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TMI Blog2020 (8) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... der P.O. No. 3228108125 under the fear that the same will not function similar to STP at Sky Forest Project. On perusal of the Reply dated 23.04.2018 (Annexure A-7), it is clear that no dispute was existing about the P.O. No. 3228108125. There is nothing on record to substantiate that there is running composite account between the same parties, and there is no differentiation between different work orders issued between the parties. The above observation of the Adjudicating Authority is without any basis. It is also necessary to mention that each P.O./W.O. Constitutes separate contract having separate terms and conditions and independent dispute resolution clause, therefore for the alleged deficiency of service relating to the Sky Forest Project, the outstanding payment relating to other invoices could not be stopped and the finding of the Adjudicating Authority that there was pre-existing dispute is also erroneous - thus, it is clear that the Adjudicating Authority erred in rejecting the application filed under Section 9 of the IBC based on the pre-existing dispute. Appeal allowed. - Company Appeal (AT) (Insolvency) No. 790 of 2019 - - - Dated:- 8-6-2020 - [Justice Venu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that Adjudicating Authority erred in observing that there is a running composite account between the parties, and there is no differentiation between different work orders. In contrast, the purchase orders/work orders are separate and different. It is further contended that the finding of the Adjudicating Authority that there is a running composite account between the parties and there is no differentiation between the work orders is wrong and perverse. 4. In Reply to the Appeal, the Corporate Debtor/Respondent submits that it had received four demand notices under Section 8 of the IBC even though there is a pre-existing dispute pending prior to the issuance of the demand notices. Respondent further submits that they are not liable to pay the Appellant anything under Work Order No. 3228001829, 3228002396, 3228001827, 3228108125, 3228002395 until the Petitioner successfully complied the terms and conditions of every purchase order and work order. 5. The Ld. Adjudicating Authority has rejected the Petition mainly on the ground that there is a running composite account between the same parties, and there is no differentiation between different work orders issued betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the W.O. No. 3228108736 and W.O. No. 3200100371 for which no demand notice has been issued. 11. The Appellant further contends that each Purchase Order/Work Order constitutes a separate contract, having different payment terms and conditions. The Corporate Debtor sent a common reply to the separate demand notices and the only ground for non-payment is shown in the Reply is regarding the default in services of Sky Forest Project, Parel, Mumbai. 12. It is necessary to quote the following para of Reply to the demand notice: In view thereof and circumstances aforesaid, we state that we are not liable to pay you anything under Work Order no. 3228108736 and 3200100371 until we receive successfully commissioned STP at our Sky Forest Project. On the contrary, it is us who is entitled to invoke indemnity provided under the Work Order no. 3228108736 and 3200100371 and claim refund of the entire amount paid by us to you under the aforesaid work orders with interest and recover expenses and penalties that is being suffered by us due to your failure and negligence to provide us fully workable STP to comply with our statutory requirement . 13. On perusal of the above-quoted Rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itor the existence of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the dispute is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court 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. 56. Going by the aforesaid test of existence of a dispute , it is clear that without going into the merits of the dispute, the appellant has raised a plausible contention requiring further investigation which is not a patently feeble legal argument or an assertion of facts unsupported by evidence. The defence is not spurious, me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifferent work orders issued between the parties. The above observation of the Adjudicating Authority is without any basis. It is also necessary to mention that each P.O./W.O. Constitutes separate contract having separate terms and conditions and independent dispute resolution clause, therefore for the alleged deficiency of service relating to the Sky Forest Project, the outstanding payment relating to other invoices could not be stopped and the finding of the Adjudicating Authority that there was pre-existing dispute is also erroneous. Based on the above discussion, and the law laid down by Hon ble Supreme Court in Mobilox Innovations (P) Ltd. it is clear that the Adjudicating Authority erred in rejecting the application filed under Section 9 of the IBC based on the pre-existing dispute. Thus, the Appeal deserves to be allowed. ORDER Appeal filed by M/s Naik Environment Engineers Pvt. Ltd. is allowed. We are of the concerned opinion that all the ingredients of Sec 9 application are fully satisfied. The Adjudicating Authority is directed to pass the Order of admission within seven days from the date of submission of a certified copy of Order. - - TaxTMI - TMITax - Insolve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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