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TMI Blog2023 (5) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... d but payments not made. It is noticed that emails were exchanged between the two parties between 11.11.2019 to 11.01.2020 at pages 182-191 of APB wherein the Corporate Debtor had been given more than one opportunity to clear the outstanding liabilities of more than USD 2,00,000. However, no payment of arrears was forthcoming - the Adjudicating Authority has committed no error in taking cognizance of the Corporate Debtor s admission of failure to pay the operational dues on account of bad financial position and conditions beyond their control. This admission by the Corporate Debtor to our mind validates the contention of the Operational Creditor that the Corporate Debtor has admitted on several occasions that there was a debt due and payable and that there was also a default in making the payment. Whether there was any pre-existing dispute which was raised prior to the issue of demand notice by the Operational Creditor on 16.12.2020? - HELD THAT:- It is relevant to note at this stage that the demand notice under Section 8 was issued 16.12.2020. As no reply to the demand notice was received within 10 days nor any payment was made by the Corporate Debtor, the Respondent No.1 had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Section 9 application. There is no merit in the appeal - appeal dismissed. - Company Appeal ( AT ) ( Insolvency ) No. 841 of 2022 - - - Dated:- 4-5-2023 - [ Justice Ashok Bhushan ] Chairperson And [ Barun Mitra ] Member ( Technical ) For the Appellant : Mr. Brijesh Kumar Tamber, Mr. Prateek Kushwaha and Mr. Vinay Singh Bist, Advocates For the Respondents : Mr. Rohit Bansal, Advocate for R-1 Mr. Vishal Ganda, Ms. Akanksha Mathur and Mr. Rahul Natula, Advocates for R-2 JUDGMENT [ Per : Barun Mitra , Member ( Technical ) ] The present appeal filed under Section 61 of Insolvency and Bankruptcy Code, 2016 ( IBC in short) by the Appellant arises out of the Order dated 20.06.2022 (hereinafter referred to as Impugned Order ) passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench-IV) in CP (IB) No. 139/(ND)/2021. By the Impugned Order, the Adjudicating Authority admitted the Section 9 application under IBC filed by the Operational Creditor and initiated Corporate Insolvency Resolution Process ( CIRP in short) against the Corporate Debtor with immediate effect. Aggrieved by this impugned order, the present appeal has been prefer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Section 9 application was filed on 07.08.2021 by the Corporate Debtor. However, the Adjudicating Authority vide impugned order dated 20.06.2022 admitted the Section 9 application. 4. Challenging the impugned order admitting the Section 9 application, it was contended that the Adjudicating Authority had overlooked the fact that there were serious pre-existing disputes between the Corporate Debtor and the Operational Creditor on account of discrepancies in invoices; levy of bogus charges and overcharging, besides the unprofessional behaviour on the part of Respondent No.1 by arbitrarily stopping cargo movement leading to loss of clients and consequential loss of revenue. 5. Refuting the submissions made by the Appellant, the Learned Counsel for the Respondent No.1 submitted that there was an outstanding liability of USD 3,16,217 towards operational dues which pertain to invoices from 19.02.2019 up to 01.12.2020. Explaining that the business practice adopted was to appropriate whatever payment was received to the oldest invoice first, it was added that payments received from the Corporate Debtor were concurrently credited and debited to the running account. The invoices raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been laid down by the Hon ble Supreme Court in Mobilox Innovative Pvt. Ltd. V. Kirusa Software Pvt. Ltd. (2018) 1 SCC 353 ( Mobilox in short) for the Adjudicating Authority while examining an application under Section 9, the relevant excerpts of which are as follows:- 34. Therefore, the adjudicating authority, when examining an application under Section 9 of the Act will have to determine: (i) Whether there is an operational debt as defined exceeding Rs. 1 lakh? (See Section 4 of the Act) (ii) Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid? and (iii) Whether there is existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute? If any of the aforesaid conditions is lacking, the application would have to be rejected. Apart from the above, the adjudicating authority must follow the mandate of Section 9, as outlined above, and in particular the mandate of Section 9(5) of the Act, and admit or reject the application, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial position and has failed to pay the debts due towards them. 11. In view of