9911796707
TMI Blog2021 (12) TMI 681X X X X Extracts X X X X X X X X Extracts X X X X ..... ). 2. The 'Adjudicating Authority' while passing the impugned order dated 26.02.2021 in IBA/35/KOB/2020 at paragraph 22 to 35 had observed the following:- 22. "Dealing with the aspect as to whether the notification issued by the Jt. Secy. of Ministry of Corporate Affairs, Govt. of India dated 24.03.2020 under Section 4 of the 'I & B' Code has a retrospective or prospective effect. At this juncture, this Tribunal makes a useful reference to the said notification which runs to the effect that:- "S.O. 1205(E).- In exercise of the powers conferred by the proviso to section 4 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government hereby specifies one crore rupees as the minimum amount of default for the purposes of the said section". 23. In the absence of clear indication of a contrary intention in the notification issued on 24.03.2020 by the Ministry of Corporate Affairs, Government of India, then the substantive rights of individuals to an action is to be decided by the Law that existed when the action was initiated as the case may be. In the present case, notwithstanding the fact, the Central Government is delegated with a power to quantify the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in this application is whether the provisions of Section 10A stand attracted to an application under Section 9 which was filed after 5th June 2020 (the date on which the provision came into force) in respect of a default which has occurred after 25 March 2020. 28. On 16th September 2020, the applicant filed an application under Section 9 of the IBC on the ground that there was a default in the payment of his operational dues. During the pendency of the application, an Ordinance was promulgated by the President of India on 5th June 2020 by which Section 10A was inserted into the IBC. Section 10A reads as follows: "10A. Suspension of initiation of corporate insolvency resolution process.- Notwithstanding anything contained in sections 7,9 and 10, no application for initiation of corporate insolvency resolution process of a 'Corporate Debtor' shall be filed, for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year from such date, as may be notified in this behalf: Provided that no application shall ever be filed for initiation of corporate insolvency resolution process of a 'Corporate Debtor' for the said defa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiation date" is defined in Section 5(11) in the following terms: "5(11) "initiation date" means the date on which a financial creditor, corporate applicant or operational creditor, as the case may be, makes an application to the Adjudicating Authority for initiating corporate insolvency resolution process;" The expression "insolvency commencement date" is defined in Section 5(12) in the following terms: "5(12) "insolvency commencement date" means the date of admission of an application for initiating corporate insolvency resolution process by the Adjudicating Authority under sections 7, 9 or section 10, as the case may be:" xxxxxx 24. We have already clarified that the correct interpretation of Section 10A cannot be merely based on the language of the provision; rather it must take into account the object of the Ordinance and the extraordinary circumstances in which it was promulgated. It must be noted, however, that the retrospective bar on the filing of applications for the commencement of CIRP during the stipulated period does not extinguish the debt owed by the 'Corporate Debtor' or the right of creditors to recover it. 25 Section 10A does not contain any requirement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its of the lockdown and Section 10A inserted into the IBC. 34. As regards the question of pre-existing dispute, this Tribunal finds that the Demand Notice under Section 8 of the IBC, 2016 was served to the 'Corporate Debtor' through email on 01.01.2020 & by speed-post as well which was received by the 'Corporate Debtor' on 10.08.2020. Even after receipt of the same, the 'Corporate Debtor' failed to bring to the notice of the Operational Creditor the existence of any pre-existing dispute within 10 days of the receipt of the Demand Notice as stipulated in Section 8(2) of the IBC, 2016. Lately, on 05.09.2020 the Operational Creditor received a reply to the Demand Notice through email sent by the 'Corporate Debtor', which was ante-dated as "18.08.2020" to fall under the 10-day period. The Counsel for the Operational Creditor stated that he had also received the same reply to the Demand Notice U/s 8 of the IBC from the 'Corporate Debtor' by speed-post on 10.09.2020 which was posted only on 05.09.2020 as clearly evident from the post receipt attached to the envelope. The same is beyond the 10 days limitation as prescribed U/s 8(2) of the IBC 2016. It is found that in the said reply the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advance money which was paid to the 'Corporate Debtor' through the proforma invoice raised by the 'Corporate Debtor' on 25.11.2019 5. The stand of the Appellant is that on 27.06.2020, the 1st Respondent sent a notice through WhatsApp for taking legal action against the 'Corporate Debtor', seeking interest, opportunity cost, Lawyers charges. Apart from that, a Form III as per Section 8 of the I&B Code 2016 was issued on 1.8.2020 by the legal representatives of the Respondent for USD 1 lakh together with interest of 18% till date of payment. 