020 (8) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/-. It is further evident from the Letter of Corporate Debtor dated 06.03.2019, wherein the Corporate Debtor had demanded a refund from the Applicant of ₹ 15.01 Crores along with interest for violation of terms of Letter dated 08.01.2019 by the Applicant, in the same Letter the Corporate Debtor had also disputed that the Applicant is in non-compliance of the BTA and therefore is not liable to receive Tranche II and Tranche III payment under the BTA. These disputes by the Corporate Debtor are raised before the receipt of demand notices - there is a plausible contention in the defence raised by the corporate debtor which requires further investigation and that the alleged dispute is not a patently feeble legal argument or an assertion of fact unsupported by evidence. The Ld. Adjudicating Authority has rightly dismissed the application filed under Section 9 of IBC - Appeal dismissed. - Company Appeal (AT) (Insolvency) No. 1522 of 2019 - - - Dated:- 11-8-2020 - [Justice Bansi Lal Bhat] Acting Chairperson, [V. P. Singh] Member (Technical) And [Shreesha Merla] Member (Technical) For the Appellant : Mr Bishwajit Bhattacharyya, Senior Advocate with Mr D. Sreenivasan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... called as BTA). 4. The Operational Creditor further submits that after due compliance and completion of the Condition Precedent , relating to the transfer of Undertaking on Slump Sale, as provided for in Clause 4 of BTA, the Compliance notice was submitted to the Corporate Debtor on 04 June 2018, which was acknowledged by the Corporate Debtor. A satisfaction letter was issued to the Operational Creditor on 09 June 2018. 5. The Operational Creditor further submitted that the slump sale was consummated on 18 June 2018 and on the same day the possession of Undertaking was handed over by the Operational Creditor to the Corporate Debtor. Accordingly, ownership of the Undertaking got vested with the Corporate Debtor. The Applicant further submits that it had issued invoice Dt. 18 June 2018 of ₹ 123 Crores in respect of the consideration for the transfer of Undertaking and the Corporate Debtor made part payment of ₹ 65,19,00,000/- (Rupees Sixty Five Crore and Nineteen Lakh Only) and balance outstanding consideration, as on 18 June 2018,remained₹ 58 Crores. 6. The Operational Creditor also contends that he sent an email communication dated 13 October 2018 to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, which were separate and distinct from slump sale and transfer of Undertaking that culminated on 18 June 2018, and from that the Corporate Debtor becomes the owner of the Undertaking. But despite being the owner of the Undertaking, the Corporate Debtor still needed the help of the Operational Creditor for additional consideration in terms of BTA. 11. It is argued on behalf of the Operational Creditor that the Adjudicating Authority has ignored and went into the post slump sale transactions, which are not the subject matter of the claim of the Operational Creditor. It is admitted that the Undertaking was transferred to the Corporate Debtor on 18 June 2018, and consummated slump sale for a consideration of ₹ 123.19 Crores is also recorded, then after 18 June 2018, i.e. post transfer of the Undertaking, alleged disputes are beyond the scope of the present proceedings. 12. It is further argued on behalf of the Operational Creditor that the Adjudicating Authority without proper appreciation of the facts and correct perspective of the law accepted the Corporate Debtor's plea of pre-existing dispute and based on that rejected the application filed under section 9 of I B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of operational debt. The Appellant's contention that post-slump sale transactions are beyond the scope of the IBC proceedings is incorrect. The Adjudicating Authority, while exercising its summary jurisdiction under the IBC, is not expected to decide the disputed question of facts of breach of contract. To admit or reject a petition under Section 9 of the I B Code the Adjudicating Authority has to ensure the existence of an operational debt of more than threshold limit of Rupees one lac, is due and payable and to ensure that there is no pre-existence dispute between the parties, before the receipt of the demand notice by the Corporate Debtor. Hence, the adjudicating Authority had rightly rejected the application filed under Section 9 of the I B Code. 18. That the Corporate Debtor further pleaded that the alleged debt is not an 'Operational Debt 'and the Appellant is not an 'Operational Creditor 'as defined under IBC. 19. The Corporate Debtor further submitted that it had replied to the Demand Notices vide its letters dated 14 June 2019 and 01 July 2019, raising disputes to the claim of the Applicant. Admittedly the Transfer Consideration of ₹ 123,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue of the instant Demand Notice that TCL had disputed ASL's demand for payments which were allegedly due from 18 June 2018. In the instance case, even though there is no operational debt due from TCL to ASL, TCL has been embroiled in a dispute with ASL regarding the same on account of ASL raising baseless claims on numerous occasions since January 2019. Despite receiving multiple clarifications from TCL regarding the correct factual background, ASL has continued to harass TCL through raising vexatious claims to unjustly enrich itself. . No operational debt due to ASL from TSL: It is clear from the provisions of the BTA that TCL is required to pay Closing Transfer Consideration on the Closing Date and then the remaining Balance Consideration upon the completion of the conditions precedent for each tranche by ASL. It remains an undisputed fact, which is also evident from Annexure B, that TCL has paid INR 65.19 Crores as the Closing Transfer Consideration on 18 June 2018, as per the BTA. It is also evident from Annexures C and D that it is an admitted position that TCL has paid the Tranche-I Balance Consideration of INR 35 Crores and Tranche-II Balance Consideration of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the BTA, which neither reflected the correct intention of both the parties to the Agreement nor was in accordance with the Board Resolution of TCL. 6. In the BTA executed on 07 April 2018, SAM added three separate and distinct contracts with specified set of activities, which were not part of the transaction for transfer of undertaking on slump sale on as-is-where-is basis. These Contracts had been incorporated with specific consideration for each of the contracts separately. It is clear from the copy of the Board Resolution attested by the Company Secretary of TCL on 04 April 2018, that there was no provision or mention of these three extra contracts. Further, the extract from the email dated 11.02.2019, sent by Applicant to the Corporate Debtor reads as below: We are pleased to include with this email, our invoice for ₹ 123 crores towards the sale of Undertaking on Slump Sale Basis and we request you to process the balance payment of ₹ 6 crores due to us and settle the same at the earliest. It is also therefore brought to your notice that we will be including the transaction value of ₹ 123 crores as a exempt transaction in the GST retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the existence of the dispute and/or the 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. 34. Therefore, the adjudicating Authority, when examining an application under Section 9 of the Act will have to determine: (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 in Section 9 ..... 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