9911796707
TMI Blog2023 (7) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... tional Creditor / Petitioner, and Interest, claimed thereon, as consequential damages, is completely arbitrary and baseless, which cannot be relied upon in the absence of adjudication, and further that the alleged Claim, was not adjudicated, by any Competent Authority, in Law, and therefore, such a Claim, cannot be described as Operational Debt. The Corporate Debtor, before the Adjudicating Authority / Tribunal, took a stand that the alleged Claim, of the 1st Respondent / Operational Creditor / Petitioner, was based on misconstruction of facts, devoid of merits, and as such, the Company Petition, was not maintainable in Law, and the same was liable to be dismissed. It is to be remembered that the Proceedings, under the I B Code, 2016, are Summary in Character, and that an Adjudicating Authority, not being a Recovery Fora or Court, (no elaborate enquiry is conducted like that of a Regular Trial of a Civil case, and also, it does not determine, a Money Claim or Civil Suit, this Tribunal, is of the earnest opinion, that the Controversy / Dispute / Claim, in respect of Interest, based on Privity of Contract or otherwise, has no relevance / significance, if the Debt, payable is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2023 in Company Appeal (AT) (CH) (INS.) No. 11 of 2023 - - - Dated:- 4-7-2023 - [ Justice M. Venugopal ] Member ( Judicial ) And [ Shreesha Merla ] Member ( Technical ) For the Petitioner / Appellant : Mr. P.H. Arvindh Pandian, Senior Advocate For Mr. Avinash Krishnan Ravi , Advocate For the Respondent No. 1 / : Mr. Arjun Suresh , Advocate Operational Creditor ORDER (Physical Mode) Justice M. Venugopal , Member ( Judicial ) : IA No. 23 / 2023 in Comp. App (AT) (CH) (INS.) No. 11 / 2023: According to the Petitioner / Appellant, being a Promoter / Shareholder of the Corporate Debtor / M/s. Vantage Machine Tools Private Limited , is Aggrieved , against the impugned order , dated 28.11.2022, passed by the Adjudicating Authority , National Company Law Tribunal , Amaravati Bench, in CP (IB) No. 51 / 9 / AMR / 2021, whereby and whereunder, the Corporate Debtor , was admitted , into the Corporate Insolvency Resolution Process , in an Application , filed under Section 9 of the I B Code, 2016, r/w Rule 6 of Insolvency and Bankruptcy (Application to Adjudicating Authority), Rules 2016, by the 1st Respondent / Operational Creditor / ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rieved by the impugned order as their management right of the company has been taken away and as they are otherwise affected as shareholders of the Company. According to us, once an insolvency professional is appointed to manage the company, the erstwhile Directors who are no longer in management, obviously cannot maintain an appeal on behalf of the company. In the present case, the company is the sole appellant. This being the case, the present appeal is obviously not maintainable. However, we are not inclined to dismiss the appeal on this score alone . 6. At this juncture, this Tribunal , worth recalls and recollects the Judgment of this Tribunal , in Comp. App (AT) (INS) No. 51 of 2017 dated 29.08.2017, between Steel Konnect (India) Pvt. Ltd. v. M/s. Hero Fincorp Limited, wherein, at Paragraphs 18 to 20 and 22, it is observed as under: 18. Once the application under Section 7 or 9 is admitted, the 'Corporate Insolvency Resolution Process' starts in such case one of the aggrieved party being the 'Corporate Debtor' has a right to prefer an appeal under Section 61, apart from any other aggrieved person like Director(s) of the company or members, who do no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 22. At this stage, it is desirable to notice that though pursuant to Section 17, the Board of Directors of a 'Corporate Debtor' stand suspended (for a limited period of 'Corporate Resolution Process maximum 180 days or extended period of 90 days i.e. 270 days), but they continued to remain as Directors and members of the Board of Directors for all purpose in the records of Registrar of Companies under the Companies Act 2013. 