TMI Blog2020 (8) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the Minutes of the Meeting held on 16.11.2018, which is prior to the issuance of the Demand Notice dated 29.03.2019, establishes that there is plausible contention which requires further investigation and that the Dispute is not patently feeble, legal argument or an assertion of fact unsupported by evidence. We hold that the dispute truly exists in fact and is not spurious, hypothetical or illusory. The IBC proceedings are summary in nature and this is not a substitute for debt enforcement Procedure. There are no illegality or infirmity in the order of the Ld. Adjudicating Authority - appeal dismissed. - Company Appeal (AT) (Insolvency) No. 613 of 2020 - - - Dated:- 17-8-2020 - [Justice Venugopal M.] Member (Judicial) , [Mr. Balvinder Singh] Member (Technical) And [Ms. Shreesha Merla] Member (Technical) For Appellant: Mr. Gaurav Kumar, for Advocate. JUDGMENT Per: Shreesha Merla Member (Technical) Aggrieved by the order dated 05.05.2020 passed by the Ld. Adjudicating Authority (National Company Law Tribunal), Chennai Bench-I, Chennai. Nirmal K Dhiran (Proprietor of NKV Home Depot), the Operational Creditor in the original Application IBA/834/2019 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itor cannot be made liable; the supplies were made as per site conditions and there was no advance payment given by the Corporate Debtor; that in the total bills of more than 50 in number, two supplies were of expired materials which were immediately replaced and a credit note was also given to that effect and that the Corporate Debtor is falsely giving the impression that all the other supplies given were also expired material. 5. The Learned Counsel appearing for the Appellant further contended that the Corporate Debtor had given cheques which were dishonored and to resolve the issue, a meeting was held between both the parties and the minutes of the meeting dated 16.11.2018, shown in the e-mail depicts that 800 bags of Gypsum were supplied on 23.11.2018 and 400 bags were supplied on 30.11.2018 respectively for which the Corporate Debtor did not make any payment. 6. The Learned Counsel for the Appellant vehemently contended that there is no evidence that the Corporate Debtor had suffered any loss or that he had reproduced the entire quantity of Gypsum and that these e-mails were created only to show existence of a dispute to avoid payments of the Balance of amounts. 7. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r invoice, as the case may be . 34. Therefore, the adjudicating authority, when examining an application under Section 9 of the Act will have to determine: i. Whether there is an operation debt as defined exceeding ₹ 1 lakh? (See Section 4 of the Act) ii. Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid? And iii. Whether there is existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operation 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 Section9(5) of the Act . 9. As subject matter of the case relates to Existence of a Dispute , we are of the view that the case has to be decided on the touchstone of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act remains that outdated material was supplied and the Corporate Debtor which had questioned the quality and also the delayed supply of the subject material by the Operational Creditor and further specifically pleaded in their Counter Affidavit that the maximum coverage should be 20-22 sq. ft. per bag of the 25 kg by the labour appointed by the Appellant had done only 10-15 sq. ft. per bag of the 25 Kg and hence consumption was more than double than that of the regular quantity; that on 15.07.2017 and 28.08.2017 they had ordered for 1200 and 4,400 bags by NKV Gypsum fine plaster to be delivered within 30 days but that the Operational Creditor had taken more than one year to supply the same. The contention of the Learned Counsel appearing for the Appellant that Corporate Debtor had received material after 30.11.2018 and made payment on 07.12.2018 and therefore it cannot be stated that there is no dispute, is unsustainable in the light of the fact that e-mails dated 15.12.2018 and 17.12.2018 raising the dispute are subsequent to this transaction. It is pertinent to mention that all the disputes were raised prior to the date of the Demand Notice which is 29.03.2019. 15. The Hon bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is due i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise. xx xx xx 42. This being the case, is it not open to the adjudicating authority to then go into whether a dispute does or does not exist? 43. It is important to notice that Section 255 read with the Eleventh Schedule of the Code has amended Section 271 of the Companies Act, 2013 so that a company being unable to pay its debts is no longer a ground for winding up a company. The old law contained in Madhusudan has, therefore, disappeared with the disappearance of this ground in Section 271 of the Companies Act. 44. We have already noticed that in the first Insolvency and Bankruptcy Bill, 2015 that was annexed to the Bankruptcy Law Reforms Committee Report, Section 5(4) defined dispute as meaning a bona fide suit or arbitration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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