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2019 (2) TMI 1697

..... of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT:- M/S Priya Trading Company is nothing but a firm belonging to the suppliers and in pursuance of Agreement only the Supplier supplied the raw material to the Corporate Debtor through M/S Priya Trading Company, the Operational Creditor herein. It is interesting to note Corporate Debtor till date had not initiated any action against the supplier / Operational Creditor for recovery of alleged loss. The alleged dispute has no merit at all. The alleged dispute cannot be recognised. The Corporate debtor has committed default in paying the amounts covered by the invoices. Having committed default, the Corporate debtor cannot blame the Operational Creditor. The Hon'ble Apex Court has held in MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [2017 (9) TMI 1270 - SUPREME COURT] that the dispute must truly exist in fact and is not spurious, hypothetical or illusionary. Absolutely there is no material filed by Corporate Debtor that there existed a dispute in fact between it and the Operational Creditor. This is a Petition filed by Operational Creditor under Setion 9 of .....

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..... ding invocies amount were never credited. The Corporate Debtor failed and neglected to pay the amount of pending invoices of the Operational Creditor even after several reminders. (4) It is the case of Operational Creditor that the coal and broken Rice were supplied and delivered by the Operational Creditor as per specifications and no dispute was raised at the time of the delivery of goods by the Corporate Debtor and according to the shortages the amount was deducted from the invoices and shown in the ledger account of Corporate Debtor. It is the further case of Operational Creditor that Corporate Debtor has not made the payments against those invoices till date. (5) It is the case of Operational Creditor that there is no dispute between the Operational Creditor and Corporate Debtor in respect of the said Invoices which are marl<ed as Annexure - B & Bl Vol.-1&2 The ledger statements of the operational creditor marked as Annexures - K&L shown at Page Nos. 66-74 and that there are no cases pending before any courts, forum, tribunal etc. (6) It is the case of Operational Creditor that an amount of ₹ 4,80,65,149/- (Principal ₹ 3,31,37,601/- and interest of & .....

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..... ankruptcy Code, 2016 to create hardship to the Corporate Debtor,and disrupt the smooth functioning of the business of the Corporate Debtor. (4) It is also the further case of the Corporate Debtor that the parties have agreed to resolve any dispute as per the arbitration clause mentioned in the Raw Material Supply Agreement through Arbitration under the provisions of Andhra Pradesh Laws. (5) It is the case of Corporate Debtor in the notice sent to Shri. Arun Agarwal and Smt. Annapurna Agarwal wherein it was stated that Corporate Debtor incurred losses due to non-performance of their (Operational Creditor) part of the contract, to which they are yet to respond and make good the loss suffered by the Corporate Debtor. (6) It is the case of Corporate Debtor that the parties to the Raw Material Supply Agreement, i.e., the Corporate Debtor and Shri. Arun Agarwal and Smt. Annapurna Agarwal (Partners of Operational Creditor) have already exchanged notices on 15th and 16th June, 2018 and the Corporate Debtor replied to the said notices on the 2nd July, 2018. It is alleged by the Corporate Debtor that without following the terms of the Agreement, issuance of demand notice by the Operational C .....

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..... to the demand notice on 14.07.2018. (10) It is the case of Corporate Debtor that there is no contract that exists between the Operational Creditor and the Corporate Debtor and as such the issue of raising invoices and supply of material would not arise as the Operational Creditor and Corporate Debtor never entered into any kind of agreement with regard to the supply of broken rice and coal. (11) The Corporate Debtor further denies that an amount of ₹ 1,39,85,095/- is due and payable to Operational Creditor towards supply of Coal and ₹ 3,31,37,601/- towards supply of Broken Rice which was communicated by the Corporate Debtor to the parties of the Raw Material Supply Agreement, i.e., Shri. Arun Agarwal and Smt. Annapurna Agarwal, vide letter dated 16.06.2018 i.e., much before the filing of the present petition. Further it is the case of Corporate Debtor that it already issued reply on 14.07.2018 to the demand notice sent by the Operational Creditor stating that it is not liable to pay an amount of ₹ 4,80,65,149/- (12) The Corporate Debtor admits the fact that along with Form-Ill Demand Notice on 05.07.2018 Operational Creditor sent enclosures but those enclosures p .....

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..... Counsel for Corporate Debtor relied on the following judgements: (i) Hon'ble Supreme Court decision in the matter of Essar Oil Ltd Vs Hindustan Shipyard Limited & Ors cited in (2015) 10 Supreme Court Cases 642. (ii) Hon'ble Delhi High Court order in Welldone Estate projects Pvt Ltd vs Today Homes & Infrastructure Pvt. Ltd cited in 2010 SCC Online Del 4415: (2011) 178 DLT 118: (2011) 167 Comp Cas 310 (iii) Hon'ble Apex Court decision in the matter of Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited cited in (2018) 1 Supreme Court cases 353. (iv) Hon'ble Apex Court decision in Innoventive Industries Limites Vs ICICI Bank & Another cited in (2018) 1 Supreme Court Cases 407. 4. I have heard the Counsel for Operational Creditor and Counsel for Corporate Debtor. It is the case of Operational Creditor it supplied raw material to the Corporate Debtor in pursuance of execution of Raw Material Supply Agreement dated 09.04.2018. It is the case of Operational creditor that Corporate Debtor having received the raw material failed to pay the amount covered by the invoices. Thus, Corporate Debtor commtited default. 5. The case of Operational Cre .....

