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TMI Blog2022 (9) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... company is Rs. 9,76,34,820/- 4. The total amount claimed by the Operational Creditors is Rs. 8,75,22,385/-. The default occurred on 18.02.2016. The Demand Notices under section 8 of the Code was sent on 19th December, 2018 and 8th March 2019, the reply to the same was sent on 1st January, 2019 and 1st April, 2019 respectively. 5. Submissions on behalf of the Operational Creditors: 5.1 The case of the Operational Creditors is that on the basis of an understanding and arrangement between the Operational Creditors and the Corporate Debtor, the Operational Creditors had duly supplied materials i.e. HR Coils/sheets/plates (hereinafter referred to as "the said goods") to the Corporate Debtor and raised invoices for the same which became due and payable within reasonable period of 30 days. 5.2 As per the commonly accepted industrial practice, the Corporate Debtor would issue orders to the Operational Creditors verbally. In terms of the said orders, the Operational Creditors sold, supplied and delivered to the Corporate Debtor the entire quantity of the said goods required by it. The said goods were supplied as per the specifications of the Corporate Debtor. 5.3 The Corporate Debtor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 to the letter dated 19th March, 2019 are annexed to the petition and collectively marked as Exhibit-"E". 5.10 In spite of the receipt of the demand notices, the Corporate Debtor neglected to make any payment. The operational debt of Rs.8,75,22,385/- is due and outstanding from the Corporate Debtor to the Operational Creditors. 5.11 The documents relied upon by the Operational Creditors in support his claims include: i. Master Data of the Corporate Debtor, being Exhibit A; ii. 64 invoices for the period 18.01.20Rs. 6 to 8.05.2018; iii. Demand Notice dated 19th December 2018 along with its reply dated 1st January 2019, being Exhibit D; iv. Demand Notice dated 8th March 2019 along with its reply dated 19th March 2019 and Operational Creditors' reply dated 1st April 2019 to the said letter, being Exhibit E; v. Bank account statements of the Operational Creditors for the period 15.01.2016 to 31.03.2019, being Annexure II; 6. Submissions on behalf of the Corporate Debtor: 6.1 It is submitted that there is no debt which is or can be said to be due and/or payable by the Corporate Debtor to the Operational Creditors. The said application has no merit and deserves to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ials supplied to Sri Pankaj Sharma who represented himself to be associated with the Operational Creditors and the said two firms. A request was made to replace the defective goods with superior quality of materials in order to enable the Corporate Debtor to complete the process of manufacturing of pipes for effecting supplies thereof to its end customers. The inferior quality of goods and/or the defective supplies were informed to the said two firms by letter dated 2nd March, 2017 issued by the Corporate Debtor which was duly received by the said Sri Pankaj Sharma. The said Sri Pankaj Sharma also assured the Corporate Debtor that the defective material supplied by the said two firms would be replaced after discussion with Sri Rajesh Bihani who was looking after the business of the said two firms. A copy of the letter dated 2nd March, 2017 is annexed to the reply affidavit and marked as Annexure "B". 6.8 By reason of the defective supplies made, the Corporate Debtor had in fact failed to meet its obligation towards its end customers. The Corporate Debtor failed to deliver manufactured pipes to its customers by reason of the quality dispute that had arisen in the raw materials supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a purported ledger statement. No money is due or payable by the Corporate Debtor to the Operational Creditors in view of the disputes between the parties. 6.12 The Operational Creditors have purported to file the instant petition suppressing the aforesaid facts, knowing fully well that serious disputes as to the claim of the Operational Creditors and the same is sufficient to warrant rejection of the said application. 6.13 The Operational Creditors have filed another application under section 9 of the Code being CP (IB) No. 824/KB/2019 for a purported claim of Rs. 64,69,117/- arising out of the same transaction as referred to in the said application. The disputes in the instant petition and CP(IB) 824/KB/2019 are the same. A copy of the reply- affidavit filed by the Corporate Debtor in the said proceeding is annexed to the instant reply affidavit and marked as Annexure "E". 