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TMI Blog2024 (9) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... shed from other correspondences/documents exchanged between the parties in this context. The Adjudicating Authority was not off the mark in observing that the Appellant has failed to produce any documentary evidence/tripartite agreement stipulating the terms and conditions of the guarantee of payment undertaken by the Respondent on behalf of the third party for the goods supplied to it by the Appellant. In the absence of any privity of contract between the parties, the Appellant cannot be treated as the Operational Creditor of the Respondent. It is a well settled legal proposition that the operative requirement of operational debt is that the claim must bear some nexus with a provision of goods or services, without specifying who is to be supplier or receiver. In the present case, the absence of any contractual agreement between the Appellant and the Respondent, defining their business relationship is an admitted fact - in the facts of the present case, it is undisputed that goods were not supplied by the Appellant but supplied by some third parties. It is however the claim of the Appellant that they had supplied the goods through the third parties who were their local distributors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the Appeal - Appeal dismissed. - [ Justice Ashok Bhushan ] Chairperson , [ Barun Mitra ] Member ( Technical ) And [ Arun Baroka ] Member ( Technical ) For the Appellant : Mr. Arijit Prasad, Sr. Advocate with Mr. Rajat Chaudhary , Advocates For the Respondent : Mr. Savar Mahajan, Ms. Pooja Mahajan and Ms. Komal Abrol , Advocates JUDGMENT ( Hybrid Mode ) Per : Barun Mitra , Member ( Technical ) The present appeal filed under Section 61 of Insolvency and Bankruptcy Code 2016 ( IBC in short) by the Appellant arises out of the Order dated 06.06.2024 (hereinafter referred to as Impugned Order ) passed by the Adjudicating Authority (National Company Law Tribunal, Chandigarh Bench-I) in CP (IB) No. 109/Chd/Hry/2019. By the impugned order, the Adjudicating Authority has rejected the Section 9 application filed by the Operational Creditor-Appellant seeking initiation of Corporate Insolvency Resolution Process ( CIRP in short) against Respondent-Corporate Debtor-POSCO E C India Private Limited. Aggrieved by this impugned order, the present appeal has been preferred by the Operational Creditor. 2. We have heard Shri Arijit Prasad, Ld. Sr. Counsel appearing for the Appellant and Shri Sav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween the Respondent and the Appellant effectively shows that the Respondent had undertaken to make payment in case Empathy failed to do so thereby assuming the role of a guarantor. Contending that signed agreement is not the only pre-requisite of a valid contract but even documents like e-mails etc. can also be seen to infer the existence of a contract it was further pointed out that the Adjudicating Authority had wrongly held that the Appellant cannot be treated as an Operational Creditor of the Respondent. The liability of the Respondent to pay the outstanding dues of Empathy to the Appellant had become absolute and unconditional. It was incumbent upon the Respondent to make payment on account of the goods supplied by the Appellant and the Respondent having defaulted in clearing the liability qua the Appellant, the Section 9 application ought to have been admitted and the Respondent admitted into CIRP. 5. Refuting the contentions raised by the Appellant, the Ld. Counsel for the Respondent submitted that the Appellant had neither provided any goods nor any services to the Respondent directly and therefore cannot claim to be an Operational Creditor of the Respondent. It was also c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent was a party in the transaction qua the material supplied by the Appellant and attendant default. 8. It was vehemently contended that the Adjudicating Authority had wrongly held that there was no material on record to establish privity of contract between the Appellant and the Respondent. Further, in support of their contention that signed agreement is not the only pre-requisite of a valid contract but that other documents like e-mails etc. can also be seen to infer the existence of a contract, the Ld. Sr. Counsel for the Appellant has relied on the judgment of the Hon ble Apex Court in M/s Trimex International FZE Ltd. Dubai Vs Vedanta Aluminium Ltd. in Arbitration Petition No. 10 of 2009. It was therefore asserted that when the Respondent had undertaken to make payment in case Empathy failed to make the payment, it was incumbent upon the Respondent to make payment on account of the services rendered by the Appellant. The Respondent having defaulted in clearing the liability qua the Appellant, the Section 9 application ought to have been admitted and the Respondent admitted into CIRP. 9. It is the case of the Respondent that there was no privity of contract between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor under Regulation 7(2)(b)(i) and (ii) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016. 