7. In reality, when the Petitioner / Appellant (he being a Promoter / Shareholder of the Corporate Debtor / M/s. Vantage Machine Tools Pvt. Ltd.), raises triable points for rumination , in the instant Comp. App (AT) (CH) (INS) No. 11 of 2023, as an Aggrieved Person , (obviously his Right of Management of the Company , being taken away, by means of the impugned order , coupled with the fact, being otherwise affected as Shareholder of the Company ), Leave , can be granted as Third Party , on an Interlocutory Application / Petition , filed by him, as per Rule 31 of the NCLAT Rules, 2016, by the Appellate Tribunal , exercising its Discretion and Inherent Power , in terms of Rule 11 of the NCLAT Rules, 2016. Viewed in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the OC for the material supplied by them. It is true that there was a request to send the test certificates on 04.10.2017 and there is a letter dated 19.04.2019 issued to the OC that they have prepared and supplied material as per the request of BGRESL; however, due to inferior quality of raw materials supplied by the OC, the BGRESL rejected the materials and they are not lifting the balance of materials, due to which they incurred a loss of Rs.82,60,000/- and that they are also black listed by the MNC Company. Except mentioning all these facts in the letter addressed to the OC, the CD did not furnish any material to the Tribunal with regard to their black listing and with regard to the BGRESL rejecting the materials on the ground that the quality of raw materials is of inferior quality. 8. The Counsel for the OC contends that the rejection if any might also be due to the defectiveness in the making of goods by the CD, which is possible. Hence, unless any concrete evidence is produced with regard to the BGRESL rejecting the materials in the first place and rejecting the material on the ground of the defective raw material in the second place, it cannot be said that the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the quality issue was there by then, he would not have paid the amounts just for the sake of good relations. 10. The contention of the Counsel for the CD that the cheque was issued with a condition not to present it also does not have any basis and support. The cheque is dated 04.04.2019 which is much after the last invoice. The contention that the cheque was issued to maintain good relations with the OC is not at all tenable. Moreover, the cheque was dishonoured on the ground of insufficient funds and not because of the instructions given by the CD to the Bank not to honour the cheque as submitted by the Counsel for the CD. In the light of the part payments made under the invoices the contention that they do not bear the signature does not stand to merit, so also in the light of the mail dated 03.11.2017 acknowledging the debt. Hence, in view of the above there need not be any demur in concluding that the CD acknowledged the debt and has failed to discharge the debt. and finally admitted the Company Petition , and appointed a Interim Resolution Professional , and declared Moratorium , etc. Appellant s Submissions : 3. According to the Learned Counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and hence, the Interest of 24% claimed in the Application (under Section 9 of the I B Code, 2016), is uncrystallised and in the nature of unliquidated damages, for which, an Application , under Section 9 of the I B Code, 2016, does not lie. 10. The Learned Counsel for the Appellant contends that the impugned order , passed by the Adjudicating Authority / Tribunal , seeks to determine Liability , as per Section 73 of the Indian Contract Act, 1872, and consequently seeks to decide Default of the said Damages itself, in gross Violation of the Judgment of this Tribunal dated 05.11.2022 (vide Comp. App (AT) (INS) 474 / 2020), in the decision in Sanjeev Kumar v. Aithent Technologies Pvt. Ltd. Ors., reported in MANU/N/0420/2020. 11. The Learned Counsel for the Appellant comes out with a plea that some random Test Certificates , were produced, for the first time in Rejoinder , before the Adjudicating Authority / Tribunal , which, on mere perusal show that they relate to some Parties named Sri Vijayalakshmi Steel Traders ; M/s Shine Steels , M/s. WHM Visakhapatnam ; and M/s. BM BSO , Vishakapatnam, and they were dated before the Dates of Purchase Ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.05.2019, disputing the Claim , to the amount claimed under the Cheque. 16. The Learned Counsel for the Appellant emphatically points out that the 1st Respondent / Operational Creditor, had issued a Notice , under Section 8 of the I B Code, 2016, claiming a Sum of Rs.3,04,76,004/- comprising of Rs.1,53,16,611/- as Principal , and Rs.1,51,59,393/- towards Interest , which was followed by an Application , under the I B Code, 2016, and it was objected on variety of reasons and ultimately the Adjudicating Authority, had admitted the Application , filed by the 1st Respondent / Operational Creditor, under Section 9 of the I B Code, 2016. Appellant s Decisions: Hon ble Supreme Court s Decisions: 17. The Learned Counsel for the Appellant, refers to the Judgment of the Hon ble Supreme Court of India dated 21.09.2017, in Mobilox Innovations Pvt. Ltd., v. Kirusa Software Pvt. Ltd. (vide Civil Appeal No. 9405 of 2017), wherein at Paragraph 40, it is observed as under: 40. It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors are concerned, is to put the insolvency process against a corporate debtor only in clear cases where a real dispute between the parties as to the debt owed does not exist. 