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TMI Blog2023 (10) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... ed fact that the contents of this email of 15.06.2018 was specifically denied by the Operational Creditor on 21.06.2018 and 09.07.2018. Both the above emails bear ample testimony to the fact that the Operational Creditor had denied any cyclical business arrangement having been agreed between them at any stage. The present facts on record clearly show that the Operational Creditor supplied and delivered raw material to the Corporate Debtor and raised corresponding invoices. No dispute has been raised by the Corporate Debtor with respect to quantity and quality of goods received by them. Corporate Debtor admittedly had made several part-payments against invoices from 01.03.2017 till 28.02.2018 - The Corporate Debtor has failed to produce any proof to show that it had made full and final payments to the Operational Creditor. The existence of debt due and payable by the Corporate Debtor has also not been controverted by the Corporate Debtor. 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. From a plain reading of the emails of the Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lobal Limited. Aggrieved by this impugned order, the present appeal has been filed by SPBP Holding Pvt. Ltd., shareholder of the Corporate Debtor. 2. The brief facts of the case which are necessary for deciding this appeal are as outlined below: - The Operational Creditor Lomat International NV supplied and delivered raw material to the Corporate Debtor for which invoices were raised from time to time. The Operational Creditor claimed that payment against 4 invoices had fallen due of which the fourth invoice dated 02.11.2017 fell due for payment on 01.03.2018. The Operational Creditor issued Section 8 demand notice on 21.09.2018. The Section 8 demand notice was replied by the Corporate Debtor on 03.10.2018 raising disputes. A Civil Suit was filed by the Corporate Debtor on 01.12.2018 before the Hon ble Calcutta High Court vide Title Suit No. 1256/2018. A counter- claim was also filed by the Operational Creditor in this Title Suit. The Operational Creditor filed a Section 9 application in January 2019 claiming an operational debt of USD 2,933,869/- and Euro 8423 against 4 invoices. The Adjudicating Authority allowed the Section 9 application o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate entity, was interested more in the recovery of dues from the Corporate Debtor rather than seeking resolution of the Corporate Debtor thereby violating the objectives of the IBC. 7. It has also been contended that Civil Suit which had been filed arose out of communications dated 15.06.2018 and 21.06.2018. Since these communications were all prior to the issue of demand notice and constituted the basis of the Civil Suit, it validates that disputes were pre-existing. Moreover, the Operational Creditor having filed a counter-claim in the Civil Suit, also shows that there was a dispute between the parties. The Adjudicating Authority thus committed a mistake in concluding that the filing of Civil Suit was an after-thought though it clearly signified a pre-existing dispute. 8. Making rival submissions, the Learned Senior Counsel for the Operational Creditor denied that there was any oral agreement to have a cyclical business arrangement between the Corporate Debtor and the Operational Creditor. It was stated that this story of cyclical arrangement has been contrived as an after-thought with the mala-fide intention to avoid payment of admitted debts. The only arrangement which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as financial creditor. It has been submitted that the applicant filed its proof of claim as financial creditor with the RP on 17.05.2022. However, the RP transgressed his powers and held the claim to be an operational debt and not a financial debt. The IA has been opposed by the Appellant on the ground that the claim of the applicant as a financial creditor having already been rejected by the RP, this application may not be allowed. 12. I.A. No. 4930 of 2022 has been filed by the Interim Resolution Professional in which it has been submitted that due to stay on the constitution of the Committee of Creditors ( CoC in short) as per interim orders of this Tribunal dated 19.04.2022, the fees of IRP have not been confirmed. Further, the expenses incurred having exceeded the amount of Rs. 5 lakhs which was deposited by the Operational Creditor to run the Corporate Debtor as a growing concern, further expenses would be necessitated which would require the approval of the CoC. The IRP has claimed to have admitted claims exceeding Rs.500 crore and prayed that CIRP fund be set up to enable the IRP to conduct CIRP smoothly. The Appellant has contended that the IRP has mis-represented the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Operational Creditor during 2012-18, the import of yarn from the Corporate Debtor was only for Rs.130 crore. This disturbed the financial flow as envisaged in the buy-back arrangement and had become a bone of contention between the parties before the issue of demand notice. 18. The Learned Senior Counsel for the Respondent No.1 refuted the above contention of the Corporate Debtor and denied the existence of any cyclical business arrangement. In support of their contention, it was contended that the Appellant in their email of 15.06.2018 as placed at pages 35-39 of the Additional Affidavit (hereinafter referred to as AA ) and in their reply affidavit to the Section 9 application at pages 67-81 of the AA, have themselves clearly admitted that no formal written agreement was entered into between them with regard to any cyclical business arrangement. It was contended that the first time such a cyclical arrangement was referred to by the Corporate Debtor was on 15.06.2018. Prior to this email of 15.06.2018, none of the correspondences made reference to any such business arrangement. It is also asserted that the Operational Creditor had specifically denied the existence of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om