7 Rejoinder on behalf of the Operational Creditors: 7.1 It is denied that there is no debt which is or can be said to be due or payable by the Corporate Debtor to the Operational Creditors as alleged or at all. 7.2 It is denied that any evidence is required to be led for the purpose of adjudication of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Operational Creditors as well as the signature of Mr. Pankaj Sharma, one of the employees of the Operational Creditors, has also been forged and the said letter was never received by him. 7.8 It is further denied that there was any meeting between the Corporate Debtor or the said Rajesh Kumar Bihani on 8th March, 2018 wherein the said Rajesh Kumar Bihani purportedly assured to compensate the Corporate Debtor for the purported loss suffered on account of the purported defective supplies made. 8 Supplementary Affidavit dated 12th December, 2019 on behalf of Corporate Debtor: 8.1 The instant supplementary affidavit has been filed to bring on record certain additional documents for adjudication of the present disputes. 8.2 It is submitted herein that Operational Creditors have also filed a civil suit before the Hon'ble High Court at Calcutta against the Corporate Debtor abovenamed being Civil Suit no. 254 of 2019 for the recovery of the price of goods as well as interlocutory application being G.A. No.2598 of 2019 seeking a judgment and decree for admission for a sum of Rs.5,79,58,608/-.The said application was heard by the Hon'ble Court on 29 November 2019 when upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,59,04,686/-. Also, all manufacturing activities of the Corporate Debtor has stopped and the factory of the Corporate Debtor is lying closed. 9.3 The purported defense of the Corporate Debtor is sham as for all goods supplied by the Operational Creditors to the Corporate Debtor the same is accompanied by test certificates issued by the manufacturer. Some of such test certificates are annexed to this reply and collectively marked with the letter-"A". Hence the plea of poor quality of goods is absolutely false and untrue. 9.4 The Operational Creditors have deposited VAT collected form the Corporate Debtors with the taxing authorities. The Corporate Debtors have also taken full input credit of such VAT paid to the Operational Creditors and adjusted against the VAT collected from the Corporate Debtor's buyers. There is no VAT mis-match. The same is evident from the VAT returns website maintained by the Directorate of Commercial Taxes, Department of Finance, Government of West Bengal a copy whereof is annexed to this reply and marked with the letter-"B". 9.5 On a comparison of the total sales figure in the hooks of accounts maintained with the Operational Creditors and acknowled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Commercial Courts Act, 2015. The Learned Single judge while dismissing the Application for Review observed that the defendant (being the Corporate Debtor herein) did not raise the issue of leave under Section 12A of Act of 2015 being granted by the Ld. Master. 10.5 The Corporate Debtor filed a Special Leave Petition challenging the decree dated 16th January, 2021, passed in G.A. No.2598 of 2019 in C.S. No. 254 of 2019 and judgment dated 1lth February, 2021 in RVW 6 of 2020. The same was however dismissed as withdrawn by an order dated 16th July, 2021. 10.6 The Corporate Debtor filed two parallel appellate proceedings before the Hon'ble High Court at Calcutta including an appeal from the Learned Master's order under Chapter VI, Rule 15 of The Rules of The High Court At Calcutta (Original Side), 1914 and an appeal from the judgment and decree dated 16th January, 2020. The appeal from the Learned Master's order at such a belated stage was dismissed by the Learned Single Judge by an order dated 07.04.2022. 10.7 The appellate proceedings are however pending before the Hon'ble Division Bench. The Hon'ble Division Bench has however observed that the plaintiffs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved by the corporate debtor. The moment there is existence of such a dispute, the operational creditor gets out of the clutches of the Code." (Para 29) The Apex Court, in Mobilox Innovations Private Limited (Supra) further held that: "...Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the "dispute" is not a patently 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." (Para 40) 11.4 In the instant matter, not only has the Corporate Debtor established that there were pre-existing disputes and that the Operational Creditors had notice of such disputes, but also, the chain of emails between the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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