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TMI Blog2024 (5) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... the fraud was committed by an unknown third party and not by the Appellant and did not make the Appellant an accused party in their police complaint, the cyber fraud and the related police complaint cannot constitute evidence of a pre-existing dispute inter se between the Operational Creditor and Corporate Debtor - Since the matter is already under police investigations and there is no finality in the matter, attributing any culpability on the employees of the Operational Creditor based on surmise and conjecture of the Corporate Debtor would be pre-mature and highly presumptuous given the summary jurisdiction of the Adjudicating Authority and this Appellate Tribunal. It is not required to examine the above contention of the Respondent that the perpetrators of the cyber fraud were assisted by employees of the Operational Creditor. There is force in the contention of the Appellant that since the Corporate Debtor and the Operational Creditor were in a long-standing business relationship, had the Corporate Debtor shown professional diligence and due rigour, they would have been able to easily detect the suspicious emails and averted the ensuing cyber fraud. This clearly shows the negli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Optinova AB Operational Creditor/Appellant against Respondent/Corporate Debtor - Bio-Med Health Care Products Private Ltd. Aggrieved by this impugned order, the present appeal has been preferred by the Appellant. 2. We heard Mr. Aditya Dewan, Learned Counsel who appeared on behalf of the Appellant and Mr. Nikhil Verma, Learned Counsel who appeared on behalf of the Respondent. 3. The Learned Counsel for the Appellant making his submissions stated that the Appellant Operational Creditor had been supplying medical tubing to the Respondent Corporate Debtor against purchase orders issued from time to time and that in terms of the statement of account maintained by the Appellant, an amount of Euro 320,406/- (Rs. 2.56 cr) is required to be paid by the Respondent as outstanding dues. It is further submitted that in spite of reminders, the dues were not cleared by the Corporate Debtor despite admitting their liabilities. Hence, the Appellant was compelled to issue a Demand Notice on 20.02.2019 requesting for payment of Rs.2.56 cr within 10 days of the receipt of the Demand Notice. Further submission was made that the Respondent in response to the Demand Notice did not pay the debt amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees of the Appellant and thus the direct involvement of the Appellant cannot be ruled out. However, this clearly renders the amount to be disputed. Hence, it was submitted that the Adjudicating Authority had correctly noted that the police complaint having been lodged before the receipt of the Demand Notice, this was a clear case of pre-existing dispute. It is also submitted that in terms of Section 9(5)(ii)(d) of the IBC, if a notice of dispute is received by the Operational Creditor, the Adjudicating Authority has to reject a Section 9 application. Hence the Adjudicating Authority has correctly dismissed the present section 9 application. In support of their contention, reliance has been placed on the Mobilox Innovations Private Limited vs. Kirusa Software Private Limited (2018) 1 SCC 353 judgment of the Hon ble Apex Court which provides that if an existence of a dispute is found before the issue of Demand Notice, the Adjudicating Authority is required to dismiss a Section 9 application without going into the merits of the dispute. 6. On the outstanding amount, it was submitted that besides the disputed amount of Euro 206,024/-, a sum of Euro 2495/- was not payable as no invoices ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es the guiding principles in analysing the admissibility of Section 9 application. The test to be followed to examine an application under Section 9 has been laid down in para 34 of this judgement which is to the effect: - 34. Therefore, the adjudicating authority, when examining an application under Section 9 of the Act will have to determine: (i) Whether there is an operational debt as defined exceeding Rs 1 lakh? (See Section 4 of the Act) (ii) Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid? and (iii) Whether there is existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute? If any one of the aforesaid conditions is lacking, the application would have to be rejected. Apart from the above, the adjudicating authority must follow the mandate of Section 9, as outlined above, and in particular the mandate of Section 9(5) of the Act, and admit or reject the application, as the case may be, depending upon the factors mentioned in Section 9(5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat on review of the emails exchanged between the two parties regarding bank account details, both parties had mutually come to the conclusion that this was a case of fraud. A police complaint was also lodged which occurred before the receipt of the Demand Notice and this was also raised by the Respondent in their notice of dispute. Thus, the payment of Euro 206,024/- was a clear case of pre-existing dispute. 