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TMI Blog2021 (5) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the present financial distress caused by the global novel corona virus pandemic necessitating a nationwide lockdown, cannot be ignored. Major decisions have been taken to protect Industry from its effects, to inject economic stimulus and to revive the economy. More specifically, on 24.03.2020 the Legislature increased the minimum threshold of default from ₹ 1 Lakh to ₹ 1 Crore so that the Code is not used merely for recovery of debt. Respondent has raised various reasons why the debt is not paid and at the same time admits liability and seeks more time to pay the same, and also that the Respondent is a going concern, thus in the totality of facts and circumstances including the bad economic scenario prevailing in the country, this is not a case fit for initiating CIRP and that it would be in the interest of justice to allow the Respondent some more time to negotiate with the Petitioner and settle the debt at the earliest. Application disposed of by directing the Respondent/Corporate Debtor to repay the debt or the amount as mutually settled with the Petitioner within a period of six months, failing which, the Petitioner would be at liberty to file a fresh pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t such rates that were finalised and agreed between the parties. (4) The Respondent placed an order on the Petitioner for supply of Crusher-Ring Granulator type and Vibrating Grizzly Feeder. The Respondent placed Purchase Order being No. J-1185-8/7538 dated 19.05.2014 as amended by Purchase Order No. J-1185/7538 A1 dated 09.02.2015 for the said project. Copies of the purchase orders are annexed to the Petition. (5) The Petitioner states that the Respondent had assured/represented at the time of awarding the purchase orders that it would make payment to the Petitioner immediately under the Purchase Orders. Placing reliance on the representations of the Respondent, the Petitioner completed its obligation under the Purchase orders to the complete satisfaction of the Corporate Debtor. (6) The Respondent accepted all the supplies made to it by the Petitioner under the purchase orders without demur and at no point raised any issues with respect to the quality or quantity of goods supplied and the services rendered in connection thereto. (7) The Petitioner states that it raised invoices amounting to a sum of ₹ 1,80,15,750/- against such supplies made and services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -alia, was required to supply the equipment along with supporting structures as per the timelines prescribed and for use by IPCL/SIDCL site and for use by IPCUSIDCL. However, your company had failed to deliver the schedule the same. Due to the delay in supply of the supporting structures, the erection schedule was delayed and we were forced to get the same manufactured from another vendor for an additional cost. Your company has been in breach of various provisions of the terms of the purchase orders and your liability was not limited to the supply of the parts of the project. You are further aware that, when matters stood as such, a joint meeting was held between your company, IPCL/SIDCL and us. In the said meeting, upon your company's recommendation, it was agreed that IPCUSIDCL would make direct payments to your company. To that effect, your company is undisputedly in receipt of ₹ 25,00,000 (Rupees twenty-five lakhs) from IPCUSIDCL Under these circumstances, our company is not under debt to repay the alleged amount to your company and all your claims lie against IPCUSIDCL It is hereby brought to your notice that there is a dispute relating to the quality of y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us accounts were maintained by the Petitioner and the Respondent. The Debt also fell due on 02.02.2017 when the Respondent once again admitted its liability expressly and unequivocally to the Petitioner. (12) The Petitioner has annexed copies of letters dated 10.05.2016, 18.10.2016 and email dated 02.02.2017 issued by the Respondent Company to the Petitioner acknowledging the liability to pay the due amounts. Relevant portion of the letters are reproduced herein below for the sake of convenience: Letter dated 10.05.2016: We hereby acknowledge and confirm the balance due payment to you against the above said order/supplies made ₹ 1,47,45,750/- and due to the lack of rotation of funds from this project, we are not in a position to liquidate this due till now. But we are exploring following options for liquidating the pending dues:- 1. We have approached Bank for enhancement of our limits, which is under due consideration. 2. We are negotiating various domestic/foreign orders, which are in the final stage likely to get through shortly. 