you are two different nature of transactions and cannot be clubbed together and moreso you cannot use this as an excuse for non payment of our dues on account of supply of raw materials you. Further we vehemently deny your allegations that you have requested for execution of written agreement for alleged 'Cyclical Business Arrangement', in this regard we state that there was never any understanding as regards the alleged 'Cyclical Business Agreement' and therefore there was never any discussion as regards execution of any written agreement. We further deny having received from you an advance sum of appx. USD 468000, in this regard we submit that the said payment was paid by you as regards payment of our invoices towards supply of raw materials to you. We remind you that further payments by you were also a pre-condition to releasing a new delivery of raw materials by Lomat under the repayment scheme which was agreed between Credendo/Lomat and yourselves and which you failed to comply with as from November 2017. It is wrong and thus we specifically deny having introduced the credit insurers viz. Credendo/Coface to you with a representation that they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any pre-existing dispute either in terms of the email dated 15.06.2018 or the preceding clutch of emails which have been referred to at para 16 above. 23. We may now look into the tenability of the contention of the Operational Creditor that the Appellant had defaulted in making payment for the goods supplied against the invoices raised. We notice that in their emails of 21.06.2018 and 09.07.2018 which has been reproduced at para 19 above, the Operational Creditor has taken a consistent stand that the Corporate Debtor has failed to clear their outstanding debts and that sale of raw materials and purchase of yarn being separate transactions cannot be clubbed together. 24. The present facts on record clearly show that the Operational Creditor supplied and delivered raw material to the Corporate Debtor and raised corresponding invoices. No dispute has been raised by the Corporate Debtor with respect to quantity and quality of goods received by them. Corporate Debtor admittedly had made several part-payments against invoices from 01.03.2017 till 28.02.2018. We notice that the Corporate Debtor acknowledged their debt in their email dated 29.06.2017 and had transferred Euro 75,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u and Lomat. However, they also believe that some of the terms of your proposal can be improved. Firstly, we propose that the new deliveries under the recycling scheme are payable on 120 days Instead of 180 days. Also, while we appreciate the uncertainties you are currently facing with the implementation of the GST, we believe that an extra effort can be made as soon as this turmoil is expected to be over and therefore would like to see higher monthly payments by the end of 2017. This would allow the old debt to be cleared sooner than proposed. We hope this is acceptable to you and would kindly ask you to send us an amended proposal reflecting our expectations. In the meantime, we look forward to receiving your payment of 75,000 EUR, which we definitely perceive as a confirmation of your willingness to settle this debt, as you confirmed several times during our meeting. We look forward to hearing from you. Best regards. Mathias Hostens (Emphasis supplied) From: Sandeep Agarwal [mailto:[email protected]] Sent: woensdag 12 jull 2017 15:21 To: Mathias Hostens; 'Manish Kumar' CC: No l Van Driessche; Karin Deesen; Jeroen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That the Corporate Debtor had on their own volition proposed a solution in several of their email suggesting recycling LC and repayment schedule to the Operational Creditor to resolve their outstanding liabilities also clearly establishes admission of debt which was due and payable. 28. The Corporate Debtor having also failed to furnish any proof or record to show how they had discharged the liability of admitted due amounts, we are inclined to believe that the Corporate Debtor defaulted in clearing the outstanding operational debt of USD 2,933,869/- and Euro 8423 which aggregated above the prescribed threshold limit. 29. This brings us to the next limb of argument raised by the Learned Senior Counsel for the Appellant that the very fact that the parties had made reference to arbitration shows existence of disputes. It was mentioned that the disputes between the two parties were outlined in their email of 15.06.2018 alongwith a request to settle them in an amicable manner or refer the same for resolution through arbitration to avoid litigation. It was also argued that even the Operational Creditor in their reply dated 09.07.2018 had requested the Corporate Debtor to resolve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocuments before us we do not find there was any 'Cyclical Business Agreement' between the parties. We also do not find any arbitration agreement between the parties to refer the alleged dispute to arbitration. 11. Merely a request for arbitration sent by a person to another and specifically not agreed to by the other person cannot constitute an Arbitration Agreement. 12. Though there was a request for the arbitration by the Corporate Debtor, but the same was categorically declined by the Operational Creditor. 13. It is also very clear that Civil Suit for specific performance valued at Rs.1 Crore was filed subsequent to issuance of notice under section 8 of Insolvency and Bankruptcy Code, 2016. There was no mention of this Civil Suit in the reply of the Corporate Debtor. Further, apart from this, on perusal of the plaint filed in the Affidavit in Reply by the Corporate Debtor, no date has been given as to when the said plaint had been verified, but at page 33 of the Affidavit in Reply (internal page 22 of the plaint), gives the list of documents that have been relied on by the plaintiff and the documents annexed by the plaintiff. The Corporate Debtor in its pl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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