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Maxim Tubes Company Pvt. Ltd. Versus International Coil Limited

Proceedings under Insolvency and Bankruptcy Code, 2016 - maintainability of the Petition - claim of the 'Corporate Debtor' - Held that:- A strict onus is placed on the 'Corporate Debtor' while raising the plea of dispute and that it must be genuine and bona fide in order to avoid the debt, which is claimed by the 'Operational Creditor' as due from the 'Corporate Debtor' and in making payment of the same. However, in the instant case we do not find any merit in the contention of the 'Corporate De .....

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so find that the Operational Creditor has materially complied with the provision of Section 9(3) of IBC, 2016, inter alia, by providing a certificate from the bankers in relation to the unpaid debt coupled with the statement of accounts from 1.3.2016 for a continuous period up to 31.3.2017. Taking into consideration all the compliance as well, this Tribunal is per force required to come to a conclusion that an operational debt is owed by the 'Corporate Debtor' to the 'Operational Creditor' for t .....

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the name of the Insolvency Professional to this Tribunal as against whom no disciplinary proceedings are pending, within 10 days from the date of receipt of the reference. However, in view of the Petition being admitted, the moratorium as contemplated under Section 14 of IBC,2016 declared in relation to the 'Corporate Debtor'. - NO.(IB)-120(PB)/2017 - Dated:- 16-8-2017 - MR. R. VARADHARAJAN AND MS. DEEPA KRISHAN, JJ. For The Petitioner : Ms. Gargi Vyas, Advocate For The Respondent : Ankur Singha .....

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ess at Survey No. l05, Pansar Road, NR.66, KV Sub-station Chhatral, Ahmedabad, Mehsana Highway, Tal, Kolol, (NG) District, Gandhinagar. It is also seen that the Corporate Debtor was incorporated in 2004 with an authorized capital of INR ₹ 5.00 crores. The paid-up share capital is ₹ 5.00 crores (Rupees five crores) and the registered office of the Corporate Debtor is located at A-21/24, Naraina Industrial Area, Phase-II, New Delhi-110028. 2. It is the claim of the Applicant that it is .....

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clause 3.1 of both the purchase orders, 100% payment was required to be made against 60 days Letter of Credit, on submission of the pro forma invoice and signed copy of the acceptance of the project order. It is the claim of 'Operational Creditor' that the 'Corporate Debtor' was not able to open Letter of Credit as contemplated above. Two post dated cheques for ₹ 68,94,223 and Rs. l,01,07,853 in relation to the first purchase order and second purchase orders, respectively w .....

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mount and sought for some more time to make the payment. Pursuant to the above promise on 20.10.2016 the 'Corporate Debtor' gave a Letter of Credit for ₹ 68,94,223 which seems to have been duly encashed by the Operational Creditor through its bankers. Subsequent to the same, in the month of November, 2016 the 'Operational Creditor'/Petitioner represents that an additional sum of ₹ 20.00 lakhs was also paid by the 'Corporate Debtor'. It is the claim of the ' .....

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a sum of ₹ 68,94,223 was sought to be encashed. However, the same got dishonoured for the reason payments stopped by drawer . Again the 'Operational Creditor' it is averred sought to present the second of the cheques, as detailed above, in relation to the second of the purchase order in the month of Januaray,2017 which it is claimed by the Petitioner was also dishonoured on the ground there is discrepancy in the amount stated in number and words . Notice of intimation of dishonour .....

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ment in relation to the amount defaulted, it is represented that the Petitioner has been forced to file this Petition for initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The above matter was listed before the Hon'ble Principal Bench on 31.5.2017 and since the proof of service of notice under Section 8 of IBC,2016 was not filed the Petitioner was directed to file an affidavit for the said purpose within a period of one week and the matter was listed .....

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ers and that both the purchase orders were dated 31.3.2016, first one being for ₹ 68,94,223 and the second one for ₹ 1,01,07,853 for supply of goods. In view of the delay on the part of 'Operational Creditor' in approving the format of Letter of Credit, as contended by the Corporate Debtor substantial time was being consumed in opening the LCs, as contemplated between the parties and a stage arose where due to non-supply of goods on the part of the 'Operational Creditor&# .....

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sit of the same shall be made only with the concurrence of the 'Corporate Debtor'. Subsequent to the approval, it is contended by the 'Corporate Debtor' that irrevocable LC in favour of the 'Operational Creditor' to the tune of ₹ 71,04,263 towards the first purchase order was opened. In the circumstances, the LC having been sent to the bankers of the 'Operational Creditor' and duly received by it, the encashment of the cheque given as security bearing No. 29 .....

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ot delayed but however in order to maintain working business relations, it is contended by the 'Corporate Debtor' that a sum of ₹ 20.00 lakhs was paid towards the second purchase order. However, without taking any permission from the 'Corporate Debtor' it is contended that both the cheques issued for security purposes were sought to be encashed by the 'Operational Creditor' with a dishonest intention and in view of the prior instructions given to the bankers of the .....

