TMI Blog2019 (11) TMI 772X X X X Extracts X X X X X X X X Extracts X X X X ..... VITTANALA, MEMBER (J) 1. C.P. (IB) No.77/BB/2019 is filed by M/s.Ponneri Steel Industries ( Petitioner/Operational Creditor ) under Section 9 of the IBC, 2016 read with Rule 6 of the I B (Application to Adjudicating Authority) Rules, 2016, by inter alia seeking to initiate Corporate Insolvency Resolution Process (CIRP) in respect of M/s.Gulam Mustafa Enterprises Private Limited ( Respondent/Corporate Debtor ) on the ground that the Corporate Debtor has committed default for a total outstanding amount of ₹ 28,69,533/- (Rupees Twenty Eight Lakhs Sixty Nine Thousand Five Hundred and Thirty Three Only) plus 18% interest per annum as per P.O. No.GM/GTT/ELEGANCE/184/17-18 dated 17.01.2018. 2. Brief facts of the case, as mentioned in the Company Petition, are as follows: (1) M/s. Ponneri Steel Industries ( Petitioner/Operational Creditor ) is engaged inter alia in the business of sale of TMT Bars and having its office at GNT Road, Peravallur Village, Chinampedu Post, Thiruvallur District, Ponneri-6012016 and also at No.5/11, Branson Garden Street Kellys, Kilpauk, Chennai-600010. (2) M/s. Gulam Mustafa Enterprises Pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law or on the facts and the same is liable to be dismissed in limine. The Petitioner is guilty of suppressing the material facts and have not approached this Hon ble Court with clean hands and as such astuteness in drafting and filing the Petition to mislead the Hon ble Court with a motive to harass the Respondent. The Respondent denies all the contents, allegations etc., levelled by the Petitioner except those which are specifically admitted by the Respondent. The Petitioner is put to strict proof of the facts as alleged in the Petition. (2) It is stated that the Respondent disputes the claim made under the provision of the Code. The amount ₹ 28,69,533/- (Rupees Twenty Eight Lakhs Sixty Nine Thousand Five Hundred Thirty Three Only) claimed in the said demand notice as well as the Petition is not tenable so as to invoke the provision of the Code. The intention of the Code is not for the purpose of recovery of any debt. The issuance of demand notice and thereafter filing Petition before this Tribunal under the Code is against the intent of the Code. The main objective of the Code is to streamline the insolvency process but not debt recovery. The actions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her reputed suppliers with additional investment. The Respondent could not deliver possession to the customers within the stipulated time due to the supply of poor quality material and purchasing the same from other reputed suppliers. Therefore, reputation of the Respondent/Builder was damaged substantially at the customer s level as well as the Bankers side since the Respondent had availed project loans. 4. Heard Ms. Annapoorna.S, learned Counsel for the Petitioner and Shri Bojanna K.J along with Shri Josita Juris, learned Counsels for the Respondent. We have carefully perused the pleadings of both the parties and extant provisions of the Code and the law on the issue. 5. Ms. Annapoorna.S, learned Counsel for the Petitioner, while pointing out various averments made in the Company Petition, Synopsis, has further submitted that even though the claim arises in the year 2018, they are in continuous correspondence with the Respondent. However the Petitioner failed to take appropriate legal action and thus issued Demand notice dated 29.09.2018, in Form 3, under the Code by inter alia demanding to pay an outstanding amount of ₹ 28,69,533/- as on 30.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had discussed the issue with the agents of the Petitioner at the Petitioners office. Consequently, the Petitioner had telephonically assured that they would replace the material with good quality materials with immediate effect. However, to the shock and surprise the Petitioner has preferred to move this Tribunal making illegal claims. (3) Respondent Company as a reputed Company had very good relationship with the many suppliers and Vendors and maintained a smooth transaction record and in the instant case only because of the poor and substandard steel supplied by the Petitioner was not accepted by the Respondent Company and since the Petitioner had assured to replace them with good quality, the Respondent Company had stopped the payment demanded and the only the Petitioner is duty-bound and liable to replace the materials and the Respondent is not liable in whatsoever manner. (4) The claim of the Petitioner is not for a legally enforceable one and hence the claim of the Petitioner is liable to be dismissed for the reasons as stated above. 8. The Purchase Order No.GM/GTT/ELEGANCE/184/17-18 dated 17.01.2018, issued by the Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has inferior quality or not, the Petitioner failed to produce any proof to substantiate the material is not of inferior quality except producing uncorroborated their email communications to the Respondent, and one of the communication stated to have been sent by the Respondent is dated 06.02.2018, wherein it is mentioned that there is no shortage in the material supplied, however, it did not say anything about the quality of material supplied. Unless all the terms and conditions contained in the purchase order in question are duly complied with by the Petitioner, amount claimed under invoice in question cannot be legally claimed and debt cannot be deemed to be established. Therefore, the Petitioner has failed to substantiate one of the conditions as per the purchase order as stated supra. 10. Moreover, when the payment is to be made 50% as in advance and remaining amount within 60 days, the Petitioner failed to take any appropriate legal actions except sending some uncorroborated email communications, producing their own records to claim the alleged outstanding amount. The cause of action admittedly arise on 22.01.2018, and the Petitioner has not filed any documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence, the Petitioner failed to substantiate the fundamental question of insolvency in respect of the Corporate Debtor, as per Section 2 of the Code. On the other hand, the Respondent claimed that they are solvent and they have not paid alleged outstanding amount on the ground that the Petitioner failed to replace substandard material. Therefore, it is for the Petitioner to make claim, after replacing the defective material supplied and getting required certificate from the Engineers of Respondent. Therefore, the instant Petition is filed only to recover alleged outstanding amount without any material. And the Adjudicating Authority cannot go into roving enquiry with regard to quality of material supplied. 14. It is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP for justified reasons as per the Code. So far as the dispute is concerned, the Hon ble Supreme Court in Transmission Corporation of A.P. Ltd. v. Equipment Conductors and Cables Ltd. (CA No. 9597 of 2018) dated 23rd October, 2018, (2018) 147 CLA 112 (SC), it is, inter alia, held that existence of undisputed d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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