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TMI Blog2020 (11) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... hand, Section 9 also states that the Adjudicating Authority to reject the application so filed if the Operational Creditor has received a notice of a dispute from the Corporate Debtor . The Operational Creditor cannot take recourse that the payment if any made to the employees were in their personal capacity and not on account of Operational Creditor. As it is a well settled principle under Law of Agency that where an employee does some wrongful act, within the course of his employment, then for that act the employer s liability shall arise. The employee would be liable for the wrongful act he has done, whereas the employer would be liable vicariously for the act due to the principal-agent relationship between the two. In that situation, the aggrieved person is at the choice whether to sue principal or agent or both. Therefore, fraud committed by any of the employees of the Operational Creditor cannot be said to be done in their personal capacity. The Operational Creditor has admitted before the Adjudicating Authority that the Corporate Debtor have made the payment of ₹ 14,17,000/-, saying that those payments were towards the out of pocket expenses incurred during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Manoj Prajapati (₹ 1,69,000/-), Mr. Raghav Malhotra (₹ 3,27,000/-) and Mr. Nitin Dhawan (₹ 40,000/-). 4. The learned counsel for the Appellant further stated that on discovering anomalies between the demands made by the Operational Creditor and the accounts maintained by the Corporate Debtor, the Corporate Debtor requested the Operational Creditor for the ledger books and bank statements with respect to the monetary transactions between the parties, particularly made to the employees of the Operational Creditor. The Operational Creditor failed to provide relevant ledger books and bank statements to the Corporate Debtor with respect to monetary transactions between the parties. However, in an attempt to reconcile the accounts and resolve the disputes, the Corporate Debtor held a meeting with the proprietor of the Operational Creditor (namely Nitin Dhawan) on 2nd March, 2019 whereby the Operational Creditor was made clear that the payments to the tune of ₹ 14,17,000/- were made to the employees of the Operational Creditor. In the said meeting, the said proprietor of the Operational Creditor had also agreed to provide the entire ledger books and bank state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent the said cheques for the second time again on 20th March, 2019. Consequently, the cheques were returned by the concerned bank with remark Payment Stopped by The Drawer . 9. It is also submitted on behalf of the Appellant that the Corporate Debtor addressed a legal notice dated 28th March, 2019 to the Operational Creditor again requesting for the ledger books and bank statement with respect to the monetary transactions between the parties. Pertinently, the Corporate Debtor, by way of the said notice had informed the Operational Creditor that an amount of 14,17,000/- was paid to the employees of the Operational Creditor for which receipts were not issued by the Operational Creditor. The content of legal notice dated 28th March, 2019 have neither been replied nor refuted by the Operational Creditor. 10. It is also submitted by the learned counsel for the Appellant that on 17th April, 2019, the Operational Creditor addressed a Legal Notice to the Corporate Debtor under section 138 141 of the Negotiable Instruments Act, 1881 thereby claiming an amount of ₹ 4,01,049/-. On 22nd April, 2019, the Operational Creditor issued a demand notice to the Corporate Debtor thereb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ger books, fell to deaf ears. Thus, the repayment of the principal amount can be clearly inferred from the Operational Creditor s own admission and thus the claim of principal amount of ₹ 14,59,308/- is erroneous and no interest is liable to be paid there upon. 13. It is further contended by the learned counsel for the Appellant that the Adjudicating Authority has clearly ignored the fact of existence of a dispute between the parties prior to the demand notice dated 22nd April, 2019 issued by the Operational Creditor under section 8 of I B Code. The communication exchanged between the parties prior to the demand notice are as follows: i. E-mail dated 5th March, 2019 addressed by the Appellant to the Operational Creditor indicating suspension of work and payment of an amount of ₹ 14,17,000/-. ii. Legal Notice dated 6th March, 2019 addressed by lawyer of the Appellant to the Operational Creditor requesting reconciliation of accounts. iii. Legal Notice dated 28th March, 2019 addressed by the lawyer of the Appellant to the Respondent No. 1 indicating inter alia wrongful presentation of cheques by Respondent No. 1 since dues already paid and work suspended. iv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executed with the Corporate Debtor, whereby the Operational Creditor had mentioned and recorded all the financial transactions and the Books of Accounts of the Operational Creditor maintained in the course of business. As of 29th January, 2019, the total outstanding amount due and payable by the Corporate Debtor to the Operational Creditor for the services of the Operational Creditor was ₹ 18,09,541/-, Principal Amount ₹ 14,59,308/- and ₹ 3,50,233.92/- as interest. 