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TMI Blog2023 (3) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... by filing both these Appeals before this Tribunal on 09.05.2022 which is well within the period of Limitation and thereforethe Company Appeal (AT) (CH) (Ins.) No.158/2022 is not barred by Limitation. This Tribunal is conscious of the fact that any Admission under Section 9 of the Code, it is also mandated that the existence of a Pre-Existing Dispute is to be ascertained by the Adjudicating Authority. Keeping in view the peculiar facts of the attendant case that the Corporate Debtor had replied on 06.01.2022 to the Section 8 Demand Notice dated 21.12.2021, highlighting the Pre-Existing Dispute; the Section 9 Application was filed on 07.01.2022 and the copy of the Reply Notice was delivered to the first Respondent on 08.01.2022; that the matter was listed before the Adjudicating Authority on 10.02.2022 and on 17.03.2022, but the Respondent had failed to place this Reply before the Adjudicating Authority either on 10.02.2022 or on 17.03.2022; this Tribunal is of the earnest view that in the interest of justice, an opportunity be given to the Appellant herein to be heard on merits. This Tribunal finds it a fit case to remand to the Adjudicating Authority to decide the matter o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.9/9/AMR/2022 respectively. Since both these `Appeals deal with common issues or fact in law, they are being disposed of by this `Common Order . Company Appeal (AT) (CH) (Ins.) No. 158/2022: 2. By the `Impugned Order dated 21.03.2022, the `Adjudicating Authority has admitted the Application filed by the Respondent/`Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as `The Code ). While admitting the Application, the `Adjudicating Authority has observed as follows: 2. iii. The revenue share of the Operational Creditor is payable to him from out of the advances received by the Corporate Debtor pursuant to the sale of residential units, the Operational Creditor started tracking the transactions being made by the Corporate Debtor in respect of residential units sale in the Project. As on 21.12.2021 more than 200 transactions were registered without transferring the share of the Operational Creditor as per the Revenue Sharing Agreement. The Corporate Debtor sold carpet area of 1,36,978 sq. ft. in the project out of which, the Operational Creditor is entitled for Rs.26,80,31,333/- including interest @ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od that in an application seeking to set aside the order of ex-parte, the Applicant needs to either prove that the service of notice is not effected on him or that he was prevented by sufficient cause not to appear before this Tribunal in spite of such service. In this case the pleas taken in the application are none of the above two. The plea taken is that the notice was refused as the Office was not functioning or that the office was functioning limitedly with skeleton staff, which can be held as not proved in the light of above discussion. The reply notices do not spell existence of pre-existing dispute in terms of section 8 of IBC. It is only the contentions in the demand notices that are disputed. According to section 8 of IBC a dispute should be existing by the date of demand notice or there should be pending a suit or arbitration proceedings which are filed before the receipt of such notice, which is not made out in this case. 4. Learned Sr. Counsel for the `Appellant , Mr. Arun Kathpalia submitted that an `Executive Director Agreement was executed between the `Corporate Debtor and the first Respondent/`Operational Creditor on 08.02.2008, under which the first Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the first Respondent seeking payment of some amounts under the `Revenue Sharing Agreement . Learned Sr. Counsel argued that Clause 3.10 of the same Agreement refers to `Arbitration , if any dispute arises between the parties. The first Respondent in invoking this Clause 3.10 himself `acknowledges and `admits that the `claimed amount is disputed. 7. It is submitted by Learned Sr. Counsel, Mr. Satish Parasaran that the `Adjudicating Authority has committed a `grave error in holding that there was no `Pre-Existing Dispute when the `Claim was disputed since 2015 and placed reliance on the following documents: Reply dated 04.08.2015 to the `Legal Notice dated 18.07.2015, denying all dues; Reply dated 04.10.2021 to the Letter dated 20.08.2021, denying all dues; Reply dated 06.01.2022 to the Section 8 Demand Letter dated 21.12.2021, once again denying all dues; The Letter of the first Respondent dated 20.08.2021, citing the `Arbitration Clause in the `Revenue Sharing Agreement dated 29.01.2009; Details of Criminal Proceedings in the case DDR N0. 7063/2019, instituted by the `sister concern of the `Appellant alleging cycling of funds; `Order dated 03.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the `Order on 05.05.2022. Therefore, the `Appeal filed before this Tribunal is well within the period of Limitation. The non-appearance of the `Corporate Debtor before the `Adjudicating Authority was not attributable in any manner to the inaction or negligence on the part of the `Corporate Debtor but only on account of an inadvertent lapse. 