14. Mr. Banerji referred us to certain judgments of the English and Singapore Courts. In Re A Company - Victory House General Partner Ltd. vs. RGB P C Ltd. [2018] EWHC 1143 (Ch), the Chancery Division of the High Court, in a situation where a debt has to be bona fide disputed in order to attract the winding up jurisdiction of the Courts in the UK, made it clear that even in a case where a judgment debt is no longer a disputed debt, as it has been finally adjudicated upon, yet if there be a cross-claim which is being adjudicated upon, or which may not even have reached the adjudicatory process at all, would be sufficient to stave off a winding up order. The learned Judge referred to the judgment in Re Bayoil SA [1999] 1 WLR 147 as follows, and concluded:- 27. This, of course, is not a case of a disputed debt. There is a judgment debt and it can be enforced immediately. However, Mr. Chivers draws attention to Re Bayoil SA [1999] 1 WLR 147, which deals with a case not involving a disputed debt bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said Rule states that where a debtor appears to have a valid counter claim or cross-demand which is equivalent to or exceeds the amount of debt, the insolvency process will not be put against such debtor. It also referred to the Supreme Court Practice Directions to the same effect. (see paras 43 45 of the said judgment) 16. We now come to some of the judgments referred to by learned counsel for the respondent. It is important to note that both the Practice Directions referred to in the U.K. judgment and the Singapore High Court judgment, referred to in LKM Investment Holdings Pte Ltd. vs. Cathay Theatres Pte Ltd. [2000] SGHC 13, are in situations where the debt needs to be bona fide disputed, which is not the situation under our Code. For this reason, it is not possible to agree with learned counsel for the Respondent that a pending proceeding challenging an award or decree of a tribunal or Court would not make the debt contained therein a debt that is disputed. 19. We may hasten to add that there may be cases where a Section 34 petition challenging an Arbitral Award may clearly and unequivocally be barred by limitation, in that it can be demonstrated to the Court that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he understanding between parties about the business was violated and thus dispute had arisen. A prior existing dispute was there before Section 8 notice was sent and thus according to him the respondent could not have resorted Insolvency Proceeding. 21. The Learned Counsel for the Appellant, brings it to the notice of this Tribunal , in regard to the Judgment of this Tribunal , dated 05.11.2020, in Sanjeev Kumar v. Aithent Technologies Private Limited and Ors. (vide Comp. App (AT) (INS.) No. 474 of 2020), wherein, at Paragraphs 34 and 36, it is observed as under: 34. The applicant has further stated that the lease deed was not properly terminated, as part termination was in breach of the Lease Agreement. The security deposit given by the Corporate Debtor for phase II was forfeited to realise the rent on the basis of the deemed continuation of lease deed. It is also contended that the Corporate Debtor vacated the ground floor without any intimation to the Operational Creditor, and moved out their computers and other official equipments overnight. Thereafter, on inspection of the premises, damages to the property were noticed for which the Operational Creditor is claimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Operational Creditor is not crystallized. The Adjudicating Authority exercising summary jurisdiction cannot determine the claim amount and initiate the corporate insolvency resolution process, as per law laid down by the Hon ble Supreme Court in the case of ― Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd., MANU/SC/1196/2017 : (2018) 1 SCC 353: (2018) 1 SCC (Civ) 311 . In the above case, the Hon ble Supreme Court has held that: 37. It is now important to construe Section 8 of the Code. The operational creditors are those creditors to whom an operational debt is owed, and an operational debt, in turn, means a claim in respect of the provision of goods or services, including employment, or a debt in respect of repayment of dues arising under any law for the time being in force and payable to the Government or to a local authority. This has to be contrasted with financial debts that may be owed to financial creditors, which was the subject-matter of the judgment delivered by this Court on 31.08.2017 in Innoventive Industries Ltd. vs. ICICI Bank [Innoventive Industries Ltd. vs. ICICI Bank, MANU/SC/1063/2017 : (2018) 1 SCC 407) (Civil Appeals Nos. 8337 - 38 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract Act, 1872 which deals with 'compensation for loss or damage caused by breach of contract', this Section can be pressed into service by the concerned party only when a contract was broken and a violation of the said Agreement/Contract ought to be established before proceeding about the issue of 'damages'. 