6. The Learned Counsel for the Appellant contends that 1st Respondent had admitted in para 9 of the application form V under Section 9 of the I&B Code that the 'debt' is due and payable on 30.04.2020, which is after the Code for date of 25.03.2020 under Section 10A of the Code. The clear cut stand of the Appellant is that the 1st Respondent in order to bring the application within Section 10 A of the Code had stated that the 'date of default' was 3.1.2020. In fact, the 1st Respondent had not submitted any evidence that the default was committed on 03.01.2020 except agreeing for a date of delivery of 'Goods'. 7. The Learned Counsel for the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are bound by the pleadings, and in any case, when the date of default is after 25.03.2020 the application under Section 9 would be barred by Section 10A of the I&B Code, 2016. 12. According to the Learned Counsel for the Appellant the judgement of this Tribunal in Andal Bonumalla V. Tomato Trading LLP (vide Company Appeal (AT)(Ins) No.752 of 2019 where this Tribunal held that amounts paid as Advance would not fall within the term 'Operational Debt' for the purpose of the I&B Code, 2016. 13. The Learned Counsel for the Appellant adverts to the Judgement of this Tribunal in Madhusudan Tantia V. Amit Choraria (Comp. App. (AT)(Ins) No.557/2020) wherein it is held that the notification is prospective in nature and it does not apply to pending applications. Moreover, it is projected on the side of the Appellant that the right of a person is decided by Law that existed on the date of filing of the 'Application'. 14. The Learned Counsel for the Appellant proceeds to point out that the 1st Respondent/Operational Creditor has initiated the 'Corporate Insolvency Proceedings' on 16.09.2020 which is after the 24.03.2020 notification. Added further, it is the stand of the Appellant that 'init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant submits that the 1st Respondent will not come under the definition of 'Operational Creditor' as per Section 5(20) of the I&B Code, 2016, since it is an admitted fact that the 1st Respondent had only made an advance towards the purchase of goods. 19. The Learned Counsel for the Appellant submits that the 1st Respondent had admitted that the purchase order was issued through various negotiations and sample testing which was during 30th September, 2018 and that the purchase order was placed after period of one year i.e. on 25.11.2019. Indeed, though the ''Corporate Debtor'' was willing to deliver the goods, there was complete disruption in the procurement and processing in the month of February, March and April, 2020 and hence the 'Corporate Debtor' could not deliver the goods before the agreed date of 25.04.2020 as the Central Government and State Government imposed lockdown with effect from 25.03.2020. 20. The Learned Counsel for the Appellant brings it to the notice of this 'Tribunal' as against the below purchase order dated 25.11.2019 the 1st Respondent had made an advance of USD 1,00,000 and the same is as follows:- S. No Grade Quantity Order Value in USD 1 W 180Grad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... May, 2020 shall remain stayed till the next date of hearing. The deposit shall be made within two weeks. The Company - VMA Enterprises Pvt Ltd. is permitted to carry on its day to day operations. However, the IRP is given liberty to approach this Court in case he deems fit for any further directions. 6. Ld. ASG, who is appearing for the Union of India is requested to bring to the notice of the NCLT the notification dated 24th March, 2020 which is placed at page 60 of the present petition." 