12. The `Adjudicating Authority did not appreciate the various communications exchanged between the parties and came to a finding that there was no `Pre-Existing Dispute which was observed in the `Impugned Order dated 05.05.2022, despite the fact that this `Order was passed against Application I.A.33/2022, wherein and whereunder the `Adjudicating Authority ought to have either rejected the Application or allowed it without traversing into `merits . 13. Learned Sr. Counsel, Mr. Arvind Pandian submitted that the `Appellants themselves inflicted the wound by adhering to Rule 49 of the NCLT Rules, 2016, as it is very clear from Order 5 Rule 9 of CPC read with Section 27 of the General Clauses Act, 1897 that once a `Notice is refused, it is deemed to be `Proper Service`. It is submitted by the Learned Counsel that under Rule 49 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceive consideration from out of the sales proceeds of the Project Components of the Company which shall be exclusive of the remuneration received by him in terms thereof. 15. It is submitted that the said Clause clearly establishes that the first Respondent is entitled to a share in the `revenue generated by the `Appellant Company and is exclusive of the remuneration received by him under the `Executive Director Agreement . Both the Agreements are independent of each other and cannot be said to be co-terminus. The delay in implementation of the Project was purely due to lack of funds which the `Appellant Company had failed to organize. It is submitted that the first Respondent is not aware of the `Legal Notice or the `Reply dated 04.08.2015, as the Advocate who issued the `Notice on behalf of the first Respondent had passed away within a couple of months, after the issuance of the said `Notice and his office was closed. 16. Even if the `Reply Notice is taken into consideration, the `Appellant had only blindly denied the payment of any dues. The first Respondent issued a `Legal Notice dated 20.08.2021, calling for an `Amicable Settlement of the `Claims but has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for hearing, the Tribunal may make an order setting aside the ex-parte hearing as against him or them upon such terms as it thinks fit 20. It is the case of the Respondent that the `Appellant herein admittedly states that the `Notice was refused, but only on account of limited functioning of the `Corporate Debtor and this cannot be a satisfactory ground for the `Adjudicating Authority to have allowed the Application under Rule 49 of the NCLT Rules 2016. It is contended that the `Appellant did not satisfy either of the two conditions as provided for, to invoke the said Rule. Learned Sr. Counsel Mr. Arun Kathpalia has fairly conceded that the `Notice was `refused but it was only on account of the fact that most of the staff was infected with Corona and were functioning from home. It was only after the Insolvency Resolution Process (`IRP ) had presented himself at the office of the `Corporate Debtor on 22.03.2022, that the `Corporate Debtor had learnt of the Proceedings and then learnt that it had received two emails from the Registry of the `Adjudicating Authority . It is the case of the `Appellant that it was an inadvertent error on the part of certain officers of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Authority for initiating a corporate insolvency resolution process. (2) The application under sub-section (1) shall be filed in such form and manner and accompanied with such fee as may be prescribed. (3) The operational creditor shall, along with the application furnish- (a) a copy of the invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor; (b) an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt; (c) a copy of the certificate from the financial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt by the corporate debtor, if available; (d) a copy of any record with information utility confirming that there is no payment of an unpaid operational debt by the corporate debtor, if available; and (e) any other proof confirming that there is no payment of any unpaid operational debt by the corporate debtor or such other information, as may be prescribed. (4) An operational creditor initiating a corporate insolvency resolution process under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority either on 10.02.2022 or on 17.03.2022; this Tribunal is of the earnest view that in the `interest of justice , an opportunity be given to the `Appellant herein to be heard `on merits . 24. The `Adjudicating Authority in their `Ex-Parte Order dated 21.03.2022 has observed that whereas, by virtue of the documents filed by the `Operational Creditor , his case stands proved prima facie. Since his case is non-controverted, which has to be accepted as true . The first `Respondent /`Operational Creditor ought to have placed the Section 8 `Reply Notice before the `Adjudicating Authority at that point of time, for the `Adjudicating Authority to have taken a comprehensive note. Though the Learned Sr. Counsel Mr. Arun Kathpalia has drawn our attention to the various documents on record to establish his case that there was a `Pre-Existing Dispute between the parties, we refrain from addressing to the `merits of the matter. This Tribunal finds it a fit case to remand to the `Adjudicating Authority to decide the matter `on merits , specifically keeping in view that in paras 13 20 of the `Impugned Order , the `Adjudicating Authority has observed that even if the `Reply No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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