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2019 (8) TMI 329

..... of issue of Demand Notice - pre-existing dispute or not - HELD THAT:- The Hon’ble Supreme Court in “Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software (P) Limited [2017 (9) TMI 1270 - SUPREME COURT] it is held that the ‘existence of dispute’ and/or the suit or arbitration proceeding must be pre-existing i.e. it must exist before the receipt of the Demand Notice or Invoice as the case may be. In the present case, the existence of dispute apparently establishes that the goods supplied by the Appellants have been rejected as per Quality Control Report. In the impugned judgement, the Adjudicating Authority gave his finding to establish the existence of dispute with regard to LOC issued by the Respondent to the extent of ₹ 39,15,148/-. The IBC, 2016 is not a recovery proceeding - the Adjudicating Authority rightly rejected the petitions with aforesaid reasons - petition dismissed. - Company Appeal (AT) (Insolvency) No. 653-654 of 2018 - 5-8-2019 - (Justice A.I.S. Cheema) Member(Judicial) and (Kanthi Narahari) Member(Technical) For Appellants: Mr. Rishabh Gupta, Advocate. For Respondent: Present but appearance not marked. JUDGMENT In view of common issue aris .....

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..... 018 i.e., M/s R.S. Cottmark (India) Pvt. Ltd. and M/s Krishna Bio Tech, Appellant in Company Appeal(AT)(Insolvency) No. 654 of 2018 and M/s Samkit Bio Farms Pvt. Ltd, Indore have filed Company Petitions before the Adjudicating Authority bearing CP(IB) No. 100/9/HDB/2018 and CP(IB) No. 102/9/HDB/2018 and CP(IB) No. 101/9/HDB/2018 against this Respondent seeking similar claims. The Adjudicating Authority rejected all the petitions on the ground of existence of dispute. He further submitted that the dispute existed prior to the date of Demand Notice issued by Appellant(s) dated 20.11.2017. 8. The learned counsel for Respondent further submitted that pursuant to deal confirmation letter dated 17.02.2017, the Respondent intimated its requirement of 100 bales of BCI Cotton of 25 mm length and 3.8 Micronaire to the Appellant. Accordingly, the Appellant in Appeal No. 653 of 2018 had dispatched Lot 145 comprising of 100 bales vide invoice No. 87 dated 28.02.2017 and Lot 58 comprising of 25 bales vide invoice No. 857 dated 08.03.2017 i.e., in total 125 bales. It is further submitted that the quality test was conducted on the said Lots on 29.03.2017 using Premier High Quality testing machine. .....

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..... e the said disputes amicably. In accordance with same, the Respondent got issued irrevocable LOC numbered as 0910317LC000097 in favour of M/s Samkit Bio Farms Pvt. Ltd. from its Banker, State Bank of India, Industrial Finance Branch, Hyderabad for a sum of ₹ 39,15,148/- (Rupees Thirty-nine Lakhs Fifteen Thousand and One Hundred Forty-Eight) and the said LOC was honoured by Respondent s Banker on 20.01.2018 and from the account of the Respondent the amount was debited on 31.01.2018 to the extent of ₹ 39,15,148/- (Rupees Thirty-nine Lakhs Fifteen Thousand and One Hundred Forty-Eight). However, the Appellants denied the fact that the LOC issued by Respondent in favour of M/s Samkit Bio Farms Pvt. Ltd. was for sale of their goods to the Respondent & Appellants claim that the LOC issued by the Respondent cannot be treated as payments made to the Appellants i.e., M/s R.S. Cottmark (India) Pvt. Ltd. and M/s Krishna Bio Tech. However, we are not inclined to accept the stand taken by the Appellants. 11. We are of the considered view that there is an existence of dispute as on the date of issue of Demand Notice by the Appellants to the Respondent. Apart from above, the Respon .....

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..... irusa Software (P) Limited - 2017 1 SCC Online SC 353 it is held that the existence of dispute and/or the suit or arbitration proceeding must be pre-existing i.e. it must exist before the receipt of the Demand Notice or Invoice as the case may be and observed 33. The scheme under Sections 8 and 9 of the Code, appears to be that an operational creditor, as defined, may, on the occurrence of a default (i.e. on non-payment of a debt, any part whereof has become due and payable and has not been repaid), deliver a demand notice of such unpaid operational debt or deliver the copy of an invoice demanding payment of such amount to the corporate debtor in the form set out in Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Form 3 or 4, as the case may be [Section 8(1)]. Within a period of 10 days of the receipt of such demand notice or copy of invoice, the corporate debtor must bring to the notice of the operational creditor the existence of a dispute and/or the record of the pendency of a suit or arbitration proceeding filed before the receipt of such notice or invoice in relation to such dispute [Section 8(2)(a)]. What is important is t .....

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..... h reads as under: - 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 amounts to the Petitioner and M/s. R.S. COTTMARK(INDIA) PVT LTD. 46. Therefore, the contention of the Respondent required further investigation and enquiry. It requires oral evidence even from the Company that acted as mediator in the resolution process. 47. In fact, the Respondent/Corporate Debtor also raised dispute regarding the quality of the cotton bales supplied. Further, it is the case of the Respondent that the consignment of cotton bales has been rejected. There are endorsements on the copies of the invoices filed by the Corporate Debtor along with the counter to the effect that consignment has been rejected with dated 29.03.2017. According to the Respondent the same has been communicated to the Petitioner but the Petitioner denies the same. Therefore, a dispute has already been raised by the Respondent even in respect of the quality of the cotton .....

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