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TMI Blog2022 (12) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... ating Authority', ('National Company Law Tribunal', Division Bench - I, Chennai), while passing the 'impugned order' dated 04.10.2021, in IBA/751/2020, at Paragraphs 12 to 15, had observed the following: 12. "It was submitted that the principal amount due and payable by the Corporate Debtor is Rs.3,25,00,000/- and that the Corporate Debtor despite having its liability with respect to the outstanding sum, failed to make payments notwithstanding several requests and reminders and it is evident that there is no dispute with regard to the existence of the said operational debt. It was further submitted by the Operational Creditor further submitted that as on 20.02.2020, a principal sum of Rs.3,25,00,000/- along with interest of Rs.46,34,301/- (calculated @ 24% p.a. up to 20.02.2020 on the principal amount), totalling to Rs.3,71,34,301 was due and payable by the Corporate Debtor up to 20.02.2020. 13. Under such circumstances, it was submitted that the Operational Creditor issued a notice of Demand as stipulated under Section 8 of the IBC, 2016, to the Corporate Debtor on 20.02.2020, which was received by the Corporate Debtor on 24.02.2020 and also received through mail on 27.02.2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Operational Creditor has proved that there is an 'operational debt' and 'default' which has been committed on the part of the Corporate Debtor. Further, it is also pertinent to note that the default arising in the present Application is much prior to the advent of the Covid-19 pandemic and hence the Corporate Debtor cannot seek shelter also under Section 10A of IBC, 2016. Under the said circumstances, this Tribunal is left with no other option than to proceed with the present case and initiate the Corporate Insolvency Resolution Process in relation to the Corporate Debtor." and admitted the 'Application' and declared 'Moratorium', etc. Appellant's Contentions: 3. Assailing the 'Propriety', 'Validity' and 'Legality', of the 'impugned order' dated 04.10.2021 in IBA/751/2020, passed by the 'Adjudicating Authority', ('National Company Law Tribunal', Division Bench - I, Chennai), in admitting the 'Application' under Section 9 read with Rule 6 of the Insolvency and Bankruptcy Code, 2016 (filed by the '1st Respondent / Petitioner / Operational Creditor'), the Learned Counsel for the Appellant submits that the 'Appellant', was transacting with the 'Respondent', over a long period of tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vency Resolution Process'. 9. The Learned Counsel for the Appellant forcefully contends that 'where a 'Party', wishes to avail the remedy under the I & B Code, 2016, for breach of the terms of a 'Settlement Agreement', an 'Application', under I & B Code, 2016, 'shall not be maintainable'. 10. The Learned Counsel for the Appellant, submits that it is a matter of record that with the payment of the amount, claimed by the Respondent, is partially due from another Company, by the name 'Uniply Décor Limited', who is not a 'Party' to the proceedings. Further, 'Uniply Industries Limited', had paid its 'old Debt', as per the terms of the 'Settlement Agreement'. 11. The Learned Counsel for the Appellant points out that it is the 'Debt' of 'Uniply Décor Limited', which remains 'unpaid' and hence, the 'Petitioner, in the Company Petition could not have continued to proceed with the Company Petition, despite, the above payments. 12. The Learned Counsel for the Appellant comes out with a plea that the 'Memorandum of Compromise', is binding on the necessary 'Parties' concerned, and Clause 5 of the 'Memorandum of Compromise', provides a 'Schedule of Payment', which gives details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 'New Contract'. 17. The Learned Counsel for the Appellant contends that the 'discharge of one's Contractual obligations', by way of performing the 'Original Terms of the Contract', is substituted by either a whole 'New Contract' or a new set of obligations, within the same 'Contract'. Also that, the 'Respondent', had charged interest till 30.06.2020 at 24% and that the 'Claim' of 'Interest' is untenable, because of the fact that the 'Respondent', had accepted 'part payments', without giving any 'Notice' that they would 'Claim' interest for the 'Delayed Payment', and therefore, the 'Respondent', is precluded from 'Claiming' interest, based on the principle of 'Waiver' and 'Acquiescence'. 18. The Learned Counsel for the Appellant while rounding up, submits that the 'Appellant', had continued to pay the 'Respondent', towards his 'Outstanding Dues', even during the 'Adjudication' of 'Petition', under Section 9 of the Code', which the 'Respondent', had deliberately concealed before the 'Adjudicating Authority', and prays for 'allowing' the 'Appeal', by setting aside the 'impugned order' dated 04.10.2021 in IBA/751/2020, passed by the 'Adjudicating Authority', ('National Company Law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of settlement agreement do not come under the definition of Operational debt. Hence, we are not inclined to allow the prayer of the Applicant." 