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TMI Blog2025 (1) TMI 1098X X X X Extracts X X X X X X X X Extracts X X X X ..... ute does not relate to the subject matter of the present proceeding. In the conspectus of the case, issue of the pre-existing dispute cannot be put to a strait jacket as there is a complex nature of transactions when the Demand Notice was issued. It is found that there is a pre-existing dispute between the Promoters inter-mingled with the two legal entities and is not a patently feeble argument or an assertion of fact unsupported by evidence, rather it is an actual dispute requiring adjudication. The Hon ble Supreme Court in the matter of Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited [ 2017 (9) TMI 1270 - SUPREME COURT ] has mandated that such an application needs to be dismissed under Section 9(5)(ii)(d). There is a pre-existing dispute between the parties and Section 9 petition is not maintainable. There is sufficient material on record to suggest that there is a pre-existing dispute and Section 9 petition is not maintainable, even then the other additional grounds raised by the Appellant - with respect to limitation and the account being running account or not, are being delved in subsequent paragraphs to unearth the real nature of transactions between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt / Jagdish Prasad Sharma 2. It is contended by the Appellant that majority of the invoices relied by the Operational Creditor / Respondent No.1 are for the year 2016-2019. As per these invoices, they were due on the same day. Therefore, limitation period in relation to the said invoices has lapsed. The Adjudicating Authority has relied on Section 19 of the Limitation Act, 1963 and has held that since part payments have been made, a fresh period of limitation starts. Since the Appellant has not acknowledged the debt fresh limitation cannot be stated to run against the alleged debt under Section 19 of the Limitation Act, 1963. It is unclear that the said payments have been made towards the alleged debt as claimed by the Operational Creditor. The promoters of the Operational Creditor and the Corporate Debtor were not restricted to a single isolated transaction - which is supply of goods and its payment - but there were several disputes and commercial transactions between the Operational Creditor, Corporate Debtor and the promoters of both the Operational Creditor and Corporate Debtor. 3. Section 9 petition has been admitted only on the basis of invoices, even though the said invoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e raises no dispute. 8. The Appellant and the Corporate Debtor had a running account cannot be in dispute. The amount of Rs. 2,41,15,076/- is owed to the OC which is clear and not disputed. The nature of a 'running account' has been considered by the Hon'ble NCLAT to mean that there must be "…'Debits' and 'Credits' entries going on simultaneously or on a regular basis and the balances are struck with some periodicity…" The ledger statement filed reflects part payments by the Operational Creditor to the Corporate Debtor in the 'Credit' column. Further, the Corporate Debtor has in its Reply demonstrated that the account maintained by the parties was a running account. The chart filed by the Corporate Debtor itself reflects continuous payments to the Operational Creditor, the last part-payment having been made on 02.03.2022. The chart also reflects the part-payments having been made against specific invoices. There can therefore be no doubt that the account maintained between the parties was indeed a 'Running Account'. The Hon'ble NCLAT has held that where statements showing regular credit entries are produced, the limitation would commence from the date of last payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The purported dispute does not relate to the subject matter of the present proceedings. Therefore, there is no merit in the CD's submissions. 13. In the facts and circumstances, it is prayed that there is no merit in the CD's submissions and the appeal may be dismissed. Appraisal 14. This appeal by Mr. Jagdish Prasad Sharma (suspended Management) arises from the order of the Adjudicating Authority admitting the Section 9 application filed by M/s Silverline Graphics Private Limited / Respondent No.1 / Operational Creditor (OC) against M/s India Offset Printers Private Limited / Corporate Debtor (CD). The Corporate Debtor has challenged the said order, primarily on grounds of pre-existing disputes, non-existence of debt and limitation. 15. Heard the counsels and perused material on record. 16. Basis the material on record and submissions, following issues emerge: whether there is a pre-existing dispute. whether the transactions are being under running account whether the demand is barred by Limitation Act, 1963. 17. All the issues are inter-twined and being dealt together. 