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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 ..... plication 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 preferred by the suspended director of the Corporate Debtor. 2. Throwing light on the facts of the present matter, the Learned Counsel for the Appellant submitted that Lark Logistics Private Limited - the Corporate Debtor provided logistics services to exporters for which purpose they had engaged the services of Tarannom Shargh International Transportation Company - the Operational Creditor. The business transactions between the Corporate Debtor and the Operational Creditor had admittedly proceeded without any disputes till mid-2019 and thereafter the Operational Creditor did not comply with the request of the Corporate Debtor to continue providing their services of transporting goods to their final destination. The Operational Creditor refused to move the Corporate Debtor's cargo in respect of a consignment of medical supplies and another consignment containing the belongings of Indian Embassy personnel in Kyrgyzstan. This refusal to move the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 raised by the Operational Creditor had been accepted by the Corporate Debtor without any demur. 56 out of 304 invoices raised on the Operational Creditor remain unpaid. It was further pointed out that there was a clear default of USD 3,16,217 (Rs.2,45,72,796) as on 04.10.2019 after adjusting the last payment of USD 18,000 received on the same date from the Corporate Debtor. 6. The outstanding amount having never been disputed by the Corporate Debtor and failure to clear the same in spite of assurances given, it was submitted by the Learned Counsel for Respondent No.1 that the Operational Creditor was compelled to send a Section 8 demand notice on 16.12.2020. It is further submitted that several exchanges of email correspondence took place between the two parties from 11.12.2019 to 11.01.2020 regarding the outstanding liabilities. It has been pointed out that in spite of adequate time and opportunity given to the Corporate Debtor to release the outstand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, as the case may be, depending upon the factors mentioned in Section 9(5) of the Act." 9. Given the above backdrop, we may now proceed to examine the analysis and findings returned by the Adjudicating Authority in the impugned order, the relevant parts of which are reproduced below for convenience: - "9. In the present matter, the Corporate Debtor in his reply has admitted the fact that till mid-2019, all the transactions between the Applicant and the Corporate Debtor were conducted without any disputes or disagreement. And the Corporate Debtor had withheld payments towards the Applicant due to the conditions beyond their control. Herein, reference can be made to judgment passed by the Hon'ble Supreme Court in the case of 'Mobilox Innovative Private Limited vs. Kirusa Software Private Limited' in civil appeal number 9405 of 2017 [(2017) 01 SC] vide order dated 21.09.2017 wherein, it was held that: "Therefore, all that the adjudicating authority is to see at this s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, the Learned Counsel for the Respondent No.1 adverted attention to an email dated 16.07.2018 wherein the Corporate Debtor had sent a Statement of Account ('SoA' in short) to the Operational Creditor regarding an outstanding amount of USD 2,00,902, which SoA was thereafter frozen by the Corporate Debtor on the same date thus signifying admitted liability. The said SoA finds place at page 136-137 of Appeal Paper Book ('APB' in short). 12. Advancing their arguments further, it was further stated that a document nomenclated as 'New Agreement' dated 17.07.2018 had been signed between the two parties wherein the Corporate Debtor had confirmed the outstanding balance of USD 1,91,111 of which USD 1,80,000 was to be treated as frozen amount and the balance to be cleared within 7-10 days' time from the date of agreement as placed at pages 291-294 of APB. Furthermore, it was contended that this agreement has also not been denied by the Corporate Debtor. 13. It was further pointed out that no paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 just that I am passing through a very bad period of my life and I am very sure this will also be over soon. Coming to your message below I want to suggest as follows:: 1. Reg VSBU2076917, you know very well that the consignee needed the material in Almaty by 31st Dec latest and as this time is over now the shipper has refused to send this cargo as the consignee has refused to take the delivery. In turn he has filed a claim of USD 100,090. - on my company as compensation for the value of goods which he wants to recover from us. Thus I propose that you find a suitable buyer of these products in whichever country you can and reduce my debt by the above amount. If you can sell this even at a higher value you can keep that amount also with you. 2. Reg OOLU8192360, we have two options... First of all the value of goods in this container is approx USD 60,000. - and because it is lying there for the last four months the shipper wants us to pay this amount to them as well. So either we pay this amount to them in the next 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamine 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. 18. 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 filed the Section 9 application before the Adjudicating Authority. It is pertinent to note that the reply to the demand notice was filed by the Corporate Debtor on 06.04.2021 by which time the hearing on Section 9 application had already commenced, the first hearing having taken place on 04.03.2021. 19. The Learned Counsel for the Appellant contended that there has been a long-standing dispute between the two parties in respect of discrepancies in invoices on account of rate difference and levy of unnecessary charges. The issue of unnecessary charges on account of demurrage/warehousing costs besides inspection and repair charges had been raised on 03.05.2016 and 10.01.2018 by the Corporate Debtor. It was also claimed that the Corporate Debtor had reminded the Operational Creditor of the need to resolve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue raised by the Learned Counsel for the Appellant that the Corporate Debtor regarding illegal stopping of containers/shipments by the Operational Creditor which resulted in their loss of clients and business. The tenability of this dispute has been questioned by the Learned Counsel for the Respondent No.1. It has been submitted that three shipments not being moved by the Operational Creditor cannot fall in the category of pre-existing dispute since these shipments pertain to a period much after the period by when the debt of over USD 3,00,000 had already accumulated. It was pointed out that these shipments cannot be viewed to be a ground for pre-existing dispute as the Operational Creditor had agreed to move the shipments only after receipt of payment to meet the existing debt of over USD 3,00,000. From the facts available on record, we are convinced that the operational debt had crystallized well ahead of the stoppage of the containers. That being the case, by no logical process, can the stoppage of shipments be held to be a pre-existing dispute, rather it was the outcome of a debt remaining unpaid. 23. We are inclined to agree that no serious lacunae have been pointed ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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