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of the 'Operational Creditor' to mention about reply dated 16.1.2017 given by the Corporate Debtor in relation to the notice of demand dated 4.1.2017 under the Negotiable Instruments Act, 1881. Further, the 'Operational Creditor' has also failed to bring to the notice of this Tribunal about the Petition for quashing of the criminal complaint filed before the Hon'ble High Court of Gujarat bearing Special Criminal Application (Quashing) No. 2448/2017 and the order of stay passe .....

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lodged a criminal complaint against the 'Operational Creditor' for the Commission of offences in relation to offence of cheating and criminal breach of trust and the said like offences and despite the Investigative Officer calling the officials of the Operational Creditor for conducting the enquiry, they have deliberately not joined in the enquiry process. It is also the contention of the Corporate Debtor that in relation to the notice of demand dated 15.4.2017, a reply has been given b .....

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as sought to be unleashed by the 'Operational Creditor', primarily rests on the ground of a pre-existing dispute prior to the filing of the Petition and in the circumstances the Petition should be dismissed as not maintainable. In view of the above contention, it is necessary for us to ascertain the definition of 'dispute'. In relation to IBC, 2016, dispute has been defined in Section 5(6) as follows: dispute includes a suit or arbitration proceedings relating to- (a) the existe .....

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ever, under Section 5 of IBC, 2016, the Code seeks to limit primarily for unleashing CIRP to two types of debt, namely financial debt and 'operational debt'. The definition given in Section 5(21) in relation to 'operational debt' is as follows: operational debt means a claim in respect of the provision of goods or services including employment or a debt in respect of the repayment of dues arising under any law for the time being in force and payable to the Central Government, any .....

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the Corporate Insolvency Resolution Process can be initiated where there is a default in the payment of debt due to the 'Operational Creditor' in accordance with the definition provided under Section 5(20) of IBC,2016 which defines an 'Operational Creditor' to mean a person to whom an 'operational debt' is owed and includes any person to whom such debt has been legally assigned or transferred. Taking into consideration the above definition, it is clear that in order to q .....

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ty of goods or services, or there is breach of representation or warranty. Keeping the above in mind and applying these to the circumstances of the case, we find that there is no dispute in relation to supply of goods made by the 'Operational Creditor' to the 'Corporate Debtor' nor has there been any grievance raised by the 'Corporate Debtor' about the quality of those goods supplied to the 'Corporate Debtor' by the 'Operational Creditor'. The 'Corpora .....

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ows: From: Paramjeet Singh (mailto:paramjeet(5)icltech.com) Sent:Saturday, October 15 , 2016 7:41 PM To: 'O P. Somani; MAXIM TUBES' Cc:pramod@ic-tech.com; 'Y S Pate'; 'Mukesh Kumar Sharma' Subject: RE OVERDUE PAYMENT OF ₹ 1,70,70,423/- Dear Mr. Somani, We value your patience expressed while sending this email, even more than your timely support to supply the tubes for timely completion of the project. Please note that, we are extensively working to get your payment .....

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the amount is disputed nor quality of the goods is being questioned in the said email nor a breach of warranty or representation broached. On the other hand, an assurance is made that the payment will be cleared as it has taken a long time to clear the same. Hence, the above email demonstrates that there has been an express admission on the part of the 'Corporate Debtor' to make the payment to the 'Operational Creditor' of the required sum for the goods supplied. However, for est .....

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nd the plea of dispute it is seen is only a moonshine as no where in the said notice the supply of goods nor amount owed to the Operational Creditor is denied. 10. In relation to the plea of criminal proceedings pending against the Corporate Debtor as initiated by the Operational Creditor for dishonour of cheques and stay of these proceedings by the Hon'ble High Court of Gujarat, we are afraid, we are not concerned with the same as the same is in relation to the dishonour of cheques and the .....

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ebtor' and in making payment of the same. However, in the instant case we do not find any merit in the contention of the 'Corporate Debtor' and hence we are unable to accede to the claim of the 'Corporate Debtor' that there is a pre-existing dispute as between the 'Operational Creditor' and the 'Corporate Debtor' as contemplated under the provisions of IBC, 2016. 11. Turning to the maintainability of the Petition in relation to the compliance with the provisio .....

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ance as well, this Tribunal is per force required to come to a conclusion that an operational debt is owed by the 'Corporate Debtor' to the 'Operational Creditor' for the supply of goods which remain unpaid and which rightly entitles the 'Operational Creditor' to maintain the Petition. 12. From the Application it is seen that under Part III of the same, the 'Operational Creditor' has left the choice of appointing Interim Resolution Professional to the Tribunal/Boa .....

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ct is declared in relation to the 'Corporate Debtor' and the terms of moratorium is reproduced hereunder: (1) This Tribunal, being the Adjudicating Authority declares a moratorium for prohibiting all of the following in relation to 'Corporate Debtor', namely:- (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other author .....

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