18. The Appellant contends that there is a pre-existing dispute between the parties. The pre-exis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Creditor from 2017 to 2022 in regard to the invoices so raised. The last part-payment was made on 02.03.2022, which reflects the 'acknowledgement of debt' on the part of the Corporate Debtor. Furthermore, on the consideration of the transactional invoices, as annexed by the Operational Creditor, and placed before us, we are of the view that there had been a transaction between the Operational Creditor and the Corporate Debtor and that the Operational Creditor has supplied goods to the Corporate Debtor and therefore, is claiming the payment in respect of the invoices so raised. Hence, this Adjudicating Authority is inclined towards believing that the debt claimed by the petitioner for provision of pharmaceutical products comes under the purview of 'Operational Debt' within the meaning of Section 5(21) of the Code." 20. The above finding of the Adjudicating Authority rejecting the existence of pre-existing dispute has not looked into the real nature of transactions between the two entities. For finding the existence or otherwise of a pre-existing dispute in this case, we now first look into the real nature of transactions basis the materials on record. It is contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Mohan Bhagat and not the OC. Also the Corporate Debtor had disputed the default on 11.10.2023, as is reflected in the status of the Information Utility (NeSL). 24. The prevailing dispute between the parties is also noted from the proceedings of Hon'ble Delhi High Court in CS (Comm.) No.825 of 2022, which was filed by the Petitioner/Appellant. From the material or record in the Appeal Paper Book, it is contended by the Corporate Debtor that the Operational Creditor and the Promoters of Operational Creditors are occupying the property of the Corporate Debtor and promoters of Corporate Debtor as a tenant and the goods supplied by the Operational Creditors were being adjusted against the rent. And they were liable to pay rent to Promoter of the Corporate Debtor. When they stopped paying rent, multiple litigations were filed between the parties and the present petition is one of those litigations. 25. Thus, in the conspectus of the case, issue of the pre-existing dispute cannot be put to a strait jacket as there is a complex nature of transactions when the Demand Notice was issued. We thus find that there is a pre-existing dispute between the Promoters inter-mingled with the two leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or had also contended that the invoices are raised from the year 2016 till 2021, and the due date mentioned on the invoice is same as the date of the invoice and the present petition has been filed on 21.09.2023, therefore, some of the invoices have become time barred. In this regard, it is observed that the Operational Creditor had maintained a running account with regard to the payments received by the Corporate Debtor. The term "same date" as the due date merely signifies that the debt has become due from that date and the fact that the due date mentioned on the invoice is the "same date" as of the date of the invoice does not rule out the possibility of the maintenance of the running account between the parties. Further, considering the pattern of the payments made by the Corporate Debtor, the nature of transaction appears to be that of running account only. Further, as per the records, it is observed that the Corporate Debtor had continuously made part-payments to the Operational Creditor in relation to the invoices raised by the Operational Creditor. The part-payments were made from 2017 and the last part-payment was made on 02.03.2022 and by virtue of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd some have been returned in cash. This indicates complex nature of transactions between Operational Creditor, Promoters of Operational Creditor, Corporate Debtor and Promoters of Corporate Debtor. If the nature of transactions has to be gone into, as indicated by the Adjudicating Authority, then we cannot conclude it to be a running account for the supply of goods and its payments alone. It has many more transactions not only between the Corporate Debtor and the Operational Creditor but also between the Promoters. The argument of the Operational Creditor that both are separate legal entities, and the transactions other than these legal entities is not tenable in such a situation. The veil of Corporate Debtor has to be pierced in such a situation. Therefore, the Order of the Adjudicating Authority, which is more on the basis of presumptions, doesn't stand the scrutiny basis materials on record. 31. Basis above analysis we find that there are multiple transactions which were happening in the purported running account - some of which relate to the supply of goods and their payment from two legal corporate entities, but others not directly related to the supply of goods and services ..... X X X X Extracts X X X X X X X X Extracts X X X X
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