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TMI Blog2024 (8) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. Since the date of default is the starting point for counting of limitation and such date of default having been specifically shown as 25.07.2016 in Part IV by the Appellant in respect of these 10 invoices, the limitation period of filing of Section 9 application clearly expired on 24.07.2019 while the Section 9 application was filed on 04.03.2020 - the Adjudicating Authority did not commit any error in holding that the first ten invoices relied upon by the Appellant as the basis for their Section 9 application were all time-barred claims on which the incidence of debt and default could not be predicated. Pre-existing dispute - HELD THAT:- Despite having received the payment, it is clear that the Appellant has tried to misrepresent the total outstanding amount as Rs. 75.38 lakhs as due and payable under the 11th invoice no. 77 dated 31.01.2019 in Part-IV of the Section 9 application. Even on seeing the reply of the Corporate Debtor to the Section 8 Demand Notice, it is noticed that the amounts claimed by the Appellant have been disputed by the Respondent - the Adjudicating Authority rightly applied the ratio of Innoventive judgement supra in deciding whether the amount under 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 8 of IBC on 18.10.2019 which was revised and resent on 22.10.2019. It is pertinent to note that in both the demand notices, the date of default remained unchanged, being 25.07.2016. The Corporate Debtor replied to the demand notice on 03.11.2019 denying any operational debt owed by it to the Operational Creditor besides raising certain disputes qua the payments claimed by the Operational Creditor, basis which the Adjudicating Authority rejected the Section 9 application, leading to the filing of the present appeal by the Operational Creditor. 4. Making submissions on behalf of the Operational Creditor, the Ld. Counsel for the Appellant submitted that 11 invoices had been raised by the Appellant to the Corporate Debtor in respect of the goods supplied by them. Contending that while some of the invoices were paid while some remained unpaid, assertion was also made that the Corporate Debtor while making payments never linked payments to specific invoices but were chronologically allocated. Submitting that in Part IV of the Section 9 application, the detailed breakup of the invoices was provided, it was stated that the total amount due was Rs. 11.52 cr including interest @ 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ready been transferred to the account of TDT Copper Ltd. which was a group company of the Operational Creditor. It was also submitted that Rs.5.96 cr had been transferred to the account of TDT Copper Ltd. at the request of the Operational Creditor vide their letter dated 13.06.2019 towards adjusting their outstanding balance. It was also contended that since the date of default as pleaded by the Operational Creditor in the Section 9 application was 25.07.2016, it was rightly held by the Adjudicating Authority that all the above ten invoices which has been relied upon by the Appellant as the basis for their claim stood barred by limitation. As regards the 11th invoice no. 77 dated 30.01.2019, it was clarified that this invoice was for a purchase order of 25 MT of cathode rods against which only 14 MT had been supplied. Payment to the tune of 95% of the 14 MT of cathodes supplied had already been made. The remaining amount was due to be paid at the time of delivery of the remaining 11 MT of cathodes which had still not been supplied. Thus, even the remaining amount of 5% of the invoice of 30.01.2019 amounting Rs.3.76 lakhs was not due and payable. Thus, despite having received the 95 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not running account evidencing inter se sales and purchase of copper and aluminium goods. The Corporate Debtor had made last payment of Rs. 71,61,378/- on 30.01.2019 which is particularly for Invoice 77. Further, if the account was a running account the amount of Rs. 71,61,378/- would be adjusted against the earlier invoices which were due for payment. We are persuaded with the contention of Corporate Debtor as substantiated by Bank Acknowledgement that the payment of Rs. 71,61,378/ - was made against invoice no. 77, therefore we are of considered view that the account maintained by the parties are not running account .. 8. The issue for consideration before us is whether these invoices were barred by limitation and, if not, whether the debt arising from these invoices were disputed or not. When we take a look at the material on record, there is no dispute over the fact that the Operational Creditor had sent demand notices to the Corporate Debtor on 18.10.2019 and 22.10.2019 in respect of 11 invoices and one debit note. All these 11 invoices including their date of issue and invoice amounts have been noted in the impugned order. These invoices are as reproduced below for easy refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 24.07.2019 while the Section 9 application was filed on 04.03.2020. Hence, we are also satisfied that the Adjudicating Authority did not commit any error in holding that the first ten invoices relied upon by the Appellant as the basis for their Section 9 application were all time-barred claims on which the incidence of debt and default could not be predicated. 