45. Suffice it, for this Tribunal to make a pertinent mention that whether there was a violation of the 'Agreement'/'Contract' is to be determined and further the same is to be established under the 'Violations' is to be proved before a 'Competent Civil Court'. It cannot be gainsaid that that in a Civil Suit to enforce a contract, it is essential to find out what the terms of the Contract/Agreement are, with a view to decide about the breech as per decision 'BiBi Durga Devi Vs. Shivram' AIR 1932 Lahore 148. 24. The Learned Counsel for the Appellant, refers to the Order of this Tribunal , dated 06.10.2017, in A.D. Electro Steel Co. Pvt. Ltd. Anr. v. Anil Steels (vide Comp. App (AT) (INS.) No. 194 of 2017), wherein, at Paragraphs 4 to 6, it is observed as under: 4. The question about existence of a disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant is to dispatch by registered post or speed post, a copy of the application to the registered office of the corporate debtor. Under Section 9(3), along with the application, the statutory requirement is to furnish a copy of the invoice or demand notice, an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt and a copy of the certificate from the financial institution maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt by the corporate debtor. Apart from this information, the other information required under Form 5 is also to be given. Once this is done, the adjudicating authority may either admit the application or reject it. If the application made under sub- section (2) is incomplete, the adjudicating authority, under the proviso to sub-section 5, may give a notice to the applicant to rectify defects within 7 days of the receipt of the notice from the adjudicating authority to make the application complete. Once this is done, and the adjudicating authority finds that either there is no repayment of the unpaid operational debt after t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n operational debt is owed, and an operational debt, in turn, means a claim in respect of the provision of goods or services, including employment, or a debt in respect of repayment of dues arising under any law for the time being in force and payable to the Government or to a local authority. This has to be contrasted with financial debts that may be owed to financial creditors, which was the subject matter of the judgment delivered by this Court on 31.8.2017 in Innoventive Industries Ltd. v. ICICI Bank (Civil Appeal Nos. 8337-8338 of2Ol 7). In this judgment, we had held that the adjudicating authority under Section 7 of the Code has to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor within 14 days. The corporate debtor is entitled to point out to the adjudicating authority that a default has not occurred; in the sense that a debt, which may also include a disputed claim, is not due i.e it is not payable in law or in fact. This Court then went on to State: 29. The scheme of Section 7 stands in contrast with the scheme under Section 8 where an operational creditor is, on the occur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough a dispute may exist, there is no time to approach either an arbitral tribunal or a court. Further, given the fact that long limitation periods are allowed, where disputes may arise and do not reach an arbitral tribunal or a court for upto three years, such persons would be outside the purview of Section 8(2) leading to bankruptcy proceedings commencing against them. Such an anomaly cannot possibly have been intended by the legislature nor has it so been intended. We have also seen that one of the objects of the Code qua operational debts is to ensure that the amount of such debts, which is usually smaller than that of financial debts, does not enable operational creditors to put the corporate debtor into the insolvency resolution process prematurely or initiate the process for extraneous considerations. It is for this reason that it is enough that a dispute exists between the parties. 