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TMI Blog2023 (6) TMI 852X X X X Extracts X X X X X X X X Extracts X X X X ..... ply of spare parts and 7 months of the Engine being made operational on 03/04/2019 for raising any dispute is justified, cannot be accepted. In the instant case, the material on record evidences that the dispute raised is spurious, hypothetical and illusory as it was raised only after several months of supply and further there was also a Meeting, whereby there was an attempt to make a part payment. At this juncture, this Tribunal pertinently points out that although the reply of the Corporate Debtor was not taken on record by the Adjudicating Authority , all the issues raised by the Appellant have been addressed. The case of the Appellant that it was only after a lapse of some time that the engine efficiency can be ascertained and therefore, the lapse of 13 months in raising the dispute of the spare parts is justified cannot be sustained as there is no specific time frame which is established by way of technical specifications to be guided by / or which were mentioned in the MoU with respect to this issue. The fact remains that the spare parts were supplied way back on 25/10/2018 and the first issue was raised almost 11 months thereafter. There is nothing on record t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xty Two Thousand Three hundred and Sixty only) falls well within the purview of the pecuniary limit fixed by the central government vide Notification S.O. 1205(E) dated 24.3.2020 issued by the Ministry of Corporate Affairs, Government of India. 16. 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 also cannot seek shelter 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 Corporate Insolvency Resolution Process in relation to the Corporate Debtor, which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. 2. The Learned Counsel submitted that the 1st Respondent / Operational Creditor is the only supplier and service provider of GE Gas Engines in India, where the spares and maintenance of the Engines were directly done. However, the 1st Respondent rather than providing the maintenance services by themselves, engaged SAS EPC Solutions Private Limited ( SAS EPC ) to carry out maintenance of the GE Engines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial Viability of the Engine and when the Engine is in a position to generate income when put in commercial operation. The Engine had become commercially operational only on 05/04/2019 and the Operational Creditor had committed a default. Even at the time of commissioning the engine, the G-2 Engine which was also supplied by the Operational Creditor was not running for almost 28 months as on 1st September 2019, which had led to huge revenue loss for the Corporate Debtor and hence, the non-payment was only because of the fault of the Operational Creditor and the same was explained by the Corporate Debtor , vide e-mail dated 11/09/2019 stating that when there is no generation or less generation of power, and expected revenue was not made, the question of payment of dues does not arise. In the meanwhile, GE-1 Engine which was overhauled by the Operational Creditor started giving trouble due to defective spares. It is contended that the Corporate Debtor , vide email dated 07/11/2019, 17th 18th December 2019 and 14th and 28th January 2020 had pointed out various disputes for defective valve and higher lube consumption, delayed commissioning, not achieving the maximum utilisa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ataka Ors. Civil Appeal Nos. 1345-1346 of 2022 @ Para 8.4 iv. M/s Brand Realty Services Ltd. Vs M/s Sir John Bakeries India Pvt. Ltd. (Company Appeal (AT) (Ins) No. 958/2020) v. Mr. Praveen Kumar Sharma Vs. Arcee Trading Corporation (Company Appeal (AT) (Ins) No. 213 of 2020) @ Para 13 vi. Rajratan Banulal Agarwal Vs. Solartex India Pvt. Ltd. and Ors. AIR2022SC5493 @ Para 48, 59, 60, 62 vii. S.S. Engineers and Ors. Vs. Hindustan Petroleum Corporation Ltd. [2022] 234 Comp Cas95(SC) @ Para 17, 30, 31 32 viii. Continuous Dyeing Printing Mills Vs. Bhavika Apparels Pvt. Ltd. (Company Appeal (AT) (Insolvency) No. 301 of 2022) @Para 14 20 ix. Rajaratan Babulal Agarwal Vs Solartex India Pvt. Ltd. and Ors. AIR2022SC5493@ Para 73 to 77 6. The Learned Counsel Mr. Yogesh Khanna appearing for the 1st Respondent / Operational Creditor submitted that the Memorandum of Understanding dated 11/07/2018 provided periodic timelines for payment towards supply of spares and the instalments towards supply of spares which were specifically payable on the debts due whether the engine is in operation or not. It is submitted by the Learned Counsel that the mainte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal : 9. The brief point for consideration which arises in this Appeal is whether the Adjudicating Authority is justified in admitting the Section 9 Application preferred by the Operational Creditor, keeping in view the emails addressed to by the Appellant / Corporate Debtor in the Reply to the Section 8 Admission Notice. 