3. Due to the cost over run in the present order from IPCHL, the customer has started directly paying to the suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited (2018) 1 SCC 407' held that a debt may not be due if it is not payable in law or in fact , it is submitted that the application is barred by limitation. (4) The Petition is not accompanied by 'record of default' from Information Utility which is non-compliance of section 9(3)(d) of the Code, 2016 (5) It is submitted that the Applicant has deliberately misrepresented facts. That the Respondent pointed out the existence of dispute and the application is silent on the issues raised by the Respondent in its Reply. The Applicant has deliberately suppressed the fact that payments were to be made directly by the Indian Corporation Haldia Limited and this was agreed by the parties and the Applicant has also received payments from IPCL/SIDCL. (6) It is submitted that the Respondent obtained a contract to construct a coal handling plant for Indian Power Corporation (Haldia) Limited (hereinafter (IPCL)) now known as Hiranmaye Energy Limited. IPCL's Associate Company-Shristi Infrastructure Development Corporation Ltd. was paying some of the invoices raised under the contract, The Respondent was required to install a Crusher -Ring Granulator type and Vibratin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting and maintenance manuals, Soft copies and 4 Hard copies of commissioning procedures; soft copies and 6 sets of hard copies of drawings for approval and soft copies with 4 sets of hard copies of the Test certificates within the timelines mentioned in the Purchase Orders. Due to the failure of Applicant in adhering to the timelines, the Respondent was unable to obtain approval for drawings from IPCL. SIDCL within time, which in turn delayed the deliverables. The Petitioner was also obligated to furnish a performance bank guarantee for 10% of the contract value, which it failed to furnish a performance bank guarantee for 10% of the Contract Value, which it failed to furnish. Further, the Applicant, much against the agreed payment terms had raised advance bills and dispatched the products, (Crusher, VGF and crusher couplings) after a month from the invoice date. It was informed to the Applicant that such bills cannot be accepted. Relevant portion of the Purchase Order stating that the documents were to be submitted through the bank immediately after the dispatch, is extracted hereinbelow: Seventy percent of basic price of materials supplied, as per approved billing schedule, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Respondent, the contentions above are reiterated and further it is stated that the petition is barred by the law of limitation as the petition is filed after 5 years after the alleged default dated 30.06.3015. Further, it is stated that the order passed by this Tribunal in CP No. 295/2016 does not anywhere in any form state that the time spent in filing and in prosecution of the initial C.O.P and the CP No. 295/2016 is to be excluded for the purpose of limitation, in the event Applicant wishes to avail any other remedy. (16) The Respondent has relied on the decision of K. Kishan v. M/s. Vijay Nirman Company Pvt. Ltd., wherein it was held that, Operational Creditors cannot use the Insolvency Code either prematurely or for extraneous considerations or as a substitute for debt enforcement procedure. This has been reiterated by the Hon'ble Supreme Court in the decision of Mobilox Innovations Private Limited v. Kirusa Software Private Limited (2018) 1 SCC 353. The Courts have categorically laid down that IBC is not intended to be substitute to a recovery forum. It is also laid down that whenever there is existence of real dispute, the IBC provisions cannot be invoke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... At the outset it must be borne in mind that the agreement between the parties was a written agreement and therefore the parties are bound by the terms and conditions of the agreement. Once a contract is reduced to writing, by operation of Section 91 of Evidence Act, 1872 it is not open to any of the parties to seek to prove the terms of the contract with reference to some oral or other documentary evidence to find out the intention of the parties. (8) Further, in support of the contention that the petition is not barred by limitation, it is stated that the Respondent admitted its debt on 10.05.2016, 18.10.2016 and most recently 02.02.2017. The present Petition was filed on 31.01.2020. The acknowledgement of debt within period of limitation creates fresh limitation. Reliance is placed on decision of Supreme Court, in J.C. Budhraja v. Chairman, Orissa Mining Corp Ltd., (2008) 2 SCC 444. (9) Further, COP No. 295/2016 filed by Petitioner before the Hon'ble High Court of Karnataka which came to be transferred to this Bench was disposed on 17.07.2019 with liberty to file fresh petition under IBC, 2016. The said order clearly records that the Respondent has no objection f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Respondent company. The master data details of the Respondent company available on the MCA website show that the company is active and compliant and has no pending charges on assets showing a good working condition of the company. In the absence of specific data regarding insolvency of Respondent, we are unable to determine that the company is insolvent, which is the main reason to push a company into the rigours of the CIRP. If the non-repayment of debt is not because of insolvency, but rather due non fulfilment of business commitment by the other side, then the Petition remains one only seeking recovery, treating this AA as a debt recovery forum, which is not permissible. Also, an undisputed debt is a sine qua non for initiating any process u/s. 9 of the Code. 10. We may add that the impact of the present financial distress caused by the global novel corona virus pandemic necessitating a nationwide lockdown, cannot be ignored. Major decisions have been taken to protect Industry from its effects, to inject economic stimulus and to revive the economy. More specifically, on 24.03.2020 the Legislature increased the minimum threshold of default from ₹ 1 Lakh to ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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