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..... ational Creditor, which is a firm. In the reply Corporate Debtor stated that a legal notice was issued on behalf of Operational Creditor on 15.06.2018 and Corporate Debtor gave reply to the said notice on 02.07.2018. The Corporate Debtor stated that there existed a dispute between Operational Creditor and Corproate Debtor before the date of demand notice. The copy of reply to the lawyer's notice was also sent along with reply to Demand Notice which is marked as Annexure-F. The main. contention of Corporate Debtor that there exists no contract between Operational Creditor and Corporate Debtor. So, the contention of Corporate Debtor that there is no privity of contract between the Operational creditor and it, The contention of the Corporate Debtor, it entered into contract with Shri Arun Agarwal & Smt Annapurna Agarwal on 09.04.2018 for supply of raw material and as such there is no agreement with Operational Creditor for supply of raw material. 8. The Corporate Debtor further stated in the reply that it had issued a legal notice on 16.06.2018 demanding the Operational Creditor to pay a sum of ₹ 4.91 crores and also ₹ 1 crore towards damages for tarnishing the ima .....

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..... or. Thus, even in the absence of an Agreement, the Operational creditor is entitled for the money for supply of raw material. The Corporate Debtor cannot say that it is not liable to pay to the Operational Creditor on the ground that it entered into contract with two individuals. Here the question is who supplied the raw material. The Operational creditor is a firm who supplied the raw material. Having received the raw material, it is the duty of Corproate Debtor to honour the invoices raised by Operational Creditor, dehors of the Raw Material Supply Agreement. 11. Here the question is who supplied the raw material. Undoubtedly, the Operational Creditor supplied the raw material. There is default. I have already stated the Corporate Debtor categorically admitted the amount actually payable to the Supplier is ₹ 2,96,54,219/-. Therefore, the Operational creditor is supplier and Corporate Debtor is buyer and there is default. 12. The contention of Learned Counsel for Corporate Debtor that Operational' Creditor has no locus standi to file Petition under Section 9 of IBC on the ground that Corporate Debtor never entered into Agreement with Operationar Ceditor for supply of raw .....

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..... ing Company. Then it is not open to the Corporate Debtor to contend Operational Creditor has no locus standi to file Petition under Section 9 of IBC against it. It can be safely concluded that the parties to the Agreement supplied raw material through its firm, the Operational Creditor herein. It is not as if Shri Arun Agarwal and Smt Annapurna Agarwal have nothing to do with the Operational Creditor. In terms of Agreement only the raw materials were supplied to the Corporate Debtor through the firm M/S Priya Trading Company, the Operational Creditor herein, in which Smt Annapurna Agarwal and her husband are partners. 14. The next contention of Learned Counsel for Corporate Debtor that there existed a dispute between Corporate Debtor and suppliers. It is a pre-existing dispute. Therefore, the Petition under Section 9 of IBC is not maintainable against Corporate Debtor. The Corporate Debtor filed the copy of Raw Material Supply Agreement whereas it is Operational Creditor who has filed the invoices issued to the Corporate Debtor. It is the case of Operational Creditor, legal notice was issued to the Corporate Debtor on 15.06.2018. It is shown as Annexure-H. It is issued by Shri Arun .....

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..... uantity of raw materials it would have earned profit of I₹ 3.15 lakhs per day. Thus, the Corporate Debtor claimed that it had sufferred loss as if on account failure to supply required quantity by supplier and as such there exist a dispute. 17. The Counsel for Corporate Debtor relied on the decision of Hon'ble Apex Court in Essar Oil Limited Vs Hindustan Shipyard Limited and Ors (2015) 10 Supreme Court Cases 642 and relied on para 25 of the judgement which is as follows:- "Simply because some payments had been made by ONGC to the Appellant, it would not be established that there was a privity of contract between ONGC and the Appellant and only for that reason ONGC cannot be saddled with a liabiity to pay the amount payable to the Appellant by the Respondent." Counsel contended the Operational Creditor cannot saddle the Corporate Debtor with liability to pay remaining balance simply on the ground it had paid some amount to the Operational Creditor when there is no privity of contract between the two. 18. I already discussed at length M/S Priya Trading Company is nothing but a firm belonging to the suppliers and in pursuance of Agreement only the Supplier supplied .....

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..... against the supplier / Operational Creditor for recovery of alleged loss. The alleged dispute has no merit at all. The alleged dispute cannot be recognised. The Corporate debtor has committed default in paying the amounts covered by the invoices. Having committed default, the Corporate debtor cannot blame the Operational Creditor. The Hon'ble Apex Court has held in Mobilox Innovations Private Ltd Vs Kirusa Software Private Ltd that the dispute must truly exist in fact and is not spurious, hypothetical or illusionary. Absolutely there is no material filed by Corporate Debtor that there existed a dispute in fact between it and the Operational Creditor. 21. Some more Operational Creditors filed separate Petitions. against this Corporate Debtor for committing default of operational debt and they are all pending. The Operational Creditor filed all invoices pertaining to the supply of broken rice and also supply of coal.. They are shown as AnnexureB & B-1. So volumnous invoices are filed which would go to show that huge quantity of raw materials were supplied to the Corporate Debtor. This is a Petition filed by Operational Creditor under Setion 9 of IBC. The Operational Creditor .....

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