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TMI Blog2024 (7) TMI 1004X X X X Extracts X X X X X X X X Extracts X X X X ..... ent by the Appellant for reasons of being unsubstantiated with supporting documents. It is also notice that the Adjudicating Authority has noticed contradiction in the pleadings made by the Operational Creditor with regard to outstanding payments and the ledger account of the Corporate Debtor maintained by the Operational Creditor in their books of account which reflect that payments have been made by the Corporate Debtor. In the absence of any credible proof put forth by the Operational Creditor to controvert the contention of the Corporate Debtor that the entire debt has been cleared and that there was no default, we have no reason to disagree with the above findings of the Adjudicating Authority that the allegations of debt and default raised by the Appellant is facile and lacks substance. The aim and objective of Section 10A was to protect a Corporate Debtor from the filing of any insolvency application against it for any default committed during the period when Covid-19 pandemic was prevailing - The Adjudicating Authority has opined that even though the invoice was issued one day prior to the commencement of prohibited period under Section 10A, it cannot escape the clutches of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the Appellant submitted that the Operational Creditor Manishaas Infratecho Solutions Pvt Ltd received a development-cum- maintenance work order from the Corporate Debtor Bhonu Hulshi Real Estate for civil construction and miscellaneous work for a real estate project, namely, Bhonu Hulshi Nilaay Project. It is further stated that in pursuance of the work order, the Operational Creditor undertook various civil-cum-electrical works which were completed and invoices were raised aggregating an amount of Rs.4.26 cr for payment. It was further submitted that the Corporate Debtor had made part payment of Rs.2.05 cr and there was an outstanding payment of Rs.2.83 cr including interest. The Appellant submitted that it had sent reminders to the Corporate Debtor for making payment but due to nonreceipt of any response from the Corporate Debtor, the Appellant had issued Section 8 demand notice on 07.10.2022 which was served upon the Corporate Debtor on 10.10.2022. Since the Corporate Debtor did not reply to the demand notice within the prescribed ten days period, nor made any payments, the Appellant filed the Section 9 application on 30.10.2022 before the Adjudicating Authority for initia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 6. It was also contended that the Adjudicating Authority wrongly took the view that the Section 9 application could not have been filed by the Appellant since the default in respect of the third invoice raised by the Appellant amounting Rs.2.47 cr arose after 24.03.2020 and hence attracted Section 10A of the IBC. The Adjudicating Authority thus committed another mistake in holding that the default of the Corporate Debtor was hit by Section 10A of the IBC. 7. Refuting the submissions made by the Appellant, the Learned Counsel for the Respondent submitted that the Corporate Debtor had cleared all payments to the Operational Creditor and to their vendors and labourers. It was also asserted that detailed submissions have been made before the Adjudicating Authority to show that the entire payment had been made against the bills of the Operational Creditor either directly from the project account or from the account of one of the Directors of the Corporate Debtor. Moreover, during the period when work order was issued by the Corporate Debtor to the Operational Creditor, both these entities were being jointly managed by members of the same family and Sunil Kumar, the Managing Director o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said 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) of the Act. 11. On the issue of outstanding operational debt payable by the Corporate Debtor, we notice that in all fairness, the Appellant has admitted that the Corporate Debtor has consistently denied debt and default. The Appellant has also admitted that it is the contention of the Corporate Debtor that all due payments have been made either to the Operational Creditor and/or to the labourers and vendors of the Operational Creditor directly. The same submissions of having cleared all payments were made by the Corporate Debtor before the Adjudicating Authority. This has been captured at para 24 of the impugned order along with details of the various accounts from which payments have been disbursed by them. The Adjudicating Authority in the impugned order, in its own analysis and findings, has also therefore noted that the Corporate Debtor ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f goods, financial accounts, copies of GSTR-1 and GSTR -3B etc to be confirmed as operational debt, the invoices relied cannot be taken at face value, considering the facts and circumstances enunciated in this order. 13. From the above extracts it is clear that the Adjudicating Authority had applied its mind while considering the contention of the Appellant that the Respondent s claim of payments having been made by them was false. However, this contention of the Appellant was not found sustainable by the Adjudicating Authority and held to be a mere sweeping statement by the Appellant for reasons of being unsubstantiated with supporting documents. We also notice that the Adjudicating Authority has noticed contradiction in the pleadings made by the Operational Creditor with regard to outstanding payments and the ledger account of the Corporate Debtor maintained by the Operational Creditor in their books of account which reflect that payments have been made by the Corporate Debtor. 14. In the absence of any credible proof put forth by the Operational Creditor to controvert the contention of the Corporate Debtor that the entire debt has been cleared and that there was no default, we h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on record to prove that the date of default is 02.04.2021. There is nothing in the invoices on payment terms, in the absence of which, we can only infer that the invoices are due for payment within reasonable time, from the date of receipt of such invoices. We are of the view that as per the trade practice of this Industry 30 days from the date of receipt of such invoices, is reasonable. 34. Based on admission made in the Notice issued under Section 8 of IBC by the corporate debtor that an amount of Rs.2,05,38,049/- has been received, we infer that first two Invoices have been paid in full. Therefore, substantial amount claimed to be due is with reference to invoice No. 3 and the said invoice is dated 24.03.2020, which is one day prior to the date of commencement of period covered under Section 10A of IBC. *** *** 36. In the case in hand, the Invoice No. 3 relates to the construction of work. Even assuming for the sake of analysis, that this invoice is genuine, the corporate debtor will have to at least verify the completion of the work order claimed to have been executed. The verification would involve quality, of civil work performed, measurement etc. Therefore, payment of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion, it becomes clear that the aim and objective of Section 10A was to protect a Corporate Debtor from the filing of any insolvency application against it for any default committed during the period when Covid-19 pandemic was prevailing. 19. We now come to the rationale followed by Adjudicating Authority in holding the third invoice as one hit by Section 10A of IBC. The Adjudicating Authority has opined that even though the invoice was issued one day prior to the commencement of prohibited period under Section 10A, it cannot escape the clutches of Section 10A since the date of issue of invoice cannot become the date of default since nothing has been placed on record by the Operational Creditor to show that the invoice had been delivered to the Corporate Debtor on the same date. Furthermore, there is no document/agreement between the two parties which has been placed on record to establish the fact that payment was to be made by the Corporate Debtor on the date of the invoice. The Adjudicating Authority has also opined that it is common business practice that some reasonable time is always available for making payment after invoices are issued. In the instant case since the third i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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