TMI Blog2019 (3) TMI 1442X X X X Extracts X X X X X X X X Extracts X X X X ..... e in hand. Applying Section 19 of the Limitation Act, 1963, the period of limitation in the case in hand would run from the payment of part consideration of the amount due i.e. 01-07-2014. It is significant to note here that the Code has been amended by adding Section 238A to Section 238 of the Code by applying the provisions of the Limitation Act, 1963 to the proceedings or appeals before the Adjudicating Authority. That being so, no doubt the application in the case in hand has been filed beyond the period of limitation and therefore, even if the Corporate Debtor has failed in establishing a pre-existing dispute, the application is not maintainable as per the law of limitation. This point is answered accordingly. The application filed under section 9 of I&B Code, is complete, however, the Applicant failed to prove that the application is maintainable as per the provisions of Limitation Act,1963. The claim of the Operational Creditor/Applicant is found barred by Law of Limitation. Therefore, the application is liable to be dismissed. - CP. (IB) No. 379/KB/2018 - - - Dated:- 13-2-2019 - SHRI JINAN K.R., MEMBER (JUDICIAL) For The Operational Creditor : Jishnu Chowdhury ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Meal along with transport challan evidencing the delivery of materials marked as Annexure II : Exhibit B, at page 53. (b) Copies of Ledger Accounts of the Corporate Debtor, in the books of Operational Creditor for the period starting from 1st April, 2013 to 21st July 2017 marked as Annexure II : Exhibit C , pages 54 to 73. (c) Copy of Certificate from the Statutory Auditors of the Operational Creditor dated 20/09/2017 confirming amount due from the Corporate Debtor marked as Annexure I : Exhibit D at page 42. (d) Copy of Legal Notice dated 3rd September 2016 served on the Corporate Debtor demanding payment of the debt amount marked as Annexure I : Exhibit E at page 43. (e) Copies of Broker receipts evidencing the supply of goods marked as Annexure I : Exhibit F at pages 46 to 47. (f) Copy of Certificate stating that Narayan Trading Company is a unit of the Operational Creditor and is authorized to do business under the said name marked as Annexure I : Exhibit G at page 48. 4. The Applicant also submitted affidavit to the effect that a notice of dispute was not raised on the side of the Corporate Debtor and a certificate under Section 9(3)(c) of Insolvency and Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ponding to only two invoices both dated 1st July, 2013 at pages 32 and 36 of the application filed by the Operational Creditor. Upon delivery of these consignments at the Corporate Debtor s factory by the Transporter appointed by the applicant, samples were tested at the Laboratory situated at the factory. After testing, it was found that the quality of the consignments was extremely poor and the goods were not Soya DOC. In fact, the specifications were found to be that of De Oiled Rice Bran, a much inferior product as compared to Soya DOC. (c) As per the two consignments referred to above, the goods supplied to the Corporate Debtor were found not as per the agreed specifications and the sample test result shown in the reply affidavit shows that the specifications of the goods supplied are more or less of De Oiled Rice Bran. The goods received notes, in respect of these two consignments is recorded as DORB Read or, in other words, De Oiled Rice Bran Received . A copy of the Goods Received Note annexed with reply affidavit proves the specification of the goods supplied to the Corporate Debtor. Payment for the said two consignments was accordingly made as if the goods supplied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by the Corporate Debtor in the reply affidavit. The application is not barred by limitation as alleged. The application is not barred by principles of acquiescence or estoppel and waiver and res judicata as alleged. It is incorrect to say that no money is due or payable by the Corporate Debtor to the Operational Creditor. The specification of Soya DOC mentioned in the reply affidavit is not part of the contract entered between the parties. There was no meeting or agreement in 2013 through any agent as alleged in the reply affidavit. There was no meeting that took place in Lucknow. There was no agreement with the Operational Creditor to Supply Soya DOC on any terms as specified in the reply affidavit. There is no oral agreement as alleged. There was no agreement to supply Soya DOC in conformity with the market specification or that the Operational Creditor would supply Soya DOC as and when required by the Corporate Debtor or that the sale would be at prevailing market rate or that the consignment would be delivered by Road Transportation or that there would be any product destine at the Laboratory in the Factory of the Corporate Debtor. The Transporter was engaged by the Oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Heard the Ld. Counsel, Mr. Jishnu Choudhury for and on behalf of the Operational Creditor and the Ld. Senior Counsel Mr. Abhrajit Mitra, for and on behalf of the Corporate Debtor. Perused the records and the citations referred to on both sides. 8. Upon hearing the arguments and contentions raised on both sides, the points that arise for determination are: (i) Whether there is a pre-existing dispute in regard to the quality of goods supplied by the Operational Creditor to the Corporate Debtor as alleged? (ii) Whether the Application is barred by the Laws of Limitation as alleged? (iii) Reliefs and costs. Point No.(i) 9. M/s. Narayan Niryat India Pvt. Limited, is a Company engaged in the business of manufacturing and sale of Soya products. The Corporate Debtor/Eva Exotica Pvt. Ltd is in the business of manufacture and retail of finished animal feeds, including poultry feeds, fish feeds and pig feeds. The Corporate Debtor allegedly purchased Soya DOC as per exhibit B series of invoices and that an amount of ₹ 37,50,212/- is outstanding payable with interest at 18% per annum from the date of default as on 30-11-2017. 10. Despite the demand, the Corporate Debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the reply notice also, the Corporate Debtor did not raise non-delivery of the above said Invoices but contended that the invoices enclosed in the demand notice are different from what was originally forwarded to the Corporate Debtor. There was no communication prior to the reply notice brought to my notice on the side of the corporate Debtor disputing the non-receipt of above referred invoices. So also it contends that the purchase orders had never been issued by the Corporate Debtor. 