11. When we look at the material placed before us, we find that the Appellant has not placed on record any documentary evidence or agreement between the Appellant, Respondent and Empathy stipulating the terms and conditions of the guarantee of payment allegedly undertaken by the Respondent on behalf of Empathy for the goods supplied to it by the Appellant. It has, however, been canvassed by the Appellant that there is no need for any signed instrument to substantiate a contract of guarantee and that the existence of such a contract can be conclusively established from other correspondences/documents exchanged between the parties in this context. 12. Coming to the e-mails which have been relied upon by the Appellant to substantiate their claim that the Respondent had stood guarantee, we find that consequent to a email dated 10.06.2015 received from the Respondent seeking competitive quotes from the Appellant for TMT bars, the Appellant on 24.06.2015 had requested the Respondent to issue a letter of assurance/guarantee of pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... risdiction, we do not wish to dwell upon the charge levelled by the Respondent that the said email was unauthorized and a creature of misrepresentation. We have perused the said email which has been placed at page 111 of the Appeal Paper Book ( APB in short) and find that the email does not make any mention of Empathy having agreed or consented to the said guarantee. To our minds, the contents of the email do not reflect any clear meeting of minds and mutual consent of all the three parties with respect to the guarantee in question. Now coming to the fourth document dated 19.10.2015 which happens to be the minutes of a tripartite meeting, as placed at page138 of APB, we find that though the minutes records a schedule of payment to be followed by Empathy, nevertheless the minutes do not bear the signature of the parties. As regards the fifth email dated 30.10.2015, we notice that this email is addressed by the Respondent to Empathy stating that if they falter in adhering to the payment schedule, strict action would be taken against them and that the Respondent will think about another way in this regard. From a plain reading of this email, we are afraid that it cannot be treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant is therefore at best a fanciful proposition bereft of any substance. Since the invoices were raised by third parties and not by the Appellant, basis these invoices, the Appellant cannot justifiably claim any amount as purportedly due to them from the Respondent. In any case, these invoices were not raised against the Respondent but raised against Empathy and hence liability to pay for the same cannot be fixed on the Respondent without the specific consent of the Respondent. To cap it all, the goods were also supplied by the third parties to Empathy and not to the Respondent. Thus, when there is no co-relation between the goods supplied by the third parties to Empathy and the claim raised by the Appellant in respect of such goods on the Respondent, the Appellant/Operational Creditor had clearly failed to fulfil the requirements of Rule 5(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 to establish their operational claims. The operative and primary requirements of Section 5(21) not having been met, we are therefore not convinced by the contention of the Appellant of their claim arising out of supply of goods as operational debt. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Code. Therefore, the Code and the procedure prescribed thereunder ought not to be used by M/s. Agarwal as a means of recovery of monies by the M/s. Agarwal in the absence of any debt owed by the Company to M/s. Agarwal as alleged in the false and concocted Notice under response or otherwise. ( Emphasis supplied ) It is, therefore, clear that in the reply to the Section 8 Demand Notice, the Respondent has not only denied their liability to pay the claims raised by the Appellant but also raised question marks on the privity of contract between them. 17. On the aspect of limitation, we find that the Adjudicating Authority has examined the rival contention of both parties. The Adjudicating Authority has noticed the reliance placed by the Respondent on the judgment of the Hon ble Supreme Court in BK Educational Services Pvt. Ltd. Vs Parag Gupta and Associates in CA No. 23988 of 2017 wherein it had held that proceedings under Section 9 of IBC are governed by the provisions of the Limitation Act, 1963. We are satisfied with the findings of the Adjudicating Authority that the claim of the Appellant was time-barred since the limitation was to be counted from the date of default which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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