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2019 (9) TMI 532

..... nner provided under Section 9 of the I&B Code - HELD THAT:- The fact that ‘Priya Trading Company’ was the name and style under which Arun Agrawal and Annapurna Agrawal have been operating was never a fact required to be discovered or rediscovered. Both are synonyms and well within the knowledge of the ‘Corporate Debtor’ as also the ‘Appellant’. The ground raised to offset the triggering of Corporate Insolvency Resolution Process at the instance of ‘Priya Trading Company’ as ‘Operational Creditor’ by taking plea of there being no privity of contract between the ‘Operational Creditor’ and the ‘Corporate Debtor’ falls flat and has to be dismissed as being absurd and repugnant to the admitted position in regard to the status and locus standi of the ‘Operational Creditor’. Contention raised on this score is rebuffed. Unpaid Liability - alleged default on the part of Operational Creditor - HELD THAT:- There is a crystal clear admission of liability of ‘Corporate Debtor’ to pay an amount of ₹ 2,96,54,219.00 to Arun Agrawal and Annapurna Agrawal who, we have found, were adm .....

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..... while Chairman and Managing Director as also a shareholder of the Corporate Debtor holding more than 45% of the total shareholding, has preferred the instant appeal assailing the impugned order on the ground that there was no privity of contract between the Operational Creditor and the Corporate Debtor and that Insolvency Resolution Process could not be triggered in wake of a pre-existing dispute interse the parties to the proceedings before the Adjudicating Authority. 2. An Operational Creditor may initiate Corporate Insolvency Resolution Process against the Corporate Debtor having committed a default in respect of operational debt in the manner provided under Section 9 of the I&B Code. However, prior to filing of an application in the prescribed form before the Adjudicating Authority, the Operational Creditor is required to deliver a demand notice of unpaid operational debt together with the copy of invoices demanding payment of the defaulted amount to the Corporate Debtor in terms of Section 8 (1) of the I&B Code and the Corporate Debtor is, within ten day of the receipt of the demand notice, required to respond by either bringing to the notice of Operational Creditor ex .....

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..... the rival contentions and the arguments advanced on behalf of the parties it is apt to notice the factual matrix culminating in passing of the impugned order. We accordingly proceed to notice the facts briefly. 4. The Operational Creditor supplied broken rice and coal to the Corporate Debtor in pursuance of Raw Material Supply Agreement dated 9th April, 2018 (hereinafter referred to as Agreement ). Invoices were raised by it upon the Corporate Debtor for supply of such materials. According to Operational Creditor , the Corporate Debtor failed to pay the amount of pending invoices of the Operational Creditor even after deduction of shortages. Further according to the Operational Creditor , the coal and broken rice (for short raw material ) supplied and delivered to the Corporate Debtor was as per specifications and the Corporate Debtor , at the time of delivery of raw material did not raise any objection in regard to the quality thereof while the amount was deducted as regards shortages in the quantity of raw material and same was reflected in the ledger account of the Corporate Debtor . According to Operational Creditor , an amount of ₹ 4,80,65,149/- (Principal amount of S .....

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..... ply of raw material by Operational Creditor to the Corporate Debtor are not at all disputed by the Corporate Debtor . Besides, there is admission of the fact that Arun Agrawal and Annapurna Agrawal are carrying on business under the name and style of Priya Trading Company and had supplied the raw material to the Corporate Debtor in respect of which Operational Creditor raised invoices and claimed outstanding amount as specified in the Demand Notice, liability in regard to the same being an admitted fact. 6. After hearing learned counsel for the parties and wading through the record, we find that the Raw Material Supply Agreement at page 50 of the Appeal Paper Book was executed interse the Corporate Debtor of the one part and Arun Agrawal and Annapurna Agrawal of the other part with regard to supply of broken rice and coal etc. required for production of ENA for a period of three months. Our attention has been invited to registered lawyer s notice dated 16th June, 2018 served by the Corporate Debtor upon Shri Arun Agrawal and Smt. Annapurna Agrawal forming Annexure-A-3 of the Appeal Paper Book at page 57 to 62, Para 3 whereof reads as under:- 3. My client states that both of you are .....

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..... merging from his Reply to the Demand Notice dated 14th July, 2018, para no. 6 relevant in this regard being extracted hereinunder:- 6. My client states that according to their accounts my client has to pay an amount of ₹ 2,96,54,219.00 only, and that amounts to be paid to 1) Arun Agrawal, and 2) Annapurna Agrawal only, but not to you, after clearing all the disputes as mentioned in notice, dated 16-6-2018 and reply notice, dated 2-7-2018. As such the notice under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 is invalid and untenable. It is manifestly clear that there is a crystal clear admission of liability of Corporate Debtor to pay an amount of ₹ 2,96,54,219.00 to Arun Agrawal and Annapurna Agrawal who, we have found, were admittedly operating under the Trade Name of Priya Trading Company . This is notwithstanding the fact that such admission of liability to pay has been subjected to clearing of disputes as mentioned in notice dated 16th June, 2018 and reply notice dated 2nd July, 2018. Reference to such notice and reply notice would reveal that the dispute related to breach of terms of the agreement as regards generating .....

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