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TMI Blog2020 (8) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... eny the appellant of its legitimate dues. The defence raised by the respondent is not genuine and an after-thought merely to evade making payments of the liabilities under the purchase orders to the appellant. Case remitted to the Adjudicating Authority, Mumbai Bench to admit the application and pass appropriate order in presence of the parties - appeal allowed. - COMPANY APPEAL (AT) (INSOLVENCY) No. 508 of 2019 - - - Dated:- 18-3-2020 - (Justice Venugopal M) Member (Judicial) , (Justice Jarat Kumar Jain) Member (Judicial) And (Mr. Balvinder Singh) Member (Technical) For the Appellant : Mr Abhijit Sinha, Mr. Mahesh Agarwal, Mr. Divyang Chandiramani, Mr Saikat Sarkar, Mr. Nishant Rao, Advocates For the Respondent : Mr. Rakesh Sinha, Mr. Arjun Harkauli, Ms A. Khurana, Mr Prateek Garg, Advocates JUDGMENT Mr. Balvinder Singh, Member ( Technical ) 1. The Appellant (Operational Creditor OC ) has filed this appeal under Section 61 of the Insolvency Bankruptcy Code, 2016 ( I B Code for short) against the order dated 02.04.2019 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai in Company Petition No. 2825/(IB)/MB/2018 vide whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the period 1st April 2012 to 25th July, 2013 had confirmed that an amount of ₹ 56,48,671/- is due and payable to the Appellant herein after adjusting debit notes, though the debit notes were not agreed upon by the Appellant. b) 01-03-2014 - A meeting held between both parties to discuss the pending issues, especially with regards to outstanding payments. The Respondent vide their email dated 1st march, 2014 to the Appellant forwarded their version of minutes of meetings dated 21st February, 2014. In the said minutes, the respondent admitted its liability towards the outstanding 52,87,267/-. It was also stated in the said minutes that final payment will be released project wise after considering all debit notes and deductibles provisioned as per respective PO s if any. c) 08-03-2014 Both the parties had a further meeting and the minutes of meeting dated 21st February, 2014 were revised. The Appellant vide its email dated 8th march, 2014 forwarded the correct version of the minutes of meeting dated 21st February, 2014 which was earlier agreed upon between both the parties. The said minutes incorporated correctly the outstanding amount towards the aforesaid invoices w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 19th February, 2015 again reiterated that payment of ₹ 30.1 Lakhs shall be made by Hindalco towards project 1 directly to the Appellant after submission of PBG (which was submitted on 23-03-2015). In the said email, the respondent attached the minutes of meeting dated 17th January, 2015 (erroneously mentioned as 17th January, 2014) and accounts statement for both the projects. As per the respondent s accounts statement and its own admission a sum of ₹ 57,54,910.50/- was due and payable by the respondent to the Appellant. However, the respondent unilaterally debited as sum of ₹ 2845757/- (₹ 683668/- towards Project 1 and ₹ 2162089/- towards project 2) towards debit notes including ₹ 15 lakhs for Rubber belt warrantee for project 2. Even after deducting the amounts of debit notes for both the projects, an amount of ₹ 3510600.68 was still due and payable to the Appellant. g) 14-03-2015 19-03-2015 The Appellant vide their email dated 14th march, 2015 informed the respondent that they are going ahead with PBG preparation for Project 1 and asked the Respondent to confirm the PBG amounts as stated in the said email which were confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However even after deducting the amounts of debit notes including ₹ 15 Lakhs for rubber belt for project 2, an amount of rupees 508615/- was due and payable to the Appellant. l) 07-01-2016 Hindalco vide email dated 7th January, 2016 (with copy to the respondent) once again informed the Appellant that they have held back the final payments for long and hoped that the Appellant has settled issues with the Respondent. Hindalco further informed that they are releasing respondent payment as the respondent has promised to settle appellant accounts of ₹ 508615/- for project 2 (after deducting debit notes worth ₹ 2162089/-) after getting payments from Hindalco. Even after considering debit notes of ₹ 508616.47 was undisputedly payable to the Appellant. m) 09-01-2016 In response to Hindalco email dated 7th January, 2016, the Appellant on 9th January, 2016, the Appellant on 9th January, 2016 informed Hindalco that an amount of ₹ 5026043/- has to