22. The Learned Counsel for the Appellant, refers to the 'Order' of the 'Tribunal' (New Delhi) in M/s. Brand Reality Services Ltd. v. M/s. Sir John Bakeries (India) Pvt. Ltd., reported in MANU/NC/7776/2020, wherein, it is observed that an 'Operational Debt', under the I & B Code, 2016, does not take account of unpaid 'Debt' instalments, under the 'Settlement Agreement', and that if the relationship between the 'Parties', to the dispute is not of 'Corporate Debtor' and 'Operational Creditor', then, such other payment defaults would not come, within the ambit of the I & B Code, 2016. 23. The Learned Counsel for the Appellant, falls back upon the 'Order' of the 'Tribunal', ('National Company Law Tribunal', Delhi Bench) in Bajaj Rubber Company Private Limited Vs. Saraswati Timber Private Limited, wherein it is held that, the breach of the terms and conditions of payment, according to a Settlement Agreement does not come under the purview of the Operational Debt', as defined under the I & B Code, 2016, and it cannot be a basis to trigge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in the year 2018 and in the year 2019, with a promise to effect 'payments', by Oct'2019, much before the spread of 'Covid-19 Pandemic' in India, Viz. March 2020. As such, the contra stand of the Appellant, that it was prevented from making 'payments', because of Covid-19 Pandemic', is an 'incorrect' one. 28. The Learned Counsel for the 1st Respondent contends that the 'Appellant' has admitted its 'Liability' in the instant Comp. App (AT) (INS) No. 260 of 2021 (vide Page 7 of the 'Memorandum of Appeal'), wherein, it is mentioned as under: DATE MODE OF PAYMENT AMOUNT RECEIVED 07.05.2019 NEFT TRANSFER Rs.25,00,000 08.05.2019 NEFT TRANSFER Rs.25,00,000 09.05.2019 NEFT TRANSFER Rs.10,00,000 09.05.2019 NEFT TRANSFER Rs.10,00,000 17.05.2019 NEFT TRANSFER Rs.15,00,000 24.05.2019 NEFT TRANSFER Rs.15,00,000 01.06.2019 NEFT TRANSFER Rs.15,00,000 28.06.2019 RTGS TRANSFER Rs. 5,00,000 17.07.2019 RTGS TRANSFER Rs.50,00,000 19.02.2020 Through NEFT Rs.25,00,000 Rs.2,00,00,000 29. Moreover, in Page 8 of the 'Memorandum of Appeal', an 'Outstanding Sum' of Rs.2,05,00,000, is yet to be 'paid by the 'Appellant', is tacitly admitted by the 'Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting Authority is required to see is whether there is a debt due and default has occurred. However, while adjudicating the default, the Adjudicating Authority does not have to indulge in determining the extent or details of debt. The moment it is satisfied that the unpaid amount of default is above Rs 1 Lakh or Rs 1 Crore as the case may be, it is bound to admit the application. In the context, we are further strengthened by the law laid down by the Hon'ble Supreme Court in the matter of "Innoventive Industries Ltd. Vs. ICICI Bank and Ors. - (2018) 1 SCC 407", whereby it is held that: "The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins. Default is defined in Section 3(12) in very wide terms as meaning non-payment of a debt once it becomes due and payable, which includes non-payment of even part thereof or an installment amount. For the meaning of "debt", we have to go to Section 3(11), which in turn tells us that a debt means a liability of obligation in respect of a "claim" and for the meaning of "claim", we have to go back to Section 3(6) which defines "claim" to mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve conclusion is further fortified then we look into the scheme of Section 9(5)(ii) which provides that the Adjudicating Authority can reject the Application if - "notice of dispute has been received by the Operational Creditor or there is a record of dispute in the information utility". The above provision indicates that even if no notice of dispute has been received, and there is record of dispute in the Information Utility the Application under Section 9 is to be rejected by the Adjudicating Authority. The above provision clearly indicates that even in absence of notice of dispute, Adjudicating Authority can reject the Application if there is record of dispute in the Information Utility. It goes without saying that record of dispute in the Information Utility can very well be pointed out by the Corporate Debtor before the Adjudicating Authority when notice is issued under Section 9. Further in Reply to Section 9 Corporate Debtor can bring the material to indicate that there are pre-existing disputes in existence prior to issuance of demand notice under Section 8. We thus are of the considered opinion that mere fact that Reply to notice under Section 8 (1) having not been given w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us Invoices as stated supra, it is bounden duty of the Respondent/Corporate Debtor to pay the due amount in issue. Company Appeal (AT)(Insolvency)No.608 of 2020. 46. The other aspect of the matter to be significantly pointed out is that the Respondent/Corporate Debtor through its purchase orders had offered to make payment to the Appellant / Corporate Debtor within a period of 45 - 60 days and in fact the payment was agreed to be made within 30 days from the date of Invoice. As a matter of fact, the Respondent / Corporate Debtor had not made any payment in respect of the due amount even after the 'Consent Decree' passed by the Competent Court of law. 47. Section 3(10) of The Insolvency and Bankruptcy Code 2016 defines 'Creditor' and even in the said definition a 'Decree Holder' cannot be excluded to file an Application under the Code. Going by the definition 3(10) of 'Creditor', it includes 'Financial Creditor', 'Operational Creditor'. 