TMI Blog2018 (9) TMI 1866X X X X Extracts X X X X X X X X Extracts X X X X ..... LIMITED has been repaid by way of encashment of LC for ₹ 39,15,148/- by M/s. SAMKIT BIO FARMS LIMITED. Even if it is held that there is no repayment of Operational Debt due to the Petitioner and M/s. R.S. COTTMARK (INDIA) PVT. LTD. inspite of the fact that LC has been encashed by M/s. SAMKIT BIO FARMS LIMITED still the material on record goes to show that there exist a dispute between the Petitioner and the Respondent in respect of the Operational Debt claimed by the Petitioner. This Tribunal is of the view that there exists a dispute and because of the resolution of the said dispute only, Respondent/Corporate Debtor issued LC for ₹ 39,15,148/- in favour of M/s. SAMKIT BIO FARMS LIMITED with an understanding that after encashment of LC, M/s. SAMKIT BIO FARMS LIMITED would pay amounts to the Petitioner and M/s. R.S. COTTMARK (INDIA) PVT. LTD. - the contention of the Respondent require further investigation and enquiry. It requires oral evidence even from the Company that acted as mediator in the resolution process. Petition dismissed. - CP(IB) NO. 102/9/HDB/2018 - - - Dated:- 6-9-2018 - SRI BIKKI RAVEENDRA BABU, MEMBER (JUDICIAL) For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeded the stipulated Trash/Non-Lint Content in the Sauda confirmation sheet issued by Apex Confirmation sheet and (C) That the aforementioned contaminations in the consignment had substantially impacted the value of the Consignment and that the contaminations in the said cotton left the Respondent with no other option other than to reject the entire consignment of 125 Bales so supplied by the Petitioner and that the present Petition is NOT admissible on the grounds that the Petitioner cannot claim payment more so when the entire consignment was found to be contaminated and not fit for use and the same had been communicated to the Petitioner and APEX COTTON AGENCY (I) LTD. (Market Intermediary). 8. It is also stated that M/s. RS COTTMARK (I) PVT. LIMITED filed CP (IB) NO. 100/2018 whereas, M/s. SAMKIT BIO FARMS PVT. LTD. filed CP (IB) No.101/2018 against the same Corporate Debtor U/s. 9 of the IB Code. 9. The respondent further stated that the books of account of the Petitioner and the Respondent has been reconciled vide Debit Notes (DRN) raised by the Respondent on the Petitioner as well as Bank Payments (BP) as per the following ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to the quality and quantity of the physical delivery for transactions that are routed through M/s. Apex Cotton Agencies (I) Pvt. Ltd. 12. The Respondent informed the rejection of the entire consignment to the Petitioner and to the intermediary namely, M/s. Apex Cotton Agencies (I) PVT. Ltd. and requested the Petitioner to take back the defective consignment. 13. It is stated that the quality of the cotton supplied would affect the overall economics of Textile industry and that on account of the higher trash content and also on account of higher moisture content, the yarn realization goes down substantially which in turn would affect the rotor spinning performance and yarn properties. 14. It is stated that although the Petitioner admitted the defect in the material, refused to take back the material. 15. It is further stated in the counter that M/s. APEX Cotton Agency (I) Pvt. Limited had initiated dispute reconciliation discussions in the month of November 2017 with all the stakeholders including the Petitioner, M/s. RS COTTMARK (I) PVT .LIMITED, M/s. SAMKIT BIO FARMS PVT. LTD. and in the said dispute reconciliation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and M/s. KRISHNA BIO TECH did not have Letter of Credit limit facility with their bankers, the said payment of ₹ 39,15,148/- shall be made by the Respondent by availing letter of credit facility with his banker and the said Letter of Credit will be drawn in the name of the Petitioner namely M/s. SAMKIT BIO FARMS LIMITED by the Respondent and (f) M/s. SAMKIT BIO FARMS for and on behalf of the Respondent i.e., M/s. Rajvir Industries shall make payment to M/s. KRISHNA BIO TECH an amount of ₹ 19,32,864/-as full and final settlement to the Petitioner and that there shall be no further claims from M/s. KRISHNA BIOTECH or M/s. SAMKIT BIO FARMS on any past transactions/invoices/DRN's between the parties. 16. In accordance with the agreement reached as per the above said Reconciliation proceedings held on 01.12.2017, the Respondent herein got issued an Irrevocable Letter of Credit numbered as 0910317LC000097 in favour of M/s. SAMKIT BIO FARMS LIMITED from its bankers namely State Bank of India, Industrial Finance Branch, Hyderabad for a sum of ₹ 39,15,148/- and the said Letter of Credit was honoured by the Respondent Banker's on 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute? If any one of the aforesaid conditions is lacking, the application would have to be rejected. Apart from the above, the Adjudicating Authority must follow the mandate of Section 9, as outlined above, and in particular the mandate of Section 9(5) of the Act, and admit or reject the application, as the case may be, depending upon the factors mentioned in Section 9(5) of the Act. 23. The claim made by the Petitioner in this case relate to supply of cotton bales made by the Petitioner to the Respondent/Corporate Debtor. 24. The Operational Debt is defined in Section 5(21) which reads as under:- 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 State Government or any local authority. 25. Since the claim in this case is in respect of the provision of goods, the claim in this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and M/s. R.S. COTTMARK (INDIA) PVT LTD i.e., Petitioner herein. 31. It is not in dispute that the Respondent issued Letter of Credit for an amount of ₹ 39,15,148/-in favour of M/s. SAMKIT BIO FARMS LIMITED. 32. It is also pertinent to mention here that the Petitioner herein, M/s. SAMKIT BIO FARMS LIMITED and M/s. R.S. COTTMARK (INDIA) PVT. LTD. filed 3 separate Petitions vide CP (IB) No.l02/2018,CP(IB)No. 101/2018, CP(IB) No. 100/2018 respectively, U/s.9 of the IB Code against the Corporate Debtor for initiation of CIRP Process. 33. A reading of the email dated 01.01.2018 clearly goes to show that the Respondent purchased 100 bales from M/s. KRISHNA BIOTECH and 100 bales from M/s. R.S. COTTMARK (INDIA) PVT. LTD. and against that Respondent obtained LS over 200 bales in favour of M/s. SAMKIT BIO FARMS LIMITED. 34. The total claim amount made by M/s. SAMKIT BIO FARMS LIMITED in CP (IB) 101/2018 as on 20.11.2017 is 10,43,562/-. When such is the case, there is no need for the Respondent to give a Letter of Credit for an amount of ₹ 39,15,148/- in favour of M/s. SAMKIT BIO FARMS LIMITED. 35. The reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 148/- by M/s. SAMKIT BIO FARMS LIMITED. 43. Even if it is held that there is no repayment of Operational Debt due to the Petitioner and M/s. R.S. COTTMARK (INDIA) PVT. LTD. inspite of the fact that LC has been encashed by M/s. SAMKIT BIO FARMS LIMITED still the material on record goes to show that there exist a dispute between the Petitioner and the Respondent in respect of the Operational Debt claimed by the Petitioner. 44. In the Judgment referred supra the Hon'ble Supreme Court held that the Adjudicating Authority has to see the existence of a dispute. It is also held by Hon'ble Supreme Court that the Adjudicating Authority has to see whether there is any 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. 45. This Tribunal is of the view that there exists a dispute and because of the resolution of the said dispute only, Respondent/Corporate Debtor issued LC for ₹ 39,15,148/- in favour of M/s. SAMKIT BIO FARMS LIMITED with an understanding that after encashment of LC, M/s. SAMKIT BIO FARMS LIMITED would pay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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