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2018 (2) TMI 884

pondent company has also relied on Annexure-R/5, the power of attorney given by M/s. Blue Star Alloys Pvt. Ltd., in favour of Shri Mohammed Saleem Shaikh wherein he was only an authorised representative to lift the scrap material from the respondent company and that too on behalf of M/s. Blue Star Alloys Pvt. Ltd. The same Mr. Mohammed Saleem Shaikh is representing the petitioner company in this petition. So, it is only a power of attorney of M/s. Blue Star Alloys Pvt. Ltd. The petitioner has no locus standi to initiate Insolvency Resolution Process against the respondent. The petitioner is not the operational creditor of the respondent. Therefore, the present petition is liable to be rejected. - CP (IB) NO. 18/BB/2017 - Dated:- 5-1-2018 - MR. RATAKONDA MURALI AND MR. ASHOK KUMAR MISHRA, JJ. For The Petitioner : Harsha H.M. and Chandrashekar S., Advs. For The Respondent : S.P.J. Legal, Adv. ORDER Per : Hon'ble Shri Ratakonda Murali, Member (Judicial) : Heard on 20.04.2017, 28.04.2017, 31.05.2017, 07.07.2017, 27.07.2017, 09.08.2017, 30.08.2017, 20.09.2017, 17.10.2017, 14.11.2017 and 20.12.2017. The Petitioner/Corporate creditor has filed Form No.5 under Rule 6 of the I & B C .....

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hereunder: It is averred that there is no debt due by the Respondent/Corporate Debtor to the petitioner. It is stated that there is no privy of contract between the Operational Creditor and the Corporate Debtor. There is no agreement between the petitioner and the respondent and as such, there does not exist any liability to pay. The petitioner is not at all the operational creditor and as such the petition is liable to be dismissed. It is averred that the respondent had entered into an agreement with M/s. Blue Star Alloys Pvt. Ltd., for the sale of Vanaspati plant equipment and dismantling of complete structure and its disposal outside the Wipro factory premises. The total sale consideration was fixed at ₹ 4.15 crores. The copy of the agreement is shown as Annexure-R/1. As per the terms of agreement, M/s. Blue Star Alloys Pvt. Ltd., shall dismantle the Vanaspati plant and also the buildings up-to the ground level. Further the debris collected would be taken out from the premises and disposed of and the agreement provides that the work cannot be entrusted to any sub-contractor. It is further stated that M/s. Blue Star Alloys Pvt. Ltd., had to deposit ₹ 1.00 crore as ad .....

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e petitioner is not at all an operational creditor for the respondent and as such, there is no debt and, consequently, there is no default of alleged debt by the respondent company. The counsel for the Petitioner has filed written submissions. Similarly, the counsel for Respondent Company has also filed written submissions. We will consider the written submissions in the course of the order. The case of the petitioner is that it is an operational creditor. The contention of the learned counsel for the petitioner is that a company by name M/s. Blue Star Alloys Pvt. Ltd., had introduced the petitioner - Operational Creditor to the Respondent Company and an agreement for lifting of the industrial scrap was duly entered into between them. The counsel would contend that the petitioner was allowed to lift the industrial scrap on payment of money in advance to the Respondent corporate debtor which was made through certificate of remittances and the petitioner operational creditor was allowed to lift such quantity of industrial scrap equivalent to the value of amount remitted. The counsel contended that, in all, the petitioner operational creditor had remitted a sum of ₹ 1.01 crores .....

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l appearing for the respondent-corporate debtor would contend that the respondent-corporate debtor had in fact, entered into contract with M/s. Blue Star Alloys Pvt. Ltd. for sale of Vanaspati plant. The counsel contended that Annexure-R/1 is the copy of the contract between M/s. Blue Star Alloys Pvt. Ltd. and M/s. Wipro Enterprises Pvt. Ltd. Counsel contended that there is no privity of contract between the petitioner and the respondent company. Therefore, the petitioner has no locus standi to initiate Insolvency Resolution proceedings against the respondent. The counsel contended that there is no debit due by the respondent company to the petitioner and further that there is no operational debt. The counsel contended that debt is defined at Section 3 (11) of the I & B Code. As a liability or obligation respect of a claim which is due from any person and includes a financial debt or operational debt. The counsel contended that operational debt is defined in Section 5(21) of the Code, 2016 which is as under: as 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 f .....

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nnexure-R/4. This e-mail is from Mr. Saleem to the Wipro Enterprises wherein it has clearly admitted that the contract could not be completed within the stipulated time. In this e-mail, the representative of M/s. Blue Star Alloys Pvt. Ltd. admitted balance of ₹ 1.40 crores and agreed to pay the same and requested for extension of time. The contention of the learned counsel that M/s. Blue Star Alloys Pvt. Ltd. has given an irrevocable power of attorney shown as Annexure-R/5. We have seen the annexure and it is an irrevocable power of attorney given to Mr. Mohammed Saleem Shaikh. It is said to have been issued by M/s. Blue Star Alloys Pvt. Ltd. As such, Mr. Mohammed Saleem Shaikh has to act on behalf of M/s. Blue Star Alloys Pvt. Ltd. The learned counsel has relied on Annexure-R/6 from which it is evident that the petitioner company represented by the authorised signatory had informed the respondent company that whatever amounts remitted should be adjusted against this sale order between M/s. Blue Star Alloys Pvt. Ltd. and the respondent company. Thus, it is very clear that the petitioner herein has clearly admitted that whatever amounts remitted are to be adjusted against the .....

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ted as an agent of M/s. Blue Star Alloys Pvt. Ltd. Therefore, there is no operational debt payable by the respondent company to the petitioner. May be, the petitioner has also remitted the amount to the account of the respondent company. But, whatever is done by the petitioner, it is with reference to M/s. Blue Star Alloys Pvt. Ltd. Further, the case of the respondent company is that there was violation of the terms of contract by M/s. Blue Star Alloys Pvt. Ltd. Therefore, a dispute was existing before the petition was filed in the Tribunal by the petitioner. The dispute is with regard to the adherence to the terms of contract. When a dispute was pending, the present petition is not maintainable. Section 5(6) of the I & B Code defines the dispute. 5.6 dispute includes a suit or arbitration proceedings relating to- (b) The quality of goods or service; (c) the breach of a representation or warranty. The contention of the counsel for the respondent company is that the deadline for completion of the agreement was 22.05.2014. This was not adhered to by M/s. Blue Star Alloys Pvt. Ltd. Thus, there was non- compliance of the terms and conditions of the agreement and that a notice was i .....

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mitted the money to the account of the respondent company. But, the amounts are remitted only on behalf of M/s. Blue Star Alloys Pvt. Ltd. The petitioner has further filed rejoinder contending that the objections raised by the respondent company are not true and correct. The contention of the counsel for the petitioner is that when the respondent company is accepting the payment made by the petitioner, then it goes without saying that the respondent company has committed default. Therefore, the petitioner is entitled to initiate the Insolvency Resolution Process against the respondent company. We have seen the primary document, Annexure-R/1 which is entered between M/s. Blue Star Alloys Pvt. Ltd. and the respondent company. The respondent company has also relied on Annexure-R/5, the power of attorney given by M/s. Blue Star Alloys Pvt. Ltd., in favour of Shri Mohammed Saleem Shaikh wherein he was only an authorised representative to lift the scrap material from the respondent company and that too on behalf of M/s. Blue Star Alloys Pvt. Ltd. The same Mr. Mohammed Saleem Shaikh is representing the petitioner company in this petition. So, it is only a power of attorney of M/s. Blue St .....

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