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TMI Blog2020 (10) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 9 the Adjudicating Authority is not competent to examine whether the dispute is according with the law or not. These are the facts which are required to be decided by the Court having the jurisdiction to try the suit, while exercising under Section 9 the Adjudicating Authority is required to see only whether there is existence of dispute between the parties or the record of pendency of suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute or not. We are unable to accept the submission of the Ld. Counsel for petitioner that this adjudicating authority is competent to decide the point which has been raised by the Ld. Counsel for petitioner in course of arguments, whether the respondent is competent to forfeit the amount in terms of forfeiture clause or not? Since, there is existence of dispute which has been raised before the issue of demand notice and the documents which enclosed with the application, shows that there is existence of dispute. Therefore, in view of Section 9(5)(ii), the present application is not maintainable. Application dismissed. - Company Petition (IB) No. 2017/ND/2019 - - - Dated:- 18- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order forthwith without any notice, costs or compensation, whatsoever. As the Corporate Debtor failed to comply the purchase order, the applicant terminated the purchase order. Therefore, termination of purchase order is in accordance with the terms and conditions of the purchase order itself. The Applicant is thus entitled to its advance admitted payment from the Corporate Debtor. vii. Further stated that admittedly, the Corporate Debtor failed to deliver the goods on or before 05.04.2019, after accepting the advance amount. The applicant, therefore, decided to terminate its purchase order and accordingly, it terminated its purchase order by sending a notice dated 15.05.2019 to the Corporate debtor and sought refund of its amount of ₹ 1 Cr. Paid as advance. viii. Further stated that the applicant thereafter issued IBC demand notice dated 04.07.2019 through its lawyer to the Corporate debtor along with computation of default amount, which the Corporate debtor received it on 05.07.2019. ix. Further stated that the applicant received a reply from the Corporate debtor to its termination notice dated 15.05.2019 wherein the Corporate debtor admitted a receipt of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There is no termination clause under the works order, which entitles the Petitioner to terminate the Contract. ix. The Purchase order dated 06.03.2019 was never signed and executed by the Petitioner. The same is never signed and accepted by the Respondent. x. Even the alleged Purchase order dated 06.03.2019 came to be issued by the Petitioner only on 06.03.2019 i.e. after the advance payments had already been released by the Petitioner on 05.03.2019 and 06.03.2019 in terms of proposal dated 28.052.2019. xi. The petitioner had never handed over the site for carrying out the requisite works to the Respondent. However, in violation of the terms and conditions of the proposal dated 28.02.2019, abruptly terminated the works vide its letter dated 15.05.2019, without even assigning any reason for its decision. xii. That the Corporate Debtor in its reply to the demand notice dated 15.07.2019 disputing the claim raised by the applicant stating that the petitioner have accepted quotation along with all the conditions mentioned to therein and confirmed the same by tendering the nonrefundable advance amount. xiii. The petitioner has nowhere discloses that any default ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een received by the Operational Creditor. The respondent also placed reliance upon the decisions and the same is quoted below:- Innoventive Industries Ltd. Vs. ICICI Bank and Anr. (Civil Appeal Nos. 83378338 of 2017) Duke Spounge and Iron Pvt. Ltd Vs. Laxmi Foils Pvt. Ltd. MANU/NC/2201/2019 : 12. He further submitted that petitioner at page 2 of the petition clearly shows that an amount of ₹ 1 crore was non-refundable and the respondent vide letter dated 06.03.2019 stated that advances would be non-refundable and the balance payment was made by the petitioner only after the receipt of such e-mail. He further submitted that the petitioner never raised any objection against the terms and conditions of proposal dated 28.02.2019. He further submitted that work had already been subcontracted by the respondent to M/s. SEW Infrastructures Ltd. vide work order dated 07.03.2019 for a total contract value of ₹ 1,66,13,116/- and the respondent has already paid an amount of ₹ 81 lakhs in favour of the company. He further submitted that since there is an existence of dispute, the petition may be rejected. He also placed reliance upon the decisions in Overseas Inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process. (2) The application under sub-section (1) shall be filed in such form and manner and accompanied with such fee as may be prescribed. (3) The operational creditor shall, along with the application furnish-- (a) a copy of the invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor; (b) an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt; (c) a. copy of the certificate from the financial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt 1 [by the corporate debtor, if available; (d) a copy of any record with information utility confirming that there is no payment of an unpaid operational debt by the corporate debtor, if available; and (e) any other proof confirming that there is no payment of any unpaid operational debt by the corporate debtor or such other information, as may be prescribed. (4) An operational creditor initiatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be; (11) Debt means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt; 14. Mere plain reading of the provision shows that debt means a liability or obligation in respect of a claim, which is due from any person and includes a financial debt and operational debt. Since the present application is filed under Section 9 of the IBC, therefore, the claim of the petitioner is under operational debt defined Section 5(21) and the same is quoted below:- (21) operational debt means a claim in respect of the provision of goods or services including employment or a debt in respect of the repayment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority; 15. Mere plain reading of the provision shows that operational debt means a claim in respect of goods or services including employment or a debt in respect of the repayment of dues arising under any law for the time b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt of such notice or invoice in relation to such dispute (Section 8(2)(a)). What is important is 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......... 25. 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, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but to reject the application. 21. At this juncture, we would like to refer the contention of the Ld. Counsel for petitioner in view of aforesaid decisions for which he placed reliance, the respondent is not entitled to forfeit the amount as we have already discussed the provisions contained in IBC in aforementioned paras and on the basis of that we are of the considered view while considering the application under Section 9 the Adjudicating Authority is not competent to examine whether the dispute is according with the law or not. These are the facts which are required to be decided by the Court having the jurisdiction to try the suit, while exercising under Section 9 the Adjudicating Authority is required to see only whether there is existence of dispute between the parties or the record of pendency of suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute or not. 22. Word dispute has been defined in Section 5(6) of the IBC and the same is quoted below:- (6) dispute includes a suit or arbitration proceedings relating to-- (a) the existence of the amount of debt; (b) the quality of goods or service; o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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