10. The Learned Counsel for the Appellant contended that the Adjudicating Authority has not taken into consideration the emails dated 07/11/2019, 17/12/2019, 18/12/2019, 14/01/2020 and 28/01/2020, whereby the Appellant had raised disputes regarding the performance of the Engine and the quality of the spares that were supplied. The Learned Counsel drew our attention to the emails dated 17/12/2019 18/12/2019 and the reply to the email dated 17/12/2019 given by the Respondent. For better understanding of the case, the same has been reproduced hereunder: From: Operations Saheliexports [email protected] Sent : 17 December 2017 07:22 PM To : Pankaj Kaushik [email protected] Cc : Punit Garg [email protected] ; DVPReddy Saheliexports, [email protected].; Control Room ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation noted by us immediately as CEIPL is the sole responsible for both the higher Lube oil consumption and abnormal valve wear taking place. Clarke must take necessary action for rectification immediately. As an immediate remedy is that Clarke Energy must supply 4 nos. of serviced Cylinder Heads for replacement in Cylinder head 1,3,6 18 with their service team. Your immediate response on this subject awaited. Reply by OC On Tue, Dec 17, 2019 at 8:48 PM Pankaj Kaushik [email protected] wrote: Dear Sir, Both referred issued oil consumption and valve wear will handled on top priority once we receive payment against 30K parts from Saheli and overdues from SAS. Please arrange to release payment at the earliest. Thanks for your understanding. Best regards, Email by Corporate Debtor dated 18/12/2019 From : OperationsSaheliexports [email protected] Date : Wed, Dec 18, 2019 at 10.57 AM To : Pankaj Kaushik [email protected] Cc : Punit Garg [email protected], DVP Reddy Saheliexports [email protected], Gautam Reddyb.v.gautam@gmai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C. Gowrishankar DGM-Operations 11. It is the case of the Appellant that after reviewing the valve measurement report, it was found that the valves the valve seats which were replaced as well as the 30K overhauling had material defects and did not suit the engine of the Corporate Debtor. Higher oil consumption at higher rates was due to the modification done by the 1st Respondent in the cylindrical liners without any intimation or approval. The email dated 14/01/2020 once again had detailed the issues with valve stems and valve guides and the mismatch in the old valves and new valves used by the 1st Respondent and the Corporate Debtor had insisted on the replacement of the said spares. But the Adjudicating Authority did not take into consideration that these disputes were raised prior to the issuance of the Demand Notice. 12. The extract of the Memorandum of Understanding which the Appellant is relying on is reproduced as herein: MEMORANDUM OF UNDERSTANDING This Memorandum of Understanding for doing 30K maintenance of gas engine located at Kothangudi Road, Komal West, Komal Village, KuttalamTaluk, Nagapattinam District, in the State of TamilNadu herei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial as per delivery terms mentioned to purchase order. Service provider shall endeavour to minimize delivery period. (Emphasis Supplied) 15. From the aforenoted clause, it is clear that the service recipient agrees to make payment irrespective of the fact whether the said engine is in operation or not at the time of the payment dates as above. This term categorically binds the Corporate Debtor to the payment of instalments. At this juncture, we find it relevant to reproduce the email dated 11/09/2019 addressed by the Appellant / Corporate Debtor to the Operational Creditor. From : dvpreddysaheliexports [email protected] Sent : 11 September 2019 16:46 To : Vishal Shah Cc :finance saheliexports; Akshay Saheliexports; Gautam Saheliexports; Punit Garg; Malhari Habbu; Pankaj Kaushik; Vijay Kulkarni (EXT) Fwd: Despatch of MoU and Purchase order reg., Dear Mr. Vishal It was discussed several times with Mr. Pankaj the reason for not making payment i.e. due to want of permission from TANGEDCO for increasing the Generation from the existing quantum to revised quantum and waited for nearly 5 months. Even we got the permission wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quantity of power (already explained in earlier mail) the expected revenue was not made. Hence, we assured you several time and now also that once Generation of existing quantity is increased to max of another 1mw, we start repaying our dues. You are also fully aware another GE Engine is also not running for the last 28 months on no fault of us and there is a total revenue loss of around Rs. 60 crores so far. Further you have not repaired the engine so far. Please take immediate steps to repair the Engine 2 without any further delay. So, please wait to increase the existing quantum to additional quantum then we will make payment. Regards D.V.P. Reddy 18. In this subsequent email, it is raised for the first time that the Operational Creditor has not repaired the Engine No. 2, for which a reply was addressed by the Operational Creditor as follows: On 9/11/19, Vishal Shah [email protected] wrote: Dear Sir Outstanding is against supply and payment terms were mutually agreed in MOU. Hence you are requested to release first four instalments as agreed. Vishal (Emphasis Supplied) 19. It is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as dispute truly exists in fact and is not spurious, hypothetical, or illusory, the Adjudicating Authority has to reject the application. (Emphasis Supplied) 21. In the instant case, the material on record evidences that the dispute raised is spurious, hypothetical and illusory as it was raised only after several months of supply and further there was also a Meeting, whereby there was an attempt to make a part payment. At this juncture, this Tribunal pertinently points out that although the reply of the Corporate Debtor was not taken on record by the Adjudicating Authority , all the issues raised by the Appellant have been addressed. 22. The case of the Appellant that it was only after a lapse of some time that the engine efficiency can be ascertained and therefore, the lapse of 13 months in raising the dispute of the spare parts is justified cannot be sustained as there is no specific time frame which is established by way of technical specifications to be guided by / or which were mentioned in the MoU with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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