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M/s. CMI Energy India Private Limited Versus M/s. Easun Reyrolle Limited

2017 (12) TMI 397 - NATIONAL COMPANY LAW TRIBUNAL, CHENNAI

Corporate insolvency process - existence of dispute - Held that:- There does not exist any dispute between the parties under the meaning and definition of section 5(3) of the IB Code, 2016 as the aforesaid civil suit is nowhere connected to instant petition. The instant petition pertains to insolvency proceedings whereas the civil suit filed before High Court belongs to recovery of money. Moreover, this Adjudicating Authority is of the opinion that there would have been a different situation, ha .....

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procedure of the winding up/insolvency process and would not have filed the civil suit before the Hon’ble High Court to self-incriminate. Further, the learned senior counsel for the petitioner has stated that the Said civil suit has been filed just to save the limitation period for recovering monies from the respondent. This also reflects the bonafide on part of the petitioner. Thus, this Adjudicating authority is satisfied that the petitioner has made out his case by establishing that this Corp .....

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Petitioner : Shankarnarayana, Sr. Adv., Shivakumar and Suresh, Advs. For The Respondent : P.H. Arvindh Pandian, Sr. Adv. ORDER Per : K. Anantha Padmanabha Swamy, Member (J) 1. - Under Consideration is a Company Petition filed by M/s. CMI Energy India Private Limited (in short, Petitioner/Operational Creditor ) against M/s. Easun Reyrolle Limited (in short, Respondent/Corporate Debtor ) under sections 433(e) and (f), 434(i)(a) and 439(i)(b) of the Companies Act, 1956 before the Hon ble Madras Hig .....

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ination of this petition. 3. The petitioner was earlier known as Navratna Energy Cable Private Limited subsequently changed to Plaza General Cable Energy Private Limited and then to General Cable Energy India Private Limited and now its present name CMI Energy India Private Limited with effect from 09.03.2017 and copies of the fresh Certificate of Incorporation Consequent on Change of name have been filed with Form-5 as Annexure A1 to A4. 4. Shri Shankarnarayana, the learned counsel appearing on .....

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ed. 5. It is submitted that towards the supplies, the petitioner had sent an e-mail dated 14.09.2014, wherein the petitioner had enclosed the account statements in respect of the supplies and sought confirmation from the respondent and in response to the same, the respondent sent a reply mail dated 18.09.2014 wherein it had confirmed that as per the respondent s records, a sum of ₹ 699.42 lakhs was payable to the petitioner and sought time to complete the process of bill-to-bill matching s .....

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16 calling upon the respondent to pay the outstanding amount of ₹ 7,88,54,073/- to the petitioner. In response to the same, the respondent had issued a vague reply notice dated 17.10.2016 denying its liability. Also, in the said reply notice, the respondent has not stated any existing dispute or any pendency of suit or arbitration proceedings. It is further submitted that in the said reply, the respondent raised the dispute only for the sake of dispute just to stall the winding up process .....

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unsel also referred to Section 42 of the Sale of Goods Act, 1930 and submitted that the respondent had not intimated the petitioner that he rejected the goods, thus the same amounts to acceptance of the goods by the respondent. Section 42 of the Sale of Goods Act, 1930 is reproduced below for ready reference :- The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them or when the goods have been delivered to him and he does any act in relation to th .....

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rther, with regard to the warranty, the respondent neither raised any demand of express warranty prior to the said reply notice nor sought for replacement of goods supplied to the respondent. The respondent had accepted the supply of goods, admitted the outstanding dues and there is no existence of any dispute in relation to the goods supplied to the petitioner. Since the respondent had failed to comply with the said demand notice, the petitioner was left with no other option except to file a wi .....

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petition before the Hon ble High Court to obtain a decree against the respondent for the admitted claim amount. 9. It is respectfully submitted that pendency of the said suit before the High Court of Delhi is not a bar to proceed under the IB Code, 2016 against the same respondent. The respondent has relied upon the judgment of the Hon ble NCLAT in case of Kirusa Software (P.) Ltd. v. Mobilox Innovations (P.) Ltd., to show that the pendency of the civil suit filed by the petitioner before the D .....

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the Corporate Debtor in relation to the dispute raised by the Corporate Debtor prior to the receipt of Section 8 Notice. 10. Shri P.H. Arvindh Pandian, the learned senior counsel appearing on behalf of the Respondent/CD submitted that the instant petition is false, vexatious and not sustainable both in eyes of law or on facts. It is submitted that the instant petition under section 9 of the Code is per se not maintainable, owing to the existence of a pending legal proceedings in C.S. No. 224 of .....