5. In the present case, we find that there was an existence of dispute between the parties. Learned Counsel for the Respondent-'Operational Creditor' while did not dispute the aforesaid fact and submits that the amount due to the 'Operational Creditor' have already been p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isting i.e. it must exist before the receipt of the Demand Notice or Invoice as the case may be and observed. 33. The scheme under Sections 8 and 9 of the Code, appears to be that an operational creditor, as defined, may, on the occurrence of a default (i.e. on non-payment of a debt, any part whereof has become due and payable and has not been repaid), deliver a demand notice of such unpaid operational debt or deliver the copy of an invoice demanding payment of such amount to the corporate debtor in the form set out in Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Form 3 or 4, as the case may be [Section 8(1)]. Within a period of 10 days of the receipt of such demand notice or copy of invoice, the corporate debtor must bring to the notice of the operational creditor the existence of a dispute and/or the record of the pendency of a suit or arbitration proceeding filed before the receipt of such notice or invoice in relation to such dispute [Section 8(2)(a)]. What is important is that the existence of the dispute and/or the suit or arbitration proceeding must be pre-existing i.e. it must exist before the receipt of the dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of delivery. Indeed, the Corporate Debtor, had requested for the Test Certificates , on 26.09.2017 and 04.10.2017 and in fact, some Test Certificates , were already given, prior to the communication and remaining said Certificates were subsequently handed over to the Corporate Debtor s Representative . 30. The Learned Counsel for the 1st Respondent, brings it to the notice of this Tribunal , that the Corporate Debtor , had made a payment of Rs.10,00,000/- on 03.10.2017 and another part payment made on 13.12.2017, amounting to Rs.20,00,000/- and there was a Sum of Rs.1,53,16,611/-, being the balance, to be paid to the 1st Respondent, together with interest @ 24% per annum. Also that, the Corporate Debtor , through email dated 02.11.2017, had confirmed the Outstanding Sum , and a Schedule , to make balance payment(s) , was / were also mentioned in the said email. 31. The grievance of the 1st Respondent / Operational Creditor / Petitioner is that, the Corporate Debtor , had not followed the Payment Schedule , envisaged and in the meanwhile the 1st Respondent s Composition of Partnership , was also changed and 5 out of the 7 Original Partners , were resigned. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor , was fully aware of the same, which inturn is quite clear, upon perusal of the email dated 04.10.2017, relied on by the Appellant , to show that there was a Pre-existing Dispute . 37. Advancing his argument, the Learned Counsel for the 1st Respondent comes out with a plea that the subject line in the email dated 04.10.2017, clearly proceeds to the effect TEST CERTIFICATES SENDING FROM SHINE STEEL , and as such, the Appellant , was aware of the fact that the Test Certificates , would only be sent by the Manufacturers , and hence request was made taking into account of the same. 38. According to the 1st Respondent, the self-serving Report on Structural Elements , made at the Workshop of M/s. Vantage Machine Tools Pvt. Ltd., dated 26.09.2022, was much after filing of Rejoinder , in Section 9 Application of I B Code, 2016, and the document, being a self-serving one, prepared by an Individual of an Unknown Qualification , with the main intention of Defrauding the Tribunal . 39. The Learned Counsel for the 1st Respondent, adverts to the conditions annexed to the Purchase Order , which runs as under: Terms and Conditions: a. Freight an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where Interest , is sought to be levied and further that this would not require any determination / disputed question of fact , as the case may be. 1st Respondent s Citations: 45. The Learned Counsel for the 1st Respondent / Operational Creditor / Petitioner, relies on the decision of the Hon ble Supreme Court of India, in Mobilox innovations (P) Ltd. v. Kirusa Software (P) Ltd., reported in (2018) 1 SCC 353, wherein, at Paragraphs 33, 34 and 51, it is observed as under: 33. The scheme under Sections 8 and 9 of the Code, appears to be that an operational creditor, as defined, may, on the occurrence of a default (i.e, on non-payment of a debt, any part whereof has become due and payable and has not been repaid), deliver a demand notice of such unpaid operational debt or deliver the