18. It was further submitted by the learned counsel for Operational Creditor that in order to partly liquidate the due amount payable to the Operational Creditor, the Corporate Debt issued cheques in favour of Operational Creditor with the assurance that as and when cheques will be presented by the Operational Creditor, the same shall be honoured. However, when Operational Creditor presented the said cheques in order to be encashed, the same got dishonoured on 22nd February, 2019 with the remark FUNDS INSUFFICIENT. Thereafter, the son of the proprietor of Operational Creditor had a meeting with the Corporate Debtor on 02nd March, 2019 who assured the Operational Creditor that the cheques should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Operational Creditor that in the reply sent by the Corporate Debtor dated 02nd May, 2019 to the notice dated 17th April, 2019, the Corporate Debtor had stated that the sum of ₹ 14,17,000/- was paid to the employees of the Operational Creditor in their personal capacity and on the request of the Operational Creditor. However, it is submitted by the learned counsel that neither the Corporate Debtor could show any such request from the Operational Creditor to this effect nor could they show any proof of payment. 23. It was further submitted that it is important to note that the Corporate Debtor had acknowledged that the said alleged payments to the employees were given in their personal capacity and not on account of Operational Creditor. Thus, the alleged defence and the so-called dispute was a spurious defence which is mere bluster. 24. It was further submitted that each of the invoices raised by the Operational Creditor on the Corporate Debtor inter alia had the following terms at the foot of the invoice viz: Interest at 24% will be charged for delayed payments'. Therefore, it was submitted that the Corporate Debtor is liable to pay the interest of 24% to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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. 28. The Adjudicating Authority having relied on this paragraph of the aforementioned Judgement and had made the following observation in para 12 of the impugned order which is reproduced as below: - 12. On hearing the arguments of either side and on the going through the pleading that the dispute raised by the Corporate Debtor are not the real disputes and in fact spurious and they doesn t fall under the ambit of section 5(6) of the code, which provides as below: Disputes includes a suit or arbitration proceedings relating to- (a) The existence of the amount of debt, (b) the quality of goods or service, or (c) the breach of a represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Under the circumstances, we as instructed by our Clients, hereby call upon you to share the Ledger and also the treatment made to the payment of ₹ 14,17,000/- (Rupees Fourteen Lakhs Seventeen Thousand Only) in your books which was made to your key employees i.e. Mr. Shailendra Yadav, Mr. Manoj Prajapati and yourself within 3 days so that there are no accounting errors at the time of filling Annual Return. 31. Once again, on 28th March, 2019 another legal notice was sent to the Operational Debtor, indicating inter alia wrongful presentation of cheques by Operational Creditor since dues were already paid and work was suspended. The said legal notice also asserts to the employees of the Operational Creditors requesting treatment of amount of ₹ 14,17,000/- deposited in their accounts. The below paragraphs reproduced below has been taken from the legal notice dated 28th March, 2019 which states as follows: Your attention is invited to the fact that on you no. 4 who is the owner of M/s Wihswanaveen Traders, business firm, request, our clients made the payment to you in your respective personal accounts, detail as under:- 1) Mr. Shailendra Yadav (ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e intent of Legislature is very vital for interpreting any law, which can be well deduced from the words of Section 8(2)(a) of I B Code existence of a dispute if any . It can be easily inferred that dispute shall not be limited to instances specified in the definition as provided under Section 5(6), as it has far arms, apart from pending Suit or Arbitration as provided Under Section 5(6) of IBC. The IBC is not a substitute for a recovery forum. 35. Section 9 of the IBC makes it very clear for the Adjudicating Authority to admit the application if no notice of dispute is received by the Operational Creditor and there is no record of the dispute in the information utility. Whereas, on the other hand, Section 9 also states that the Adjudicating Authority to reject the application so filed if the Operational Creditor has received a notice of a dispute from the Corporate Debtor . 36. We also want to clarify that the Operational Creditor cannot take recourse that the payment if any made to the employees were in their personal capacity and not on account of Operational Creditor. As it is a well settled principle under Law of Agency that where an employee does some wrongful act, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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