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2022 (1) TMI 868 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Oprational creditor - pre-existing dispute - last payment was made by the ‘Corporate Debtor’ on 07.11.2013, the Demand Notices were issued on 30.08.2017 and on 25.07.2018 and the Application was filed on 05.10.2018 - bar of time limitation - C Forms/Sales Tax declaration were given for the entire supply portions - liability and admission as stipulated under Section 18 of the Limitation Act, 1963 - HELD THAT:- In the instant case, the correspondence on record evidences that there indeed was a delay in the performance of the Contract and the final Notice was issued on 01.12.2013 by the ‘Corporate Debtor’ to complete the works. The first Respondent/‘Operational Creditor’ stated in their Reply that despite several requests and reminder letters from 2013 to 2017, the ‘Corporate Debtor’, instead of paying the due amounts, raised these baseless allegations and disputes. It is the case of the ‘Operational Creditor’ that there is no ‘Existence of Dispute’ prior to the issuance of Demand Notice - The ‘Operational Creditor’ only accepted the debit of ₹ 1,25,80,121/- against 5% entry tax which was also accordingly been deducted in calculating the principal amount of ‘Operational Debt’ of ₹ 13.69 Crores. Except these debits, none of the debits have been accepted or consented to by the ‘Operational Creditor’. It is also their case that fraudulent debit notes were raised by the ‘Corporate Debtor as Purchase Orders were placed with Power Former Engineer for repairs of centrifugal machine, which was never part of the ‘scope of work’ of the first Respondent. On 29.03.2014, it is the case of the ‘Corporate Debtor’ that the ‘Operational Creditor’ had abandoned the site and therefore, the ‘Corporate Debtor’ had to take over the Project and make all the relevant payments to the vendor. The material on record shows that on 28.04.2014 another letter was addressed by the ‘Corporate Debtor’ to the ‘Operational Creditor’ citing all the inadequacies in the performance of the contract. On 19.06.2014, the ‘Operational Creditor’ once again raised the payment for ₹ 13.34 Crores - It is clear from Section 8(2)(a) that ‘Existence of a Dispute’, (if any, or) record of the pendency of the Suit or Arbitration Proceeding filed before the receipt of such Notice or invoice in relation to such dispute should be brought to the notice of the ‘Operational Creditor’ within 10 days of receipt of the Demand Notice. In this case, the Demand Notice under Section 8 of the Code claiming a sum of ₹ 13.69 Crores was issued on 25.07.2018. On 07.08.2018, the ‘Corporate Debtor’ responded to the Demand Notice referring to various communications, Minutes of the Meeting and submitted that there was a ‘Pre-Existing Dispute’. It is pertinent to note that on 09.07.2016, ‘prior to the issuance of the Demand Notice under Section 8 of the Code’, the ‘Operational Creditor’ invoked Arbitration pursuant to the 8 project orders issued by the ‘Corporate Debtor’, which itself substantiates the ‘Existence of a Dispute’. In the ‘Notice’ invoking Arbitration, the ‘Operational Creditor’ has stated that there is an outstanding of ₹ 18,12,21,452/- and has further stated that they are ready to settle the disputes through Arbitration. A brief perusal of the documents on record evidence that the ‘Operational Creditor’ admitted that the contract was on lumpsum turnkey basis and stated in the Arbitration ‘Notice’ that the ‘Corporate Debtor’ had raised issues relating to non-adherence of the terms of the contract. The communication between the parties as noted in para 10 read together with the Arbitration invoked by the ‘Operational Creditor’, there is an ‘Existence of a Dispute’ between the parties which is a genuine dispute and not a spurious, patently feeble legal argument or an assertion of fact unsupported by evidence. Appeal allowed.
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