copy of an invoice demanding payment of such amount to the corporate debtor in the form set out in Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Form 3 or 4, as the case may be (Section 8(1)). Within a period of 10 days of the receipt of such demand notice or copy of invoice, the corporate debtor must bring to the notice of the op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the notice from the adjudicating authority to make the application complete. Once this is done, and the adjudicating authority finds that either there is no repayment of the unpaid operational debt after the invoice (Section 9(5)(i)(b)) or the invoice or notice of payment to the corporate debtor has been delivered by the operational creditor (Section 9(5)(i)(c)), or that no notice of dispute has been received by the operational creditor from the corporate debtor or that there is no record of such dispute in the information utility (Section 9(5)(i)(d)), or that there is no disciplinary proceeding pending against any resolution professional proposed by the operational creditor (Section 9(5)(i)(e)), it shall admit the application within 14 days of the receipt of the application, after which the corporate insolvency resolution process gets triggered. On the other hand, the adjudicating authority shall, within 14 days of the receipt of an application by the operational creditor, reject such application if the application is incomplete and has not been completed within the period of 7 days granted by the proviso (Section 9(5) (ii) (a)). It may also reject the application where there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntly feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied 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 a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application. 46. The Learned Counsel for the 1st Respondent, refers to the Judgment of this Tribunal , dated 11.11.2022 (vide Comp. App (AT) (INS) No. 662 663 of 2022), between Suzlon Synthetics Ltd. v. Stressed Asset Stabilization Fund (2022) 145 taxmann.com 594 (NCLAT-New Delhi), wherein, at Paragraph 14, it is observed as under: 14. . There is no requirement in the adjudication of Section 7 application to calculate and fix the exact amount of debt in default of repayment. It is only to be seen whether the amount in default is more than the minimum or threshold value that is prescribed in Section 4 (1) of the IBC. Sale of Goods Act, 1930 : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter, since Corporate Insolvency Resolution Process , is not a Litigation . Evaluation : 57. Before the Adjudicating Authority / Tribunal , the 1st Respondent / Operational Creditor / Petitioner, in Form 5 of the Application , in CP (IB) No. 51 / 9 / AMR / 2021 (Filed under Section 9 of the Code, r/w Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, under Part IV - Particulars of Operational Debt , at Paragraph 4, has mentioned . .. that Creditor has supplied the total structural Steel worth of Rs.1,83,16,611/- out of which the Debtor has paid Rs.10,00,000/- on 03.10.2017; and on 13.12.2017 Debtor paid Rs.20,00,000/-. Debtor, is liable to pay the balance amount of Rs.1,53,16,611/- along with interest at 24% per annum which was confirmed by debtor to operational creditor by email on 02.11.2017 , and also at Paragraph 6, had observed that the debt has accumulated to the tune of Rs.3,04,76,004/-, as on 22.07.2021 . 58. In fact, in Form 3, Demand Notice / Invoice , demanding payment, under I B Code, 2016, as per Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, dated 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er , and Interest , claimed thereon, as consequential damages , is completely arbitrary and baseless , which cannot be relied upon in the absence of adjudication , and further that the alleged Claim , was not adjudicated, by any Competent Authority , in Law , and therefore, such a Claim , cannot be described as Operational Debt . 62. Proceeding further, the Corporate Debtor, in its Counter , to the main Petition, filed by the 1st Respondent / Operational Creditor / Petitioner, had taken a clear stand that the 1st Respondent, had violated the Terms of Contract , and as such, the Corporate Debtor , is entitled, to claim Damages , from the 1st Respondent / Petitioner, in terms of the ingredients of Section 73 of the Indian Contract Act, 1872, for the losses suffered by it, in lieu of inferior quality material supplied by the 1st Respondent / Petitioner. 