TMI Blog2020 (10) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... does not establish any substantial Pre-Existing Dispute . Applying the test of existence of a dispute it is evident that without going into merits of the disputes, the argument raised by the Appellant cannot be construed as a plausible contention requiring further investigation or an assertion of facts supported by evidence. The defence is spurious, mere bluster and not a tenable one in the eye of law, in the considered opinion of this Tribunal. A dispute does not truly exist in fact between the Parties and, therefore, this Tribunal holds that the communication on record specifically the letter dated 19.09.2018, addressed by the Appellant themselves prior to the issuance of the Demand Notice clearly establishes that there is a Debt due and payable and there is no Pre-Existing Dispute . This Tribunal holds that there is no illegality or infirmity in the Impugned Order of the Adjudicating Authority in admitting the Application - Application admitted - appeal dismissed. - Company Appeal (AT) (Insolvency) No. 229 of 2020 - - - Dated:- 7-10-2020 - [Justice Venugopal M.] Member (Judicial) And [Ms. Shreesha Merla] Member (Technical) For the Appellant : Mr. Sanjay K. Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r submits that the Corporate Debtor also issued several cheques in discharge of the outstanding liabilities towards the Petitioner, but the cheques got dishonored on presentation. Thus, the Petitioner had also initiated the criminal prosecution against the Corporate Debtor under Section 138 of Negotiable Instruments Act, 1881 for one such cheque and same is pending before the concerned court at Mumbai. 7. The Counsel for the Petitioner submits that the Corporate Debtor was served with the Petition and date of hearing was also intimated to him by the Petitioner. Despite the receipt of notice, the Corporate Debtor did not appear for the hearing on 10.10.2019. The Counsel for the Petitioner was heard and the matter was reserved for orders. 8. The Petitioner has issued several invoices towards the payment of monthly licence fee as agreed under the Leave Licence Agreement and the same remained unpaid. The Corporate Debtor vide letter dated 26.02.2018 has confirmed to release the outstanding dues for rent of two months and vide earlier letter dated 01.06.2017, the Corporate Debtor confirmed to clear the outstanding dues of rent, electricity and penalties. The Leave and Licenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bt as defined under Section 5 (21) of the I B Code and the same was observed by this Tribunal in M. Ravindranath Reddy V/s. G Kishan, [Company Appeal (AT) (Ins) No. 331 of 2019]. The Learned Counsel also argued that the Adjudicating Authority had failed to acknowledge the difference in the amount demanded in the Demand Notice i.e. ₹ 1,83,45,278/- and the amount claimed in Form 5, which is ₹ 2,14,14,559.03/- and that there is a security deposit of approximately ₹ 27.93/- Lakhs and another ₹ 10 Lakhs towards electricity security which was not adjusted by NAFED towards dues if any. 7. Learned Counsel appearing for the First Respondent argued that the Appeal was barred by Limitation as it was filed beyond the prescribed period of 30 days without filing any Application seeking condonation; that the Demand Notice dated 26.09.2018 was issued under Section 8 of the Code to the Corporate Debtor alongwith all the relevant Invoices and Debit Notes , but the Demand Notice was not replied to within the statutory period provided under Section 8(2) of the Code and it was replied to only on 10.11.2019, raising frivolous objections; that there is no evidence of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Corporate Debtor which establish that the Corporate Debtor was aware of the proceedings. The contention of the Learned Counsel appearing for the Appellant that the Appellant was released from custody only in August 2019 and, therefore, was not aware of the proceedings, is not tenable as the notice issued to the Appellant by the Adjudicating Authority on 18.09.2019, regarding the matter being taken up for hearing, was subsequent to the release date of the Appellant. Further, the Impugned Order is dated 21.01.2020, which is more than four months after the release date. Additionally, the Corporate Debtor is a Private Limited Company and it cannot be stated that it could not have been represented by any other person merely because the Director of the Corporate Debtor Company, was in custody. Therefore, this Tribunal is of the considered view that sufficient opportunity was very much available for the Appellant to have appeared before the Adjudicating Authority , but despite service of notice did not choose to do so. 10. Heard both sides at length. The main issues which fall for consideration in this Appeal are; (a) Whether dues, if any, arising from the Leave and Licenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any claim in respect of the provisions of the goods or services and debt in respect of repayment of dues does not arise under any Law for the time being in force payable to the Central Government or State Government. It was also observed as follows; 31. In case of lease of immovable property, Default can be determined, on the basis of evidence. While exercising summary jurisdiction, the Adjudicating Authority exