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TMI Blog2025 (1) TMI 1216X X X X Extracts X X X X X X X X Extracts X X X X ..... the 3-year period would expire on 16.02.2020, which was a Sunday and a non-working day for the Tribunal and its registry. As per Section 4 of the Limitation Act, read with Rule 3 of the NCLT Rules, the Petition could be validly filed on the next working day, i.e., 17.02.2020, which is when it was indeed filed. Hence, the Petition is still within the limitation period - Appellant's grounds on limitation cannot be therefore accepted and the application is very much maintainable on this ground. Whether the Demand Notice in Form-3 dated 15.01.2020 was properly served or not? - HELD THAT:- CD claims that the OC falsely asserted in its affidavit that it did not receive a Reply to the Demand Notice. The CD claims that it duly responded to the Demand Notice, with supporting postal receipts provided as evidence. The tracking reports were unavailable due to the operational challenges during the COVID-19 pandemic. It is claimed that CD replied to the Demand Notice within the statutory period and raised a legitimate dispute regarding the claimed amount. Consequently, the Order violates Section 9(5) of the Insolvency and Bankruptcy Code (IBC), as the application is incomplete and OC has not r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C & A Farm Fresh Private Limited ("Corporate Debtor/CD") was admitted to CIRP process under Section 9, Petition bearing CP (IB) No. 226/CHD/2020 of the IBC for debt and default of Rs. 20,66,028.76/- (rupees twenty lakhs, sixty-six thousand and twenty-eight and seventy-six paise only), which is above the threshold limit of Rs. 1 lakh being applicable threshold at the time of filing of Petition on 17.02.2020. Submissions made by the Appellant- Suspended Management: 2. The Impugned Order should be set aside because OC's Form-5 was incomplete and defective, warranting the dismissal of the Application under Section 9. The Impugned Order should be set aside under Section 9(5)(b) of the IBC, which mandates rejection of incomplete applications. OC falsely affirmed in an affidavit that it did not receive a Reply to the Demand Notice. 3. The Demand Notice dated 15.01.2020 was posted on 22.01.2020 and received by the CD on 28.01.2020, as confirmed by the postal receipts and tracking report. The CD sent its Reply dated 07.02.2020 via speed post on 08.02.2020 to the same address from which the Demand Notice was sent. The Reply was returned from two of the three addresses with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng an unregistered partnership firm, was not eligible to file an Application before the Adjudicating Authority under Section 69 of the Partnership Act, 1932. 8. The calculation of the alleged debt and interest is fabricated and should not have been relied upon. The invoices, supposedly due from 29.06.2016 to 30.11.2016, incorrectly include GST at 18%, which was introduced only on 01.07.2017. 9. The OC initially supplied boxes that met the required specifications and quality, for which the CD made payments. However, the quality of the boxes later declined, causing damage to the packed fruits and resulting in financial loss to the CD. The CD repeatedly raised concerns about the inferior quality of boxes with the Company. In 2016, Arvind Gulsia, the Appellant's Managing Director, visited the OC's Mumbai office several times to address the issue. Other representatives of the CD also followed up regularly. During these discussions, the OC admitted to the poor quality of the boxes, apologised, and promised to improve future supplies. To avoid legal issues and based on their long relationship, the OC and CD mutually agreed to a deferred payment schedule for the remaining balance, st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nty-four thousand, four hundred and ninety-five only), which became due and, consequentially, default occurred on 30.12.2016. The Demand Notice at Page No. 76 of Appeal Memo at Column 1 and 2 as well as the Form-5 Petition at Page No. 68 refers to the same dates of default with respect to first and last of the 13 invoices raised. The details of due and default date of each of the 13 invoices was annexed to the Petition as well as Demand Notice in a tabular chart which is at Page No. 161 of the Appeal Memo. The third date of default mentioned on Page No. 68 in the Form-5 Petition is 18.02.2017, which is mentioned since it is relevant for computation of period of limitation as there was running account between parties and last payment of Rs 1,34,892/- (rupees one lakh, thirty-four thousand, eight hundred and ninety-two only) was made by the CD on 17.02.2017 and, hence, as specified therein, the date was referred to for the purposes of computing period of limitation of 3 years from 18.02.2017 as such payment extends limitation under Sections 18 and 19 of Limitation Act, 1963. With respect to the issue that whether the Petition was filed within limitation or not since, last part paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without prejudice to the fact that no iota of evidence is produced to demonstrate the same including any cash receipts. Hence, the CD has admitted the entire factum of transaction and principal amount in default of Rs 11,69,948/- (rupees eleven lakhs, sixty-nine thousand, nine hundred and forty-eight only) as on 01.04.2018 without prejudice to the fact that supplies made in each invoice were backed by delivery challans and are acknowledged by the CD. 15. The Appellant has made baseless claims and grounds for challenging the Impugned Order, questioning genuineness