26. The Learned Counsel for the 'Appellant' refers to the Judgement of this Tribunal in the matter of Madhusudan Tantia V. Amit Choraria (Comp. App. (AT)(Ins) No.557/2020) wherein at paragraph 51 to 56 it is observed as under:- 51. "It is significant to point out that the 'Duty of Judges' is to expound and not to legislate is a primordial rule. Moreover, the transience of justice at the hands of Law troubles a judge's conscience. It is an axiomatic principle in Law that a judgement / an order of a Court of Law / Tribunal is to be written after much travail and productive disposition. As a matter of fact, the judicial key to the construction is the composite perception of the 'Deha' and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case is concerned, this Tribunal, after carefully and with great circumspection, ongoing through the contents of the notification dated 24.03.2020 issued by the Ministry of Corporate Affairs, Government of India, whereby and whereunder the minimum amount of default limit was specified as Rs. one crore (obviously raising the minimum amount from Rs. one lakh to one crore) unerringly comes to a definite conclusion that the said notification is only 'Prospective in nature' and not a 'retrospective' one because of the simple reason the said notification does not in express term speaks about the applicability of 'retrospective' or 'retroactive' operation. Suffice it for this Tribunal to point out that from the tenor, spirit and the plain words employed in the notification dated 24.03.2020 of the Ministry of Corporate Affairs, Government of India, one cannot infer an intention to take or make it retrospective as in this regard, the relevant words are conspicuously absent and besides there being no implicit inference to be drawn for such a construction in the context in issue. That apart, if the notification dated 24.03.2020 of the Ministry of Corporate Affairs, Government of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons on the financial health of corporate enterprises. The Ordinance and the Amending Act enacted by Parliament, adopt 25 March 2020 as the cut-off date. The proviso to Section 10A stipulates that "no application shall ever be filed" for the initiation of the CIRP "for the said default occurring during the said period". The expression "shall ever be filed" is a clear indicator that the intent of the legislature is to bar the institution of any application for the commencement of the CIRP in respect of a default which has occurred on or after 25 March 2020 for a period of six months, extendable up to one year as notified. The explanation which has been introduced to remove doubts places the matter beyond doubt by clarifying that the statutory provision shall not apply to any default before 25 March 2020. The substantive part of Section 10A is to be construed harmoniously with the first proviso and the explanation. Reading the provisions together, it is evident that Parliament intended to impose a bar on the filing of applications for the commencement of the CIRP in respect of a 'Corporate Debtor' for a default occurring on or after 25 March 2020; the embargo remaining in force for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 21st December 2018, passed by NCLAT is quashed and set aside. The order passed by NCLT dated 26th July 2018, is maintained." 30. The Learned Counsel for the Appellant refers to the Order of this Tribunal dated 25.10.2021 in Jumbo Paper Products V. Hansraj Agrofresh Pvt Ltd (vide Comp.App.(AT)(Ins) No.813/2021) wherein at paragraph 3 and 10 it is observed as under:- 3. "The Learned Counsel for the Appellant-Operational Creditor has argued that Operational Creditor used to provide corrugated paper boxes/cartons to the 'Corporate Debtor' and he has claimed that the 'Corporate Debtor' never raised any dispute about quality or quantity of the supplied goods when he was supplying them. Since some payment was pending with the 'Corporate Debtor', the Operational Creditor sent demand notice under section 9 to the 'Corporate Debtor'. In reply to this demand notice, the 'Corporate Debtor' again did not advert to any pre-existing dispute about the quality or quantity of the goods supplied but only sought time to clear the dues. The Operational Creditor thereafter filed application under section 9 of IBC 0n 13.9.2020 since there was a debt in default since 27.5.2018 till 23.6.2018." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Counsel for the 1st Respondent received the same reply to the demand notice under Section 8 of the Code from the Appellant through speed post on 10.09.2020 which was posted only on 05.09.2020 and this was clearly evident from the postal receipt attached to the envelop. Indeed, in the said reply the Appellant had acknowledged and admitted the debt and default and issuance of proforma invoice alongwith the payment received by him. 35. The Learned Counsel for the 1st Respondent points out that the Appellant in reply had stated that having procured and stored different grade of cashew and the same being perishable goods were disposed of at throw away prices. But the Appellant had failed to produce any proof evidencing any procurement, storage or disposal of the cashews and raising only false stories, to mislead this Tribunal, as an afterthought. 