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er the IB Code, 2016. The respondent s counsel further submitted that this argument for the petitioner is untenable and has in fact already been rejected by the Division Bench of NCLT Chennai Bench in Emerson Process Management Chennai Ltd. v. Shriram EPC Ltd. TCP/135/(IB)/2017 wherein it was held that a pending suit, irrespective of whether the same has been instituted by the creditor or debtor is by itself a bar to maintaining a petition filed u/s 9 of the IB Code, 2016 and the instant petitio .....

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nsel paced his reliance on a judgment passed by the Hon ble NCLAT in MCL Global Steel (P.) Ltd. v. Essar Projects India Ltd. MANU/UL/0031/2017. It is submitted that the mere raising a dispute in reply to the statutory notice sent under section 433 of the Companies Act, 1956 amounts to be dispute under the IB Code, 2016 and for this reason alone, the instant petition ought to be dismissed. 12. Further, it is submitted that a number of disputes as defined by the Hon ble Supreme Court in Mobilox In .....

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or the existence of a dispute or the fact that a suit or arbitration proceedings relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the dispute is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere blus .....

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on 433(l)(e) of the Companies Act, 1956 are irrelevant for the purpose of deciding matters under the IB Code, 2016, for which reason alone, all the decisions relied upon by the Petitioners herein ought to be rejected. 14. It is submitted that on a meeting held on 02.03.2015, Mr. John Winstell SVP (Finance) & Admin; Global Controller, General Cable and Mr. Kangwas Bwalya, Regional CFO APAC, General Cable, Mr. G.D. Thaker had visited the office of the Respondent Company. During the meeting and .....

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iving of warranty was not possible, they are free to take away the cables within six months from the date of the meeting. But till date suitable manufacturer s warranty from an approved manufacturing firm has not been given and the cables for which manufacturer s warranty has not been given have also not been lifted and accordingly the supplies made by GC India has been treated as rejected and as such the Respondent Company is not liable to pay any amount to M/s. General Cable Energy (India) Pvt .....

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the Respondent Company and the petitioner company alone is liable. It is further submitted that the item supplied by the petitioner company, is still under warranty and during the subsistence of warranty, closing down of manufacturing activity rendered the contractual obligations as null and void and unenforceable. 16. He further submitted that once the suit is filed for the recovery of money, then all other proceedings for the very same subject matter ought to be stopped. The learned senior cou .....

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tor and not by the creditor. Therefore, the learned senior counsel finally submitted that the suit can be filed either by the Creditor or Debtor and thus, dispute means a dispute pending in Arbitration or a suit filed either by the creditor or debtor. 17. The learned senior counsel for the petitioner vehemently opposed the contentions put forth by the counsel for the respondent and submitted that from the bare perusal of the aforesaid provisions, it is clear that the suit referred in Sec. 5(6)(a .....

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he amount payable to the operational creditor, he submitted that the corporate debtor has not filed any suit or initiated arbitration proceedings within the meaning of Sec. 5(6)(a)(ii) to (c) of the IBC Code in the instant case. From the reading of the Sec. 8(2)(a) of the IB Code, 2016 also, one can understand that on receipt of the notice from the operational creditor, the corporate debtor must bring it to the notice of the operational creditor existence of a dispute, if any and record the pend .....

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ounsel for the petitioner further submitted that the winding up petition or initiation of corporate insolvency resolution process is not only for the benefit of the Petitioner/Operational Creditor but also for the general body of the creditors, contributors etc., therefore, the present petition is in the nature of Right in Rem and cannot be termed as Right in Personam. Moreover, the instant petition filed before this Adjudicating Authority pertains to insolvency proceedings whereas the civil sui .....

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ceedings whereas the civil suit filed before High Court belongs to recovery of money. Moreover, this Adjudicating Authority is of the opinion that there would have been a different situation, had the respondent initiate a case related to breach of warranty or defective goods against the petitioner. However, the respondent neither raised any demand of express warranty prior to the said reply notice nor sought for replacement of goods supplied to the respondent. 21. In this case, the petitioner ha .....

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e respondent. This also reflects the bona fide on part of the petitioner. Thus, this Adjudicating authority is satisfied that the petitioner has made out his case by establishing that this Corporate Debtor has defaulted the payment dues on various occasions to this petitioner/OC and there is no dispute between the parties. In the circumstances, I am inclined to admit the instant petition. 22. Therefore, the instant petition is admitted and I order the commencement of the Corporate Insolvency Res .....

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