be recovered from the respondent (after deducting debit received from respondent) for both the projects. The appellant further requested Hindalco to hold respondent payment for ₹ 2025043/- for project 2 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the respondent without any demur. As agreed between the parties the payment of the said invoices were required to be made by the respondent on or before the due date as mentioned in the LOIs/POs. 8. The Appellant reiterate that for the period 2011 to 2013, a sum of ₹ 56,58,764/- (plus interest) still remains due and payable by the Corporate Debtor to the Appellant towards the said aforesaid invoices. Even if the debit notes of ₹ 2845757/- for both the projects is considered by the respondent, still an amount of ₹ 3510600.68 is due and payable to the Appellant as admitted by the respondent. 9. It is further stated by the Appellant that Form 3 had issued by the appellant to the corporate debtor on 3rd February, 2018. The principal amount claimed by the operational creditor in its Form 3 was ₹ 56,58,764/-. The said amount of ₹ 56,58,764/- was arrived at based on the individual purchase orders raised during the relevant period. However, upon reconciling its accounts, the operational creditor found that an excess amount of ₹ 37,501/- had been paid by the Corporate Debtor against an old order. Thus, the operational creditor, after setting off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the debit notes ₹ 30,01,985.21 for project 1 and ₹ 5,08,615.47 for project 2 (total ₹ 35,10600.68/-) was due anjd payable without any dispute. 14. The Appellant finally submitted that NCLT, without considering that the debt was already admitted by the respondent and that no real dispute under the IBC Code existed between the parties, dismissed the petition filled by the Appellant solely on the ground that dispute had been raised by the respondents. The view taken by the NCLT, if allowed to prevail, would lead to closing of rights of operational creditors on sham and bogus defences being raised by the respondents, which is not the aim or intention of I B Code. 15. Respondents filed their reply and rebutted in brief as under: - 16. That the appellant has admitted vide its advocate that the respondent had raised a dispute under its email dated 16th September, 2014. Further, it is pertinent to note that the Respondent s email dated 16th September, 2014 states that the belts at both the projects had sheared. 17. That the admission by the appellant s advocate before NCLAT is particularly important as it conflicts with the Appellant s submission of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adjudicating Authority has correctly concluded in paragraph 12 of its order that there was a pre-existing dispute between the parties. Therefore, the appellant had failed to prove that this was a fit case for summary insolvency proceedings under the code hence, the NCLT correctly rejected the appellant s Company Application. 22. That the Adjudicating Authority in paragraph 7 of its order, correctly relies on the emails which are evident that the debt payable to the appellant being novated and agreed to be paid by Hindalco directly to the Appellant leading to a new contract between the parties. This new agreement between the parties contemplated that the payment would be made by Hindalco directly to the Appellant and the same was accepted by the Appellant. Therefor the appellant s averments that the primary responsibility of the debt being the respondent were considered by the adjudicating authority and rejected. 23. That additionally, in paragraph 7 of the order, the adjudicating authority, further correctly relies on the respondent s email dated 3 rd July, 2015 as evidence that the respondent had conveyed its consent for Hindalco to directly release a sum of INR 5,08,615 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence without taking into the merits of the matter and acceptance of debt by the respondent. In 'Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd., the Hon'ble Supreme Court while discussing the provisions of Section 9 observed as follows: 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? (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? NCLT wrongly applied the principle enshrined in the aforesaid case to the present facts. The judgement of Mobilox clearly stipulated that the disputes in a case ought to be real disputes and that it is the duty of the adjudicating authority to bifurcate between the two. 30. Adjudication authority failed to consider t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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