36. Expatiating his submissions, the Learned Counsel for the 1st Respondent contends that the Appellant had sufficient time to fulfil the contractual obligations viz; on 03.01.2020 when the 1st default took place and in between the period from 03.01.2020 to 25.03.2020 when the lock down was imposed. As a matter of fact, it is the versi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Appellant vindicates the 1st Respondent's stand with respect to the 'Contract', contractual obligations of both sides, delivery time lines and the default in delivery lines and failure on Appellant's side, in satisfying the contractual obligations. 42. It is the stand of the 1st Respondent that the 'date of refusal' to the 'deliver the goods' and return the money is not to be treated as the date of default in view of the fact that the default took place on 03.01.2020 when the promised date of shipment was not satisfied and complied with by the Appellant, which was rightly held so by the 'Adjudicating Authority' orders dated 16.10.2020. Further, it is pointed out on the side of the 1st Respondent when the 'Corporate Debtor' had failed to satisfy his/its obligations, the same is to be treated as the date of default and that is the 'essence' of the 'Agreement'. 43. The Learned Counsel for the 1st Respondent advert to Section 5(20) and 5(21) of the I&B Code which reads as under:- (20) "operational creditor" means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred; (21) "operational debt" means a cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. 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." 46. The Learned Counsel for the 1st Respondent cites the Order of this Tribunal dated 16.1.2020 in Unistill Alcoblends Pvt Ltd Vs India Brewery and Distillery Pvt Ltd (vide Comp App (AT)(Ins) No.162/2019) wherein at paragraph 6 to 8 it is observed as under:- 6. "The learned Counsel states that although the amount is shown under the heading of long term borrowings, the nature of dealings between the parties are apparent from the Agreement which they entered into and the business dealings which they had and which are reflected even in the various acknowledgements issued by the Respondent. 7. Considering the documents pointed out by the leaned Counsel for the Appellant, and the fact that the learned Counsel for the Respondent is unable to show us any document before the Notice under Section 8 was issued which would indicate that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint as to its voidable character is a part of the merits of the dispute between the parties. Whether or not 0. 32, r. 7(1) applies to the case would certainly be a matter of dispute in such a case and the object of s. 97 is precisely to disallow any such dispute being raised if the preliminary decree is not challenged by appeal. The whole object which s. 97 intends to achieve would be frustrated if it is held that only the factual correctness of the decree cannot be challenged but its legal validity can be even though an appeal against the preliminary decree has not been filed. Therefore, in our opinion, the High Court was right in coming to the conclusion that it was not open to the appellants to challenge the validity of the preliminary decree in the appeal which they had preferred against the final decree before the said High Court." and submits that in the instant case the 'default' took place on 03.01.2020, which fact was arrived at by the 'Adjudicating Authority' as per order dated 16.10.2020 which was not assailed by the Appellant till date and, therefore, the said order has become a conclusive, final and binding one upon the Appellant. 48. The Learned Counsel for the 1st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermina- tion, is an authority, or binding precedent in the same court, or in other courts of equal or lower rank in subsequent cases where the very point is again in controversy unless there are occasions when departure is rendered necessary to vindicate plain, obvious principles of law and remedy continued injustice. It should be invariably applied and should not ordinarily be departed from where decision is of long standing and rights have been acquired under it, unless considerations of public policy demand it. But in Nakara it was never required to be decided that all the retirees formed a class and no further classification was permissible." 