48. Be that as it may, in the light of detailed qualitative and quantitative discussions and also this Tribunal keeping in mind the entire conspectus of the attendant facts and circumstances of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te debtor; (ii) The respondent will be considered to have taken over the Proprietary Concern in accordance with its MOA; and (iii) The application under Section 9 of the IBC is not barred by limitation. 63. The appeal is allowed by setting aside the impugned judgment and order of the NCLAT dated 12 December 2019. Since the CIRP in respect of the respondent is ongoing due to this Court's order dated 18 November 2020, no further directions are required. 64. Pending application(s), if any, stand disposed of." 38. The Learned Counsel for the 1st Respondent, submits that in the instant case, the 'Debt', arose out of the 'Unpaid Invoices', for the Goods, supplied by the 1st Respondent to the 'Corporate Debtor', and that the 'Outstanding Amounts', were not paid. Also that, the 'Outstanding Sum(s)', are also duly reflected in the 'Ledger Account' (for the period from 01.04.2015 to 31.03.2016, onwards), maintained in the name of the 'Appellant' / 'Company', by the '1st Respondent' and the relevant 'Ledger Entry', is in Pages 205 & 206 of the 'Appeal Paper Book' ('Ledger Account' - for the period from 01.04.2019 to 31.03.2020). Dispute : 39. It is pointed out that a 'Dispute', do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not required under Section 18 of the Limitation Act, 1963, but, it is 'essential under Section 19 of the Limitation Act, 1963'. 46. An 'Acknowledgement', has the effect of creating a new period run from the 'date of acknowledgment'. It does not create a 'New Contract'. Therefore, it is distinct from a 'Novation of Contract', with the meaning of Section 62 of the Indian Contract Act, 1872, as per decision in Hastimal v. Shankar, reported in AIR 1952 Raj at Page 7 (Full Bench). 47. An 'Acknowledgment', extends the 'Period of Limitation'. An 'Acknowledgement' of 'Liability', ought to be a necessary implication, so that the 'Acknowledgement', is 'clear' and 'unequivocal', as per the decision Sarangdhar Singh v. Lakshmi Narayan, reported in AIR 1955, Patna at Page 320. Discussions : 48. Before the 'Adjudicating Authority', ('National Company Law Tribunal', Division Bench - I, Chennai), the '1st Respondent / Petitioner / Operational Creditor', in Form No.5 (filed under Section 9 of the Code read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority Rules, 2016), under Part IV 'Particulars of Operational Debt', had averred that the 'Principal Sum' of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok' in 'Diary No. 864 dated 11.10.2021), had mentioned that the 'Ledger Account' of the 'Corporate Debtor', maintained by the 'Operational Creditor' along with 'Letter of Explanation', was filed vide Annexure - II (9) (Colly). 54. In the instant case, although on the side of the 'Appellant', a plea is taken, that the 'Unpaid Dues', under a 'Settlement Agreement', is not an 'Operational Debt', and also that, a 'Violation' of the 'Memorandum of Compromise' dated 30.04.2019, cannot be a basis to initiate 'Corporate Insolvency Resolution Process', against the 'Corporate Debtor', it is evident from the 'Memorandum of Compromise' dated 30.04.2019, and other materials available on record that the 'Outstanding Principal Amount', remains 'Unpaid' and on this ground alone, the instant 'Appeal', deserves to be dismissed, in the considered opinion of this 'Tribunal'. 55. In the present case, the 'Defaults', took place in the year 2018 and later in the year 2019, with a promise to effect payments, by October 2019, prior to the 'Covid-19 Pandemic', in March 2020. 56. Apart from that, the 'Appellant', in the instant 'Appeal Memorandum', had tacitly admitted that, till date, a payment of Rs.2,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent / Operational Creditor', along with the 'Copy of Statement of Accounts', was filed by the '1st Respondent / Petitioner / Operational Creditor', vide Page 193 - 195 of the Appeal Paper Book (Diary No. 864 dated 11.10.2021 - filed by the 'Appellant'). 64. It cannot be brushed aside, that the 'Invoices' and the 'Ledger Account', were the cementing platform, for the '1st Respondent / Petitioner / Operational Creditor', to prefer an 'Application' in IBA/751/2020, before the 'Adjudicating Authority', ('National Company Law Tribunal', Division Bench - I, Chennai). 65. In the instant case, the 'Appellant', had not produced any 'Document', to the subjective satisfaction of this 'Tribunal', evidencing the 'prevalent' of 'Preexisting Dispute', either prior to the 'issuance of Notice', under Section 8 of the I & B Code, 2016, or in 'Reply', to the 'Notice', issued under Section 8 of the Code, by the '1st Respondent / Petitioner / Operational Creditor'. Also, the 'Appellant', had failed to exhibit any 'interest' / 'controversy' / 'dispute', when the Section 9 'Application', was pending before the 'Adjudicating Authority'. 66. In view of the detailed upshot, on a careful consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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