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TMI Blog2024 (5) TMI 526X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned order, the Adjudicating Authority has allowed the Section 9 petition filed by the Rashmi Cement Limited for initiating Corporate Insolvency Resolution Process ('CIRP' in short) of the Bhilai Jaypee Cement Limited - Corporate Debtor. Aggrieved by this order, the present appeal has been preferred by the Appellant/Corporate Debtor. 2. Putting briefly the facts of the case, Rashmi Cement Ltd ('RCL' in short), placed orders for supply of cement clinker to Bhilai Jaypee Cements Ltd ('BJCL' in short) and for this purpose advanced payments to BJCL. RCL claims to have paid in advance for supply of three rakes of cement clinker to BJCL, however, BJCL failed to supply the third rake and also did not refund the advance payment received by them. RCL therefore sent a letter to BJCL on 25.06.2022 seeking return of the unpaid amount of Rs.1.96 cr comprising of Rs.1.83 cr as principal amount and Rs.13 lakhs as interest amount @ 18% p.a. as on 11.04.2022. A Demand Notice under Section 8 of IBC was sent by RCL to BJCL on 15.09.2022. As the outstanding amount was not received, RCL proceeded ahead by filing a Section 9 application. The Adjudicating Authority on hearing the matter reserved the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Appellant, the Learned Counsel for the Respondent No.1 submitted that the claim made by the BJCL that they had settled the entire outstanding dues of RCL on 10.08.2023 is not based on correct facts. Submitting that such unilateral settlement of outstanding dues by BJCL was not acceptable to RCL, it is also contended that BJCL cannot shy away from the fact that they had been clearly informed by RCL that GST credit could not be availed by RCL because of belated filing of GST return by BJCL. RCL had categorically apprised the Corporate Debtor on 10.08.2023 by email regarding non-payment of return on GST by BJCL and that they demand payment of the total unpaid operational debt alongwith GST and accrued interest. It was further pointed out that BJCL had admitted and acknowledged their liability on account of non-payment of the returns on GST and that they had agreed to pay Rs.65.72 lakhs for this purpose. These material facts were suppressed from this Tribunal and the Appellant having therefore come with unclean hands, their appeal deserves to be dismissed. It has also been contended that the Appellants do not have locus standi to institute the present appeal as they have fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation proceedings filed before the receipt of such notice or invoice in relation to such dispute; (b) the payment of unpaid operational debt- (i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or (ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by the corporate debtor. Explanation. -For the purposes of this section, a "demand notice" means a notice served by an operational creditor to the corporate debtor demanding payment of the operational debt in respect of which the default has occurred." 10. This now brings us to the statutory construct of IBC post issue of demand notice by the Operational Creditor as laid down in Section 9 of IBC. Under Section 9(1), if the Operational Creditor does not receive payment from the Corporate Debtor or notice of the dispute under Sub-section (2) of Section 8, he may file an Application under Section 9(1) of the Code. It is an undisputed fact in the present matter that RCL did not receive any payment from the Corporate Debtor after service of Section 8 Demand Notice and therefore proceeded to file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the operational creditor or there is no record of dispute in the information utility; and (e) there is no disciplinary proceeding pending against any resolution professional proposed under sub-section (4), if any. (ii) reject the application and communicate such decision to the operational creditor and the corporate debtor, if - (a) the application made under sub-section (2) is incomplete; (b) there has been payment of the unpaid operational debt; (c) the creditor has not delivered the invoice or notice for payment to the corporate debtor; (d) notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility; or (e) any disciplinary proceeding is pending against any proposed resolution professional: Provided that Adjudicating Authority, shall before rejecting an application under sub-clause (a) of clause (ii) give a notice to the applicant to rectify the defect in his application within seven days of the date of receipt of such notice from the Adjudicating Authority. (6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1th April, 2022 to 02nd September, 2022 for 145 day is Rs.13,14,431/- and the same is continuing till date and shall be claimed upto the date of realisation. PART IV of FORM 5 PARTICULARS OF OPERATIONAL DEBT 2. AMOUNT CLAIMED TO BE IN DEFAULT AND THE DATE OF WHICH THE DEFAULT OCCURRED (ATTACH THE WORKINGS FOR COMPUTATION OF AMOUNT AND DATES OF DEFAULT IN TABULAR FORM) Rs.1,96,96,325/- (Rupees One Crore Ninety-Six Lakhs Ninety-Six Thousand Three Hundred and Twenty-Five only). The above amount includes: Principal: Rs.1,83,81,894/- (Rupees One Crore Eighty-Three Lakhs Eighty-One Thousand Eight Hundred Ninety-Four Only). Interest: Rs.13,14,431/- (Rupees Thirteen Lakh Fourteen Thousand Four Hundred and Thirty-One Only) @ 18% p.a. from 11th April, 2022 to 02nd September, 2022. (Calculated till 02.09.2022) The date on which the default occurred is 11th April 2022 and is continuing. The dates on which the default occurred and the workings for computation of default in tabular from can be referred to in "Annexure C". 14. It is the case of the Learned Senior Counsel of the Appellant that when BGCL had already made payment of the complete outstanding amount as clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to amicably settle the dispute by proposing to repay the operational debt. It is also an admitted fact that BJCL had already refunded Rs.1.96 cr via RTGS on 10.08.2023 though it is the contention of the RCL that this amounted to a unilateral settlement which was not agreed to by them as it did not reflect the ITC dues. 17. Pursuant to the remittance of the operational debt of Rs 1.96 cr to RCL via RTGS transaction, the BJCL filed I.A. before the Adjudicating Authority on 11.08.2023 informing about this subsequent development which date albeit was after the Adjudicating Authority had reserved the matter for orders on 07.08.2023. Be that as it may, it is also pertinent to notice that before the pronouncement of the order, due to certain administrative exigencies, one of the Members of the Bench of Adjudicating Authority who had heard the matter on 07.08.2023 was transferred and a Special Bench was set up on 30.08.2023 before which the company petition came to be listed on 05.09.2023. In effect, the two I.A.s filed by BJCL remained pending before the Adjudicating Authority since 11.08.2023 and one of them was filed for the purpose of seeking urgent listing and disposal of the I.A.s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, we have no hesitation to opine that BGCL had already made payment of the entire operational debt as claimed by RCL in Section 8 Demand Notice and debt as reflected in Form 5 of Section 9 application. To that extent the alleged operational debt stands satisfied and clearly there is no default. It is also an undisputed fact that RCL had not sought any GST amount in the Section 8 demand notice or Section 9 application. RCL has of course clarified that this amount could not be reflected in Form 3 and Form 5 since the GST Return had been filed belatedly by the Corporate Debtor. Be that as it may, we need not go into the reasons adduced by RCL as to why they failed to demand payment of unpaid return on GST in the Section 9 application. It only suffices to note that no such GST refund and ITC claim was included in the Section 8 Demand Notice or the Section 9 application by the RCL and hence it cannot become a ground of default on which CIRP can be initiated. 20. We are of the considered view that in the factual matrix of the case at hand, when the dues in terms of Form 3 and Form 5 have been cleared by BJCL, endeavours on the part of RCL to seek initiation of CIRP by raisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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