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TMI Blog2020 (12) TMI 1175X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Statement of Objections for ₹ 29,02,650/- with a statement that the said debit note is issued on account of Towards Debit for Rejection of cotton Trousers processed during the year 2015 and 2016 due to Silicon Stains - It is also seen that the two parties were continuously transacting between themselves till August 2018. Supplies were being made and part payments were being received, thereon from time to time. This means that the Petition filed by the Operational Creditor is only for the recovery of dues on the outstanding bills, that too on account of the dispute on the quality of goods supplied. This forum cannot be used for recovery On perusal of the audited balance sheet of the Corporate Debtor Company, it is clear that it is an ongoing concern with substantial turnover and therefore pushing a company with such revenue into CIRP will be an act contrary to the objects of the code. The Code aims at resolving the insolvency of a corporate debtor through the CIRP, and cannot be used done if the Corporate Debtor/ Respondent Company in question is not insolvent. This also makes it clear that when the Petitioner has filed this petition not to aid in resolving its d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its registered office at the aforesaid address. The Corporate Debtor is running garment washing units with a workforce of around 100 plus employees. (3) The Operational Creditor has been supplying the chemicals to the Corporate Debtor since 2012 at regular intervals and used to receive the payment without much delay. However, from the month of August 2018 there has been a halt in payments despite the regular supply made by the Operational Creditor. (4) It is stated that for the supplies made from October 2014 to August 2018 there are outstanding dues of ₹ 39,09,014/- which includes Principal amount of ₹ 23,06,422/- and interest of ₹ 16,02,591.91/-. (5) The latest financial statements available at the MCA portal is relating to the F.Y. 2016-17. As per the said financial statements Corporate Debtor has assets worth ₹ 19,35,64,874/- and liabilities amounting to ₹ 16,65,26,293/-. The Corporate Debtor has not filed its Annual Returns for the last two financial years with the MCA but is very much functional with operations being carried out at 2 or 3 locations within Bengaluru. (6) The master data at MCA website shows that the Corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Corporate Debtor, which is the objective of the Code. (3) It is submitted that Central Government vide notification dated 24.03.2020 bearing No.S.O.1205 (E) F.No.30/9/2020-lNSOLVENCY has increased the minimum threshold to ₹ 1,00,00,000/- (Rupees One Crore only) for initiating a CIRP. In the present case, the Operational Creditor has alleged that a sum of ₹ 23,06,422/- along with interest as due from the Corporate Debtor, which is well below the minimum threshold limit. (4) It is submitted that representatives of Operational Creditor approached the Corporate Debtor and represented that they are engaged in the business of manufacturing and supplying chemicals which may be used for the purpose of fabric dying and garment processing. On the representations made by the Operational Creditor, the Corporate Debtor started purchasing chemicals from the Operational Creditor from the year 2013. The Corporate Debtor received the chemicals and made payment for the same. (5) On and from 2014, the Corporate Debtor while using the chemicals for their garments observed that the chemicals such as silicon softener supplied by the Operational Creditor were not as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 353 and Innoventive Industries Limited v. ICICI Bank and another reported in (2018) 1 SCC 407 stating that the existence of an undisputed debt is a sine qua non for initiating Corporate Insolvency Resolution Process. Further, provisions of the Code must not be invoked for recovery of outstanding amount and the Adjudicating Authority is not intended to substitute a recovery forum. (11) It is also contended that the Operational Creditor is seeking to recover amounts allegedly due from Corporate Debtor for the period 27.10.2014 to 10.08.2019. The present petition is filed on 06.02.2020. The alleged dues under the invoices are clearly barred by limitation and therefore the Operational Creditor cannot maintain the instant Petition. (12) It is submitted that the Corporate Debtor is a going concern and has engaged approximately 50 employees and engages 150 to 200 contract labourers and workers depending on the assignment. Further several vendors are dependent on the business of the Corporate Debtor and considering the said facts it is prayed that the present Petition be dismissed. 4. In response to the said objections, the Operational Creditor has filed rejoinder dated 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not able to identify any particular order or lot which has been damaged by the chemicals supplied by the Operational Creditor nor its value nor number of pieces damaged in it. In case of any damages, such 'samples' are written off under normal industry and accounting practices. There has never been any correspondence with the Corporate Debtor on any quality issues identified in the supplies made by the Operational Creditor. (8) It is stated that the Operational Creditor is no way concerned with the return of products of the Corporate Debtor and was never intimated of any such return of any products by the Corporate Debtor till the filing date. Further, the silicon softeners supplied by it were of certified quality and any business losses must be attributable to other suppliers from whom it was buying silicon softeners. (9) it is also stated that the Operational Creditor who, in deference to the long standing relationship between the parties, has till now not initiated any proceedings to recover its dues from the Corporate Debtor but had granted time to make good the payments due. Further, the Corporate Debtor had not disputed the claim of the Operational Credito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties or the record of the pendency of a suit or arbitration proceeding filed before receipt of demand notice of the unpaid operational debt in relation to such dispute? If any one of aforesaid conditions is lacking, the application would have to be rejected. 8. On perusal of the Invoices annexed to the Petition, it is seen that the invoices annexed are from 27.10.2014 to 10.08.2018. However, the amounts that fall within the period of limitation are approximately a sum of ₹ 4,89,849/- as the invoices from the period 06.02.2017 have to be considered for the purposes of calculating the amounts due. Further, the Debit Note dated 21.04.2017 annexed to the Statement of Objections for ₹ 29,02,650/- with a statement that the said debit note is issued on account of Towards Debit for Rejection of cotton Trousers processed during the year 2015 and 2016 due to Silicon Stains. Qty 3138 Pcs @ 925/-, the Ref Style Code : Joggar Pant, Powder Blue, TWL Petite R8 White and Box Mix Chino makes it clear that there existed a dispute in respect of the quality of the goods supplied way back in the year 2017 for which the Demand Notice was issued on 27.12.2019. 9. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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