50. The Learned Counsel for the 1st Respondent relies on the decision of Hon'ble Supreme Court in Fida Hussain & Ors V. Moradabad Development Authority and Anr. (2011) 12 SCC 615 at Spl. Page 626 wherein at paragraph 21 it is observed as under: 21. "It is now well settled that a decision of this Court based on specific facts does not operate as a precedent for future cases. Only the principles of law that emanate from a judgment of this Court, which have aided in reaching a conclusion of the problem, are binding precedents within the me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the person or authority to whom such powers have been delegated by the legislature it may or may not be possible to make the same so as to give retrospective operation. It will depend on the language employed in the statutory provision which may in express terms or by necessary implication empower the authority concerned to make a rule or regulation with retrospective effect. But where no such language is to be found it has been held by the courts that the person or authority exercising subordinate legislative functions cannot make a rule, regulation or bye- law which can operate with retrospective effect; (see Subba Rao, J. in Dr. Indramani Pyarelal Gupta v. W.R. Nathu & Others (1963 S.C.R. 721) - the majority not having expressed any different opinion on the point; Modi Food Products Ltd. v. Commissioner of Sales Tax U.P. (A.I.R. 1956 All. 35); India Sugar Refineries Ltd. v. State of Mysore (A.I.R. 1960 Mys. 326) and General S. Shivdev Singh & Anr. v. The State of Punjab & Others (1959 P.L.R. 514)." 10. "By the addition of the words 'either prospectively or retrospectively' by the aforesaid amendment, the State Legislature has now conferred the necessary power on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jasthan & Ors. v. Basant Agrotech (India) Ltd.11 "21. There is no dispute over the fact that the legislature can make a law retrospectively or prospectively subject to justifiability and acceptability within the constitutional parameters. A subordinate legislation can be given retrospective effect if a power in this behalf is contained in the principal Act. In this regard we may refer with profit to the decision in Mahabir Vegetable Oils (P) Ltd. v. State of Haryana (2006) 3 SCC 620, wherein it has been "41. We may at this stage consider the effect of omission of the said note. It is beyond any cavil that a subordinate legislation can be given a retrospective effect and retroactive operation, if any power in this behalf is contained in the main Act. The rule-making 10 (2006) 13 SCC 542 11 (2013) 15 SCC 1 Page 96 96 power is a species of delegated legislation. A delegatee therefore can make rules only within the four corners thereof. 42. It is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication." ( 110.3 Keshavla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iple that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the faith of the then existing law. 29. The obvious basis of the principle against retrospectivity is the principle of 'fairness', which must be the basis of every legal rule as was observed in the decision reported in L'Office Cherifien des Phosphates v. Yamashita- Shinnihon Steamship Co. Ltd. Thus, legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obvious omission in a former legislation or to explain a former legislation. We need not note the cornucopia of case law available on the subject because aforesaid legal position clearly emerges from the various decisions and this legal position was conceded by the counsel for the parties. In any case, we shall refer to few judgments containing this dicta, a little later. 33. A Constitutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be taken to have been that which it was not, that Act I understand to be retrospective. That is not this case. The question here is whether a certain provision as to the contents of leases is addressed to the case of all leases or only of some, namely, leases executed after the passing of the Act. The question is as to the ambit and scope of the Act, and not as to the date as from which the new law, as enacted by the Act, is to be taken to have been the law." These observations were made in dealing with the question as to the retrospective construction of Section 3 of the Conveyancing and Law of Property Act, 1892 (55 & 56 Vict. c. 13). In substance Section 3 provided that in all leases containing a covenant, condition or agreement against assigning, underletting, or parting with the possession, or disposing of the land or property leased without licence or consent, such covenant, condition or agreement shall, unless the lease contains an expressed provision to the contrary, be deemed to be subject to a proviso to the effect that no fine or sum of money in the nature of a fine shall be payable for or in respect of such licence or consent. It was held that the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cognizant of the fact that resolution applicants may not come forth to take up the process of the resolution of insolvencies (this as we have seen was referred to in the recitals