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TMI Blog2019 (3) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... 17, passed by the Adjudicating Authority (National Company Law Tribunal), Hyderabad Bench, Hyderabad, whereby and whereunder, the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("I&B Code" for short) preferred by the Respondents'M/s. Dr. Reddy's Laboratories Limited' has been admitted, order of 'Moratorium' has been passed and 'Interim Resolution Professional' has been appointed. 2. On hearing the counsel for the Appellants, this Appellate Tribunal on 19th September, 2017 passed the following orders: Contd/-....... "19.09.2017 There is nothing on record to suggest that the Respondent supplied any goods or rendered any services to the Appellant/ 'corporate debtor' within the meaning of Section 5 (20) read with su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the matter for fresh hearing. 5. Learned counsel for the Appellant reiterated his arguments that there was pre-existence dispute and that the Respondent does not come within the meaning of 'Operational Creditor' as defined under Section 5(20) & (21) of the 'I&B Code'. 6. From the record, we find that the Respondent issued one legal notice under Section 433 (e) and 434 of the Companies Act, 1956, by letter dated 5th October, 2016 asking the 'Corporate Debtor' to pay the dues. The 'Corporate Debtor' by its legal reply dated 9th November, 2016, raised dispute relating to late supply of raw material and the poor quality of products and made counter claim. The relevant portion of the letter written by the 'Corporate Debtor' on 9th November, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months due to non-availability of raw materials. Our client is a very small company and is a Small Scale Industry and it had limited sources of finance and had already exhausted its working capital. Because of non-availability of raw materials, and due to shutting down of the plant a number of times our client was incurring more and more yield loss. As on November 2013, our client had a total strength of about 120 people working with our client and our client was solely dependent on your client for the job work arrangement and on several occasions and some times for months together our client's plant and all the staff were lying idle and incurring more and more loss. This resulted in a shut down of the plant for around 4-5 months in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d an order of 1,294 tonnes of Q-Acid from June, 2007 to September, 2016. That your client has also defaulted in providing regular supply of raw materials as per terms of the agreement. In fact as of March 31, 2014 our client was already suffering severe losses to the tune of Rs. 4,00,00,000 because of your client and your client kept breaching the terms of agreement and was pressuring our client to supply Q-Acid out of small quantities of raw materials. Your client's continuous breach of terms of agreement was resulting in negative economies of scale and the con version cost over small quantities was simply not adequate to keep the facility running twenty four seven at your clients book and call. 14. That our client was shocked to rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat prior to the dispute raised by letter dated 9th November, 2016, the 'Corporate Debtor' had agreed to pay the amount by letter dated 4th July, 2016. Further, according to him, there is no suit pending nor any arbitration proceeding pending against the 'Operational Creditor'. However, it is not denied that the dispute relating to quality of raw material and loss was raised by the 'Corporate Debtor' on 9th November, 2016 i.e. much prior to the issuance of the demand notice dated 18th March, 2017 issued under Section 8(1). 8. In the aforesaid background, as we find that there is pre-existence dispute prior to the issuance of the demand notice under Section 8(1), we hold that the application under Section 9 of the 'I&B Code' preferred by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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