11. This now brings us to the question as to whether the payment of Rs. 5.96 cr remained unpaid, as has been claimed by the Operational Creditor. It is the case of the Respondent that the Operational Creditor was supressing the fact that the amount of Rs.5.96 cr had already been paid since the said amount was transferred to the account of TDT Copper Ltd. at the request of the Operational Creditor vide their letter dated 13.06.2019. 12. The Ld. Counsel for the Appellant contended that the letter of 13.06.2019 cannot be relied upon as it lacks authenticity since it was not written on the letterhead of the Operational Creditor. Moreover, it had been signed by the authorised signatory of a third entity, TDT Copper Ltd. and not by the Operational Creditor. It was also pointed out that there were no other documents to show any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Limited and the transaction would be settled from that account itself. Thanking You Authorised Signatory, TDT Copper Ltd 15. Reiterating their stand that there was no outstanding debt with respect to the said amount of Rs. 5.96 cr, it was submitted by the Corporate Debtor that perusal of the letter of 13.06.2019 clearly shows that the Operational Creditor had requested the Corporate Debtor to transfer the balance to the account of TDT Copper Ltd., which was a group company of the Operational Creditor, to adjust their outstanding balance. It was further added that the letter itself admits that it was issued with the consent of all partners/directors/owners of both the companies which therefore shows that there was consensus between the two parties. Thus, when it had been agreed by all the parties that on the payment of Rs. 5.96 cr by the Corporate Debtor to TDT Copper Ltd. the outstanding balance of the Operational Creditor would become NIL, the Operational Creditor cannot now renege on this balance squaring off. 16. More importantly, the Ld. Counsel for the Respondent buttressing his arguments stated that the Appellant had deliberately supressed placing of their ledger account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placing the 11th invoice against which the Operational Creditor could only deliver 14 MT of copper cathodes. The parties had thereafter agreed by email on 30.01.2019 that the Corporate Debtor would pay 95% of the invoice amount for the supply delivered. It was submitted that the remaining amount of 11th invoice is clearly not due and payable to the Operational Creditor and therefore this cannot be a debt or default within the meaning of IBC. 19. When we peruse the impugned order, we find that the Adjudicating Authority has duly considered whether there was any pre-existing dispute surrounding the 11th invoice. The findings contained in the impugned order is as extracted below: 18. The Corporate Debtor contended that there exists a pre-existing dispute between the Corporate Debtor and Operational Creditor with respect to delivery of 25MT Copper Cathodes for which only 14MT was delivered. However, this Adjudicating Authority is of the view that, to rely on the contention of Corporate Debtor, there must be a pre-existing dispute prior to issuance of demand notice. The invoice dated 30.01.2019 for Rs 75,38.292/- is placed on record wherein it is mentioned that the said invoice is part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 MT of cathodes as placed at page 10 in their Additional Affidavit. Despite having received the payment, it is clear that the Appellant has tried to misrepresent the total outstanding amount as Rs. 75.38 lakhs as due and payable under the 11th invoice no. 77 dated 31.01.2019 in Part-IV of the Section 9 application. Even when we see the reply of the Corporate Debtor to the Section 8 Demand Notice, we notice that the amounts claimed by the Appellant have been disputed by the Respondent. We are therefore satisfied that the Adjudicating Authority rightly applied the ratio of Innoventive judgement supra in deciding whether the amount under 11th invoice had become due and payable or not and basis that appreciated the existence of a pre-existing dispute in respect of the said invoice and factorising the same rejected the Section 9 application. Given the conspectus of facts in the present case, it is clear that the first ten invoices were clearly time-barred and the 11th invoice no. 77 stood disputed even before the issue of demand notice. We are therefore satisfied that the Adjudicating Authority did not commit any error in rejecting the Section 9 application. 21. In result, we find no g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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