63. As a matter of fact, the Corporate Debtor , before the Adjudicating Authority / Tribunal , in its Reply , had referred to the decision of the Hon ble Supreme Court of India, in the matter of Union of India v. Raman Iron Foundry, reported in AIR 1974 at Page 1265, wherein, it is observed and held as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the 1st Respondent / Operational Creditor, before the Adjudicating Authority , took a stand that the Corporate Debtor , had never initiated the Enforcement of Purported Terms of Contract , either by Claiming Damages or otherwise , and such a Counter Relief , cannot be taken as Defence , in a Proceeding , under Section 9 of the I B Code, 2016. 69. According to the 1st Respondent / Operational Creditor, an Adjudicating Authority , is not a Common Law Fora , to adjudicate upon the Entitlement of the Corporate Debtor , for Loss or Damages . Hence, such a plea , is impermissible , to be raised as a Defence , to the initiation of Corporate Insolvency Resolution Process . 70. The Learned Counsel for the 1st Respondent / Operational Creditor / Petitioner points out that the Corporate Debtor , had not denied the Email address [in email dated 02.11.2017) , through which, the Balance Confirmation , had originated was [email protected] and when the email was not disputed and it belong to the Corporate Debtor only, and it was not significant the Person , who sent that email, was describing himself in what capacity, because his capacity in the Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lished, after a lapse of one and half years. 73. A perusal of clear copies of Purchase Orders and Invoices (vide Page 145 to 171 of the Appeal Paper Book vide Diary No.1132 dated 14.12.2022), exhibit that there was no mention of any Interest percentage , to be paid by the Corporate Debtor . But, the 1st Respondent / Operational Creditor s side, takes a stand, that there is no fetter , to include interest in the Section 9 Application of the I B Code, 2016. 74. Be it noted, that Interest , is not a Penalty or Punishment , at all, but, it is the normal accretion on Capital , as per decision of the Hon ble Supreme Court of India, in Alok Shankar Pandey v. Union of India, reported in AIR 2007, Supreme Court at Page 1198. 75. In this connection, this Tribunal , aptly points out the decision of the Hon ble Supreme Court of India in Secretary, Irrigation Department, Government of Orissa Ors., v. G.C. Roy, reported in 1992, 1 SCC at Page 508, wherein, it is held that, a Person , deprived of the use of money, to which, he is legitimately entitled, has a right to be compensated and such compensation, may be called interest , compensation or damages . 76. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Dues , to be paid to an Operational Creditor . 83. In this connection, it is not out of place, for this Tribunal , to make a significant mention that the Corporate Debtor , had not filed any Suit or any Legal Proceeding , before the Competent Court , against the 1st Respondent / Operational Creditor / Petitioner , claiming Damages , seeking redressal of its grievances. 84. It is brought to the fore on behalf of the 1st Respondent / Operational Creditor / Petitioner, that Transfer Certificates , are sent from Shine Steels , and the email dated 08.03.2022, was much after the initiation of Proceedings , commenced by the 1st Respondent / Operational Creditor / Petitioner . Moreover, in a Transaction , between the 1st Respondent / Operational Creditor / Petitioner , and the Corporate Debtor , Shine Steels , is an Alien . Besides these, there is nothing to point out in a convincing manner, to the subjective satisfaction of this Tribunal that Transfer Certificates , found part and parcel of Sale of Goods Transaction , between the Parties . 85. When the Delivery of Goods, were taken delivery by the Corporate Debtor , without any meandic mumbling and gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which, the Payment Schedule , was provided in three Instalments, wherein, the Corporate Debtor, had admitted its Liability , in regard to the Sum(s), specified therein, and as such, it is a Tacit acknowledgment of Debt , by the Corporate Debtor , in the considered opinion of this Tribunal . In this connection, this Tribunal , aptly points out that just a day before the said email, a Part Payment of Rs.10,00,000/- dated 03.10.2017, and a further Sum of Rs.20,00,000/- on 13.12.2017, were made by the Corporate Debtor (ofcourse, after the said email). 90. Section 3(11) of the I B Code, 2016, defines Debt , meaning, a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt . 91. Section 3(6) of the I B Code, 2016, defines Claim , meaning; (a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured; (b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmature ..... X X X X Extracts X X X X X X X X Extracts X X X X
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