of the invoices trying to mislead that GST is levied on invoices raised during period of 29.06.2016 to 30.11.2016, while GST regime was introduced on 01.07.2017 as stated in Page No. 29 of Appeal Memo. The same is an entirely false statement being made and an attempt to mislead this Hon'ble Appellate Tribunal is evident from bare perusal of invoices from Page No. 84 to 107 of Appeal Memo wherein VAT, CENVAT is levied and not GST. The CD itself has acknowledged the receipt of goods under the said invoices. GST is claimed while filing Form-5 Petition in the year 2020 when GST regime was implemented and GST Act provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitation period. As such, it should have been dismissed on this ground alone. OC falsely included a third default in its Section 9 Application, despite only two dates (26.10.2016 and 31.12.2016) being referenced in the Demand Notice. This was a deliberate attempt to bring the Application within the limitation period. 20. Regarding the multiple dates of default and the inconsistency between the dates mentioned in the Demand Notice and Form-5 Petition, it is noted from the materials on record that a total of 13 invoices, aggregating to a principal debt amount of ₹11,69,999/- (rupees eleven lakhs, sixty-nine thousand, nine hundred and ninety-nine only) were raised and defaulted upon. The first invoice, dated 26.09.2016, was for ₹1,12,360/- (rupees one lakh, twelve thousand, three hundred and sixty only). After the 30-day credit period, the payment became due, and default occurred on 26.10.2016. The last invoice, dated 30.11.2016, was for ₹74,495/- (rupees seventy-four thousand, four hundred and ninety-five only) and became due on 30.12.2016. The Demand Notice (Page 76 of the Appeal Memo) and Form-5 Petition (Page 68) both reference these same default dates for the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd was refiled on 03.03.2020 vide Diary No.1733. Therefore, this Adjudicating Authority finds that this application is filed within limitation" Appellant's grounds on limitation cannot be therefore accepted and the application is very much maintainable on this ground. 23. On the issue of whether the Demand Notice in Form-3 dated 15.01.2020 was properly served or not, the AA has concluded that: "The demand notice delivered to the corporate debtor vide registered post as the postal receipt and tracking reports are attached at Annexure-l of the petition. The corporate debtor did not reply to the demand notice till date. Therefore, a demand notice was duly served." 24. CD claims that the OC falsely asserted in its affidavit that it did not receive a Reply to the Demand Notice. The CD claims that it duly responded to the Demand Notice, with supporting postal receipts provided as evidence. The tracking reports were unavailable due to the operational challenges during the COVID-19 pandemic. It is claimed that CD replied to the Demand Notice within the statutory period and raised a legitimate dispute regarding the claimed amount. Consequently, the Order violates Section 9(5) of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following have been laid down: "… 6. Having heard the learned counsel for both sides, what is apparent is that Article 62 is out of the way on the ground that it would only apply to suits. The present case being 'an application' which is filed under Section 7, would fall only within the residuary Article 137. As rightly pointed out by the learned counsel appearing on behalf of the appellant, time, therefore, begins to run on 21-7-2011, as a result of which the application filed under Section 7 would clearly be time-barred. So far as Mr Banerjee's reliance on para 11 of B.K. Educational Services (P) Ltd., suffice it to say that the Report of the Insolvency Law Committee itself stated that the intent of the Code could not have been to give a new lease of life to debts which are already time-barred." 6. An application under Section 9 of IBC cannot be said to be a suit and analogy of Hon'ble Supreme Court judgment in Hargovindbhai Dave's case, supra, is fully applicable to the application filed under Section 9 IBC also. Further, also it is well settled by the judgment of the Hon'ble Supreme Court in B.K. Educational Services (P) Ltd. v. Parag Gupta and Associates, (2019) 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings. 28. In fact, the real issue before us is whether we could rely on the issue of dispute raised by the Appellant and whether it is not a moonshine dispute and whether to treat that as a pre-existing dispute and accept this dispute for setting aside the Section 9 Order. This issue is delved into by us in subsequent paragraphs. 29. The Reply of the CD to Section 9 Petition starting from Page No. 146 of APB read with finding of Ld. NCLT in Para 11 of Page No. 47 of APB has been gone into. It was claimed by the CD that the quality of boxes was not as per specifications leading to damage of fruits packed in boxes leading to financial loss to the respondent. However, there is no material placed on record to show that the dispute existed between the parties much before the issuance of the Demand Notice. There is no correspondence between the parties to that effect. Further only after the service of Demand Notice and filing of Petition by OC, CD disputed it. Further, on the one hand, the Appellant contends pre-existing dispute, while on other hand, assumes an entirely contradictory position that the entire debt amount was paid by way of cash in instalments during the period of 03.05 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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