the foregoing documents, this Tribunal is of the affirm view that there was default on the part of the respondent in pursuance of invoices raised on behalf of the applicant, accordingly, the present application stands admitted in terms of Section 9(5) of the Code and CIRP is hereby ordered to be initiated against the respondent Corporate Debtor, forthwith. (Emphasis supplied) 10. The Learned Counsel for the Respondent No.1 asserted that the Adjudicating Authority had correctly taken note of the fact that the Corporate Debtor had not only admitted that a debt was due and payable to the Operational Creditor but that they had also admitted that transactions between them and the Operational Creditor was conducted without any disputes or disagreement till mid-2019. Hence, it was contended that this is clearly a case where the Corporate Debtor had admitted that an undisputed operational debt had become due and payable to the Operational Creditor and that there is incidence of default in payment. 11. Reinforcing their contention that the Corporate Debtor had admitted the operational debt, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emails have implicitly admitted the receipt of these invoices. No disputes having been raised either on the quantum of dues qua the invoices or on the quality of the services provided by the Corporate Debtor, it was a fit case for admission of Section 9 application. 14. The Learned Counsel for the Respondent No.1 also submitted that the Corporate Debtor had sent an email to the Operational Creditor on 11.01.2020 admitting a liability of over Rs.1 crore and providing a solution on how to reduce his debt. The relevant excerpts of the email is as reproduced below: - From: sharad [email protected] Sent: Saturday, January 11, 2020 2:16 PM To: Leila Naseri [email protected] Cc: Vikaram [email protected] Subject: Re: Our issues Dear Mr. Saghafi, There is a saying in our country:: WHEN THERE IS A PROBLEM, THERE IS ALSO A SOLUTION FOR THE SAME. I fully understand that the faith which you had in us is no longer there but I request the mail I am sending to be read not as business partner but as a family member which you have always considered me. Frankly speaking my intentions are not bad as you may be thinking, its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there were no disputes until May 2019 in respect of business transactions conducted with the Operational Creditor. Moreover, we notice that in the reply to demand notice, at page 145 of APB it has been admitted by the Learned Counsel on behalf of the Corporate Debtor that due to intervening Covid-19 and prevailing market conditions certain circumstances beyond the control of our client has arisen and our client had to withhold payments as it was difficult to get credit from the banks at that time. That being so, we are of the considered opinion that the Adjudicating Authority has committed no error in taking cognizance of the Corporate Debtor s admission of failure to pay the operational dues on account of bad financial position and conditions beyond their control. This admission by the Corporate Debtor to our mind validates the contention of the Operational Creditor that the Corporate Debtor has admitted on several occasions that there was a debt due and payable and that there was also a default in making the payment. 17. We now come down to examine whether there was any pre-existing dispute which was raised prior to the issue of demand notice by the Operational Creditor on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th respect to rate difference. Therefore, the Learned Counsel for the Respondent No.1 contended that the bogey of rate determination as a ground of dispute was not tenable. 21. We notice that no material has been placed on record by the Corporate Debtor to show that they had categorically rejected the outstanding dues claimed by the Operational Creditor prior to issue of demand notice. Present is a case where the accounts were frozen in terms of SoA prepared by the Corporate Debtor and sent to the Operational Creditor by email on 16.07.2018. In such circumstances, when the Corporate Debtor has frozen their liability, subsequent raising the issue of rate differences and attendant reconciliation, to our mind becomes redundant and therefore does not appeal to us to be genuine. When the Corporate Debtor had admittedly prepared the SoA showing an outstanding liability of over USD 2,00,000 and it was frozen after mutual agreement, raising the issue of reconciliation of accounts as a ground of dispute clearly lacks substance and credibility. 22. We now come to the issue raised by the Learned Counsel for the Appellant that the Corporate Debtor regarding illegal stopping of containers ..... X X X X Extracts X X X X X X X X Extracts X X X X
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