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TMI Blog2023 (9) TMI 1292X X X X Extracts X X X X X X X X Extracts X X X X ..... it notes aggregating Rs.35,91,500/-. Neither any invoices have been furnished in support of their contention that the Corporate Debtor had supplied material to the Operational Creditor. There are no communication which has been placed on record by which the Corporate Debtor had sent any reminder to the Operational Creditor in respect of their outstanding payments. It has also been rightly observed that disputes surrounding claims and counter-claims cannot be adjudicated or determined by the Adjudicating Authority given their summary jurisdiction. The Adjudicating Authority in the present case has carefully considered the reply and submissions made by the Corporate Debtor and has correctly come to the conclusion that there is no ground to establish any real and substantial pre-existing dispute which can thwart the admission of section 9 application against the Corporate Debtor - there are no hesitation in observing that in the present case there is no real pre-existing disputes discernible from given facts and all other requisite conditions necessary to trigger CIRP under Section 9 stands fulfilled. The Adjudicating Authority has rightly admitted the application of the Ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of goods supplied by the Operational Creditor. The debt having continued to remain unpaid, a Section 9 application was filed by the Operational Creditor before the Adjudicating Authority. The Adjudicating Authority on 12.09.2022 allowed the Section 9 application and admitted the Corporate Debtor into the rigours of CIRP. Aggrieved with the impugned order this appeal has been preferred by the Appellant. 3. It is equally relevant to note the subsequent developments after issue of the impugned order. This Tribunal vide interim order dated 27.09.2022 had allowed the Corporate Debtor on their request to deposit Rs.13,42,230/- in the name of the Corporate Debtor without prejudice to its rights and contentions. The IRP was directed not to take further steps in pursuance of CIRP. Resultantly, CoC has not been constituted. A subsequent offer was made on 22.08.2023 by the Corporate Debtor to pay Rs.24.50 lakh to the Operational Creditor but not accepted by the Operational Creditor as it demanded reasonable interest on the operational debt from the date of CIRP commencement. 4. Making his submissions, the Learned Counsel for the Appellant submitted that the Adjudicating Authority whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor was not grounded on facts and the ledger accounts submitted by the Corporate Debtor was false and fabricated which had been created with the ulterior motive of raising disputes to escape the wrath of IBC proceedings. 8. IA No.4272 of 2023 has been filed by Bank of Baroda before this Tribunal seeking impleadment as intervenor in the instant company appeal which has been allowed on 21.10.2022. It has been submitted that the Bank of Baroda is a lead member of the consortium of banks through which made available advances to the tune of Rs.70 crores to the Corporate Debtor. The account of the Corporate Debtor had been declared as NPA on 31.03.2021. The Bank of Baroda having a 44% share in the said consortium has claimed that an outstanding amount of Rs.37,36,32,233/- plus unrealized interest is due to them. It has been submitted that due to debt and default committed by the Corporate Debtor qua the Bank of Baroda, the Corporate Debtor needs to be put into CIRP. It was also submitted that endeavours were being made by the Corporate Debtor to negotiate with the Operational Creditor to pay their dues. However, this should not be allowed as that would tantamount to pref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 31.03.2016 respectively. This led to the wrong conclusion in the impugned order that all pre-existing disputes stood satisfied. Thereafter, for the subsequent period during FY 2016-17 also, defective goods having been supplied, debit notes were issued by the Corporate Debtor for Rs.36,464/- and Rs.25,00,000/- on 18.10.2016 and 31.10.2016. After adjusting these debit notes, the sum payable to the Operational Creditor was only Rs.3,43,845/-. Additionally, thereafter the Corporate Debtor had made payments to the Operational Creditor of Rs.19,52,161/- including advance towards supply of goods during the period 07.07.2017 to 02.08.2017. If these amounts are adjusted then it is the Operational Creditor who has to pay to the Corporate Debtor. The counter-claim made by the Corporate Debtor for FY 2016-17 has been mistakenly ignored by the Adjudicating Authority. 14. The contestation fielded by the Learned Counsel for the Respondent No.1-Operational Creditor is that the Corporate Debtor has tried to create unnecessary confusion by raising frivolous grounds of variance in account reconciliation to create pre-existing disputes. Reiterating that the credit notes amounting to Rs.35,91,500/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a patently 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. ( Emphasis Supplied ) 16. Applying the Mobilox (supra) test, the Adjudicating Authority has arrived at the following findings after taking note of the reply filed by the Corporate Debtor to the legal notice of 05.12.2019 as well as their reply to the demand notice dated 02.01.2020. The relevant findings of the Adjudicating Authority are as reproduced below: - 23. While going through the replies of the respondent to both the notices together, we observe that the Respondent has raised the same issue of poor quality of goods and claimed compensation of Rs. 25,00,000/- on account of loss claimed to have been suffered by it. It is fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the. Operational Creditor has established the default on the part of Corporate Debtor in payments of the operational debt. The present petition filed under Section 9 fulfills all the requirements of law 17. We notice that the Adjudicating Authority has rightly observed after perusing the reply filed by the Corporate Debtor to the legal notice of 05.12.2019 as well as their reply to the demand notice dated 02.01.2020 that at no occasion the Corporate Debtor had raised complaints with regard to poor quality of goods with the Operational Creditor after issue of the two credit notes aggregating Rs.35,91,500/-. Neither any invoices have been furnished in support of their contention that the Corporate Debtor had supplied material to the Operational Creditor. We also do not find any communication which has been placed on record by which the Corporate Debtor had sent any reminder to the Operational Creditor in respect of their outstanding payments. It has also been rightly observed that disputes surrounding claims and counter-claims cannot be adjudicated or determined by the Adjudicating Authority given their summary jurisdiction. 18. We find that the Adjudicating Authority in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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