13. It is also the case of the Respondent that this cyber fraud could not have taken place without the help of some of the employees of the Appellant and that the involvement of the Appellant cannot be ruled out given their noncooperative behaviour towards the investigations. It was submitted that while the Appellant had initially agreed to cooperate with the investigation having accepted that a fraud had taken place, they later refused to cooperate and even refused to become a co-complainant before the police authorities to pursue the investigation into the cyber fraud. In terms of Section 9(5)(ii)(d) of the IBC, the Adjudicating Authority has to reject a Section 9 application if a notice of dispute has been received by the Operational Creditor. Hence, it was submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Police, Faridabad dated 14.01.2019, with regard to the alleged fraud committed against the respondent corporate debtor much before the date of default. 10. 11. From the aforesaid decision, it is amply clear that the existence of dispute must be pre-existing i.e. it must exist before the receipt of the demand notice or invoice. In the case at hand it has come to the notice of this Adjudicating Authority that the operational debt is under dispute as the cyber fraud has been stated to be committed against the respondent corporate debtor which is still under investigation. Moreover, the proceedings before this Adjudicating Authority are not in the nature of recovery proceedings. In light of the above, we direct the operational creditor to approach the appropriate forum for proper redressal of its grievance. 12. In the given facts and circumstances, where there is a pre-existing dispute between the parties about the operational debt, the petition is liable to be rejected, in terms of Section 9(5) of IBC, 2016. Therefore, the claim of the petitioner is rejected and the petition stands dismissed, however, without any order to the costs. 15. Coming to our findings, at the outset, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.2019 against unknown persons . The complaint was not made by the Corporate Debtor against the Appellant. Neither did the police complaint make mention of any on-going dispute in this regard existing between the parties. Prima-facie, this cannot be treated as a dispute inter se between the parties. 18. At this stage, it may be useful to notice certain contents of the police complaint which finds place at page 308 of the Appeal Paper Book ( APB in short). To: Shri Sanjay Kumar Commissioner of Police Office of the Commissioner of Police Sector 21 C Faridabad 14 January 2019 Subject: Complaint against unknown individuals responsible for committing offences punishable under the Indian Penal Code, 1860 and the Information Technology Act, 2000 Respected Sir: Under instructions from and on behalf of our client, Bio-Med Health Care Products Private Limited, having its registered office at 30, DLF Industrial Estate, Phase I, Faridabad 121003, Haryana, India [hereinafter referred to as Client ], we request you to take on record the following: 38.That such instances make it abundantly clear that the perpetrators[s] are sophisticated and trained criminals and were somehow able to access and/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion letters, it shows that such a fraud could not have been committed without complicity of the Operational Creditor. Since the matter is already under police investigations and there is no finality in the matter, attributing any culpability on the employees of the Operational Creditor based on surmise and conjecture of the Corporate Debtor would be pre-mature and highly presumptuous given the summary jurisdiction of the Adjudicating Authority and this Appellate Tribunal. We therefore do not wish to examine the above contention of the Respondent that the perpetrators of the cyber fraud were assisted by employees of the Operational Creditor. 20. We are also of the considered view that the Appellant cannot be held responsible in any manner for the payment made by the Respondent into a wrong bank account. When we see the reply affidavit of the Respondent as placed at pages 13-14 thereof, we find that the Respondent has conceded that while sending payments to the changed bank account details of the Appellant, they have relied on emails which were not sent from the domain name of the Appellant. The relevant excerpts from the reply affidavit is as reproduced below: (xxv) It was noticed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s communications have admitted their liabilities. Even in their Notice of Dispute of 01.03.2019, they have acknowledged an outstanding balance of Euro 111,887/- which was agreed to be paid in monthly instalments of Euro 10,000/- only. Further the very fact that much after the issue of the Demand Notice, an amount of Euro 49,664/- has been claimed to have been paid by the Corporate Debtor to the Appellant as stated in their Reply Affidavit as placed at pages 26-27 shows that they have acknowledged that outstanding operational debt qua the Appellant was payable by them. Furthermore, we find that in the said Reply affidavit of the Respondent, the Respondent has accepted and admitted that it owed the Appellant a sum of Euro 62,222/-. This acknowledgement in itself is sufficient to satisfy existence of undisputed operational debt exceeding the threshold level of Rs.1 lakh. 24. We notice that the Respondent has placed reliance on the judgment of the Hon ble Supreme Court in SS Engineers vs Hindustan Petroleum Corporation Ltd, [2022] 18 SCR 391 wherein it has been held that if a debt is disputed, the application of the Operational Creditor for initiation of CIRP must be dismissed as the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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