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TMI Blog2023 (4) TMI 775X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisputed fact that the demand notice was issued by the Operational Creditor on 16.09.2019 and notice of dispute raised by the Corporate Debtor on 27.09.2019 - since payments were not forthcoming, Section 8 demand notice issued on 16.09.2019 was followed by Section 9 application before the Adjudicating Authority. While admitting that the Corporate Debtor had raised disputes in their communication dated 23.08.2019, it was pointed out that the Adjudicating Authority failed to appreciate the fact that this communication had been triggered by the fact that the Corporate Debtor had been informed on 19.08.2019 that action would be initiated against them before the NCLT in case of non-payment. It has been clearly mentioned that there is a pre-existing dispute and that inspite of having pointed out these discrepancies, the operational creditor had continued to ignore the same and rejected the debit notes which has led to filing of a civil suit No.517/2019. It has been pressed in the said reply that the Civil Suit was filed before the receipt of the demand notice of the Operational Creditor and hence the demand notice is illusory and unwarranted having no legs to stand. In the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued a work order dated 13.12.2018 for which the Operational Creditor had raised invoices from 04.01.2019 to 05.02.2019 and raised GST bills for the same. It has been further submitted that the Corporate Debtor on receipt of the printed fabrics used to check the goods and clear the bills for the invoices submitted after making TDS deductions and that payments were cleared on running account basis instead of bill wise payments. Moreover, Form 26A shows acknowledgment of invoices by the Corporate Debtor. 3. It was stated that only when the Operational Creditor took up the matter in January 2019 with the Corporate Debtor for release of payment that the Corporate Debtor for the first time sent debit notes dated 31.01.2019 by email on 05.02.2019 to the Operational Creditor. However, the Appellant/Operational Creditor sent a reply email on 06.02.2019 to the Corporate Debtor conveying the non-acceptance of the debit notes as baseless. The Corporate Debtor later released a payment of Rs.10 lakh on 18.06.2019. Thereafter, due to delay in receipt of further payments, the Appellant sent details of invoices and balance payments to the Corporate Debtor on 19.08.2019. In the said communicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of printing job prior to the intimation notice of 19.08.2019 and this bogey has been raised to avoid liability to pay outstanding dues. Furthermore, had the goods not been of acceptable quality, the same should logically have been returned by the Corporate Debtor, but the goods were never returned which shows that the dispute raised is moonshine and an afterthought. 6. Submitting further that several reminder emails were sent for release of outstanding payment from 30.12.2018 onwards and the total outstanding amount as on 04.01.2019 stood at Rs.35,33,737/- and the payment not having been cleared even after the receipt of the demand notice, the Appellant had filed Section 9 application on 15.10.2019. 7. The Learned Counsel for the Respondent refuting the submissions of the Appellant contended that there was pre-existing dispute with respect to quality of goods supplied by the Operational Creditor which had been raised on 23.08.2019 which was prior to the issue of demand notice under Section 8. It had been brought to the notice of the Appellant that the fabric supplied by the Operational Creditor was inferior quality as it had 10% contraction as against the order placed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruct of IBC post issue of demand notice by the Operational Creditor as laid down in Section 9 of IBC. Under Section 9(1), if the Operational Creditor does not receive payment from the Corporate Debtor or notice of the dispute under Sub-section (2) of Section 8, he may file an Application under Section 9(1) of the Code. It is also an undisputed fact in the present matter that the Operational Creditor did not receive any payment from the Corporate Debtor and therefore proceeded to file an application under Section 9 of IBC. 11. For convenience, we reproduce Section 9(1) of IBC which is to the following effect: 9. Application for initiation of corporate insolvency resolution process by operational creditor.- (1) After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment under sub-section (1) of section 8, if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under sub-section (2) of section 8, the operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process. Section 9(5)(ii) is as follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n their communication dated 23.08.2019, it was pointed out that the Adjudicating Authority failed to appreciate the fact that this communication had been triggered by the fact that the Corporate Debtor had been informed on 19.08.2019 that action would be initiated against them before the NCLT in case of non-payment. It is also the Appellant s contention that the very fact that they were called for negotiations by the Corporate Debtor in their communication dated 23.08.2019, this was an implied admission on the part of the Corporate Debtor that they had acknowledged their liability. 14. When the matter came up before the Adjudicating Authority, it was observed by the Adjudicating Authority that even prior to issue of demand notice by the Operational Creditor, a communication was issued by the Corporate Debtor on 23.08.2019 raising questions about defective goods supplied by the Operational Creditor. The Adjudicating Authority took notice of the fact that the above notice of 23.08.2019 to the Operational Creditor for supply of defective goods predated the Section 8 Demand Notice which was issued on 16.09.2019. The Adjudicating Authority while observing that the notice of the Corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continued to ignore the same and rejected the debit notes which has led to filing of a civil suit No.517/2019. It has been pressed in the said reply that the Civil Suit was filed before the receipt of the demand notice of the Operational Creditor and hence the demand notice is illusory and unwarranted having no legs to stand. Paras 8 and 9 of the Reply Notice is relevant and is to the following effect: - 8. That the dispute as regards the amount claimed by you from our client is a pre-existing dispute, that is, this dispute is prior to the receipt of the demand notice under reply if and therefore on this ground alone the demand notice under reply must fail in light of the provisions of the Insolvency and Bankruptcy Code, 2016. 9. In view of the above stated facts and legal precedents, we request you, to withdraw your unwarranted, untenable and frivolous notice of demand by issuing forged invoices preferred under the Insolvency and Bankruptcy Code, 2016. 18. The contention raised by the Appellant that the Civil Suit filed by the Corporate Debtor was not filed by the Corporate Debtor but by one of the Directors in his individual capacity has also been looked into by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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