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TMI Blog2022 (12) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute - HELD THAT:- The Adjudicating Authority has further erred in not looking to the fact that in the reply to the pre-trial notice, the Respondent did not raise any issue regarding the goods being substandard which issue came to be raised only when the demand notice was issued before filing the application and was an afterthought objection, not made out from the record. The emails relied upon the Adjudicating Authority are not directed to raise a pre-existing dispute rather the said emails are exchanged by the parties regarding the improvement in the operation and sales and has nothing to do with the goods which are now alleged to be substandard or defective. Argument of the Respondent that the Appellant has invoked the arbitration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply Contract on 23.08.2017 with the Respondent (Corporate Debtor). There was an addendum to the said contract dated 27.08.2018. It is an admitted case that the Appellant served a pre-trial notice (Annexure A-5) in terms of the provision of Russian Laws to the Respondent on 03.09.2019 to which reply was filed by the Respondent on 23.09.2019. Thereafter, the Appellant served a demand notice dated 23.01.2020 (Annexure A-7) claiming an amount of Rs. 20,143,443.87/- on account of nonpayment of the goods supplied by the Respondent. The Respondent sent a reply dated 15.02.2020 to this demand notice in which it was averred that fact that you have supplied substandard goods to our client not capable of fetching a market in India . Thereafter, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue decided by the Adjudicating Authority qua the related party, while relying upon the judgment delivered by the Tribunal, approved later on by this Appellate Tribunal in the case of Zoom Communication Pvt. Ltd. (Supra), it is submitted that the facts in the case of Zoom Communication Pvt. Ltd. (Supra) are altogether different from the present case. It is submitted that in the case of Zoom Communication Pvt. Ltd. (Supra) the court has come to the conclusion that it was a sham transaction between the parties which cannot be followed for initiation of CIRP whereas in the present case no such finding has been recorded. It is further submitted that even if the appellant is a related party then there would be two hurdles before it that in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing to say that the goods supplied were substandard. As regards the clause of arbitration is concerned, which is stated to have been mentioned in the contract itself, it is argued that the presence of the arbitration clause in the argument will not disentitle the Appellant from preferring the application under Section 9 of the Code, in this regard, he has relied upon a decision of this Tribunal rendered in the case of Hasan Shafiq Vs. CT-Technologies Aps, CA (AT) (Ins) No. 802 of 2020 decided on 14.02.2022. 5. In reply, Counsel appearing on behalf of the Respondent has submitted that in so far as the first issue of the related party is concerned, he would rely upon the findings recorded by the Adjudicating Authority and shall refer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which it has been observed that Section 21 is in Part I of the Act and, indisputably, applies only to arbitral proceedings in India . He has further submitted that pretrial notice was sent in consonance with the laws of Russia and the Respondent was informed that if the claim is not satisfied then matter goes to the Arbitration Court of the St. Petersburg and Leningrad Region. He has further explained with the help of the report of one Baker McKenzie that the Arbitrazh Court are the commercial Court in Russia has nothing to do with Arbitral Tribunal. It originates from an old soviet tradition, whereby the disputes between state enterprises were heard before the so-called State Arbitrazh and the procedural principles of the arbitrazh c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive. Argument of the Respondent that the Appellant has invoked the arbitration in the pre-trial notice is also neither here nor there in view of the fact that firstly, Section 21 of the Act would apply only to the Arbitral proceedings in India as has been held by the Delhi High Court in the case of Raffles Design International India Pvt. Ltd. (Supra) and secondly, it was the arbitration court in the St. Petersburg which is akin to Civil/Commercial Court having three tiers. 10. Thus, looking from any angle, there is an error of appreciation of facts and evidence on the part of the Adjudicating Authority in dismissing the application filed by the Appellant. The appeal is allowed and the impugned order is hereby set aside. Though in the g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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