13. According to Ld. Counsel for the Operational Creditor, the goods were supplied on the basis of purchase orders issued through an agent and that on the basis of the purchase orders, the Operational Creditor used to deliver the goods and generate invoices. To prove that the goods referred to in all the Invoices were supplied to the corporate Debtor, the Operational Creditor produced consignment note proving transport of goods referred to in the four invoices. A reference to all the invoices and the purchase orders and the consignment note annexed with exhibit B series, it reveals no doubt in respect of the delivery of all the four invoices to the Corporate Debtor. It is significant to note here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to be paid by the Corporate Debtor is less than the rate as shown in the invoices which has been admittedly received by the Corporate Debtor. Therefore, being found no reliable evidence forth coming on the side of the Corporate debtor to prove that the amount due as per the invoices has been paid off other than ₹ 5 Lacs paid by the corporate Debtor on 1-7-2014, the plea of discharge of the debt due to the corporate Debtor is found not true or probable to believe in the absence of any evidence proving that goods receipt note allegedly issued by the corporate Debtor is a condition precedent in accepting the goods by the Corporate Debtor. 15. This is a case in which the Operational Creditor has issued demand notice and the Corporate Debtor has sent a reply not within 10 days as referred to under Section 8(1) of the code. The contention of the Corporate Debtor that there was no debt due is found not established on the side of the Corporate Debtor by producing reliable evidence. To prove that there was a pre-existing dispute, the only document referred to is Exhibit F, an E-mail produced along with the reply affidavit. The demand notice in the case in hand was issued on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sported the goods has signed in the Goods Receipt Note and it evidenced that the goods delivered to the corporate Debtor is not Soya DOC but DORB (De Oiled Rice Bran Receipt) and therefore the Corporate Debtor has no liability to pay the amount as demanded by the Operational Creditor. 19. The Annexure A cannot be taken as a proof of receiving goods by the Corporate Debtor other than the goods specified in the invoices because existence of a valid and enforceable contract fixing the specification of the goods ordered is to be determined by the Corporate Debtor at its own laboratory is stand not proved. Moreover, the said contention is also seen raised firstly in the reply affidavit and in the reply notice sent by the Corporate Debtor. No proof to prove that upon receipt of the goods, the Corporate Debtor disputed the quality and rate of the goods any time prior to the receipt of the demand notice. 20. It is significant to note here that the demand notice was issued by the Operational Creditor on 26-09-2017 and it was received by the Corporate Debtor on 4-10-2017. The Corporate Debtor did not send reply within 10 days. But sent reply only on 27-11-2017 raising all those content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id, is found liable to be paid by the corporate Debtor. 22. At this juncture the Ld. Counsel for the Operational Creditor cited Rajeev K Aggarwal v. Panipat Texco Fabs (P.) Ltd. [2019] 151 SCL 279 (NCL-AT) of the National Company Law Appellate Tribunal for strengthening an argument that want of proof of communication in between the parties regarding quality of goods delivered to the Corporate Debtor and non receipt of the invoices allegedly not received by the Corporate Debtor, cannot be relied upon to hold that there was a pre-existing dispute. Here in the case also, the Corporate Debtor failed in proving existence of any communication raising valid dispute other than the E-mail dated 05/09/2016 before the date of receipt of demand notice in the case in hand. The proposition held in the said decision is applicable in this case. 23. Referring to Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. 144 SCL 37 (SC) referred to above, the Ld. Senior Counsel appearing for the Corporate Debtor attempted to show that in the absence of proof of delivery of invoices on the side of the Operational Creditor, an application of this nature should not be allowed. He relied upon para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the proposition laid down in the above cited decisions. The dispute raised by way of issuing reply notice is not at all a pre-existing dispute. It cannot be ruled out that the dispute raised in the case in hand is a dispute to stage-manage false evidence so as to defeat the claim of the Operational Creditor. This point is answered accordingly. Point No (ii) 25. The Ld. Sr. Counsel for the Corporate Debtor submits that even if the Corporate Debtor failed in proving the pre-existing dispute as alleged, the Application is not maintainable because the claim is barred by law of limitation. 26. The Invoices referred to in the Application is dated 01-07-2013 and 03-07-2013 respectively. The Application in the case in hand was filed on 14-03-2018, long after the date of issuance of the invoices. 27. The Ld. Counsel for the Operational Creditor, at this juncture, submits that the period of limitation would run from 01-07-2014, the date of part payment of the amount. Admittedly, the corporate Debtor has paid ₹ 5 lacs towards the outstanding amount on 01-07-2014. If that is taken into consideration, the period of three years would run from 01-07-2014. The filing of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at provisions of Limitation Act, 1963 are applicable in IBC proceedings. On this point, it is good to read Para 27: 27. It is thus clear that since the Limitation Act is applicable to applications filed under Sections 7 and 9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted. The right to sue , therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application. 31. That being so, no doubt the application in the case in hand has been filed beyond the period of limitation and therefore, even if the Corporate Debtor has failed in establishing a pre-existing dispute, the application is not maintainable as per the law of limitation. This point is answered accordingly. Point No(iii) 32. The above said discussions lead to a conclusion that the application filed under section 9 of I B Code, is complete, however, the Applicant faile ..... X X X X Extracts X X X X X X X X Extracts X X X X
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