to the Ordinance), which would lead to instances of the 'Corporate Debtor's going under liquidation and no longer remaining a going concern. This would go against the very object of the IBC, as has been noted by a two-Judge bench of this Court in its judgment in Swiss Ribbons (P) Ltd. v. Union of India (2019)(4)SCC 17 . Speaking through Justice Rohinton F Nariman, the Court held as follows: "27. As is discernible, the Preamble gives an insight into what is sought to be achieved by the Code. The Code is first and foremost, a Code for reorganisation and insolvency resolution of 'Corporate Debtor's. Unless such reorganisation is effected in a time-bound manner, the value of the assets of such persons will deplete. Therefore, maximisation of value of the assets of such persons so that they are efficiently run as going concerns is another very important objective of the Code. This, in turn, will promote entrepreneurship as the persons in management of the 'Corporate Debtor' are removed and replaced by entrepre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference between the initiation of the CIRP and its commencement succinctly, when it observed: "13. Reading the two definition clauses in juxtaposition, it emerges that while the first viz. 'initiation date' is referable to filing of application by the eligible applicant, the later viz. 'commencement date' refers to passing of order of admission of application by the Adjudicating Authority. The 'initiation date' ascribes a role to the eligible applicant whereas the 'commencement date rests upon exercise of power vested in the Adjudicating Authority. Adopting this interpretation would leave no scope for initiation of CIRP of a 'Corporate Debtor' at the instance of eligible applicant in respect of Default arising on or after 25th March, 2020 as the provision engrafted in Section 10A clearly bars filing of such application by the eligible applicant for initiation of CIRP of 'Corporate Debtor' in respect of such default. The bar created is retrospective as the cut-off date has been fixed as 25th March, 2020 while the newly inserted Section 10A introduced through the Ordinance has come into effect on 5th June, 2020. The object of the legislation has been to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Chandra Patnaik) , (2002) 1 SCC 1 followed in Union of India Vs. Hansoli Devi, (2002) 7 SCC 273. But no decision can be arrived at contrary to or inconsistent with the law laid down by the coordinate Bench. Kalyani Stores (supra) and K.K. Narula (supra) both have been rendered by the Constitution Benches. The said decisions, therefore, cannot be thrown out for any purpose whatsoever; more so when both of them if applied collectively lead to a contrary decision proposed by the majority." DISCUSSIONS 57. The 1st Respondent/Petitioner/Operational Creditor in IBA/35/KO/ 2020 (filed under Section 9 of the I&B Code r/w Rule 6 of Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 before the 'Adjudicating Authority' (National Company Law Tribunal, Kochi Bench) under Part IV 'Particulars of Operational Debt' in Sl.No.1 had mentioned hereunder:- Particulars of Operational Debt 1 Total amount of debt, details of transactions on account of which debt fell due, and the date from which such debt fell due. Total amount of debt USD 1,13,500/- is outstanding payable by the 'Corporate Debtor' to the Operational Creditor including interest @ 18% p.a. amounting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 'email'. The notice was also sent through speed post on 04.08.2020 which was received by the 'Corporate Debtor' on 10.08.2020. 63. The plea of the 1st Respondent is that the 'Corporate Debtor' had not made any payment of 'Debt' and also not raised any dispute in terms of the ingredients of Section 8(2) of the I&B Code relating to the 'Debt', within 10 days of the receipt of notice dated 20.08.2020. However, on 05.09.2020, the Learned Advocate of the 'Operational Creditor' had received a reply from the 'Corporate Debtor' to the 'Demand Notice' (under Section 8 of the Code) through email which is a 'Concocted', 'Misleading' and 'Untenable' one. Also through speed post on 10.09.2020, the Advocate of the 1st Respondent/ Operational Creditor received a 'Reply' through 'Speed Post'. 64. The clear cut stand of the 1st Respondent/Operational Creditor is that the total sum due and payable it for the default committed by the ''Corporate Debtor'' is USD 1,00,000 and interest at 18 % per annum amounting to USD 13,500. The date of default according to the Appellant took place on 03.01.2020 when the 'Cashew Kernel/shipment was to be dispatched by the ''Corporate Debtor'' who has failed to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable to be dismissed for want of jurisdiction as per Section 10A of the I&B Code. 69. According to the ''Corporate Debtor'', the 'Application' filed by the 1st Respondent/Operational Creditor is not maintainable because of the fact there was a 'Pre-existing' dispute between the parties in respect of the 'Contract' including the 'purchase terms',' procurement terms, delivery terms, repayment terms, interest terms and the failure to perform the 'Contract' beyond the control of the 'Corporate Debtor' due to 'Force Majeure' arising out of Covid19 pandemic. Indeed, the 'Pre-existing dispute' was very much before the issuance of 'Demand Notice' and, therefore, the Application filed by the 1st Respondent/Operational Creditor is not maintainable. 70. The plea of the ''Corporate Debtor'' is that there is no contract or agreement between the parties to the award of the 'Interest' on account 'Delay' or 'Default' in performing the Contract and further none of the documents. of the 1st Respondent/ Operational Creditor proves that the ''Corporate Debtor'' had agreed to pay any interest of 18%, as claimed. 71. According to the Learned Counsel for the Appellant, the object of the I&B Code is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it or any other instrument issued by a bank or financial institution; (i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clauses (a) to (h) of this clause; 76. Adjudicating Authority. As seen from the I&B Code, 2016 an 'Adjudicating Authority' does not decide a suit/money claim and the 'CIRP' is not determined by the 'Court'. In the initial stage, an 'Adjudicating Authority' is required to take appropriate steps for 'Resolution' of the 'Corporate Debtor' under 'Insolvency'. No wonder, 'Resolution Process' is not a 'Litigation' by any stretch of imagination. 77 In the instant case, the application under Section 9 of the I&B Code (IBA/35/KOB/2020) was filed on 16.09.2020. The Section 8 Demand Notice to the 'Corporate Debtor' was sent by WhatsApp and email on 01.08.2020 and further that the said Notice, by way of caution was sent through speed post on 04.08.2020 which was received by the ''Corporate Debtor'' on 10.08.2020, as averred by the 1st Respondent/Operational Creditor in Part IV of its application at Sl.No.8. 78. The 'Corporate Debtor' before the 'Adjudicating Authority' had taken a stand that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery object of the IBC, as has been noted by a two-Judge bench of this Court in its judgment in Swiss Ribbons (P) Ltd. v. Union of India7." 33. The date of the initiation of the CIRP is the date on which a financial creditor, operational creditor or corporate applicant makes an application to the adjudicating authority for initiating the process. On the other hand, the insolvency commencement date is the date of the admission of the application. This distinction is also evident from the provisions of sub-section (6) of Section 7, sub-section (6) of Section 9 and sub-section (5) of Section 10. Section 7 deals with the initiation of the CIRP by a financial creditor; Section 8 provides for the insolvency resolution by an operational creditor; Section 9 provides for the application for initiation of the CIRP by an operational creditor; and Section 10 provides for the initiation of the CIRP by a corporate applicant. 34. NCLAT has explained the difference between the initiation of the CIRP and its commencement succinctly, when it observed: 13. "Reading the two definition clauses in juxtaposition, it emerges that while the first viz. 'initiation date' is referable to filing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the 'Adjudicating Authority' on 16.09.2020 wherein the 'Operational Creditor' had claimed a total amount of debt USD 1,13,500 payable by the 'Corporate Debtor' to it including interest at 18% per annum amounting to USD 13,500 as on 31.08.2020, in view of the fact that the contract was terminated on 30.04.2020, there being a dispute in regard to the contract for delivery of goods (in respect of supply of cashew kernels) between the parties, the threshold limit under Section 10A of the Code for initiation of CIRP is Rs. 1 Crore (vide Notification to Section 4 of the Code dated 24.03.2020, in the instant case, the 'Default' claimed from ''Corporate Debtor'' is USD 1,00,000 and 'interest' @ 18% per annum amounting to USD 13,500 and the interest being denied by the ''Corporate Debtor'' there being no contract for paying the interest between the parties) and this 'Tribunal' taking note of the fact that under the 'Contract' the amount was due and payable on 25.04.2020, comes to a consequent conclusion that as per provision of Section 10A, the application filed by the 'Operational Creditor'/petitioner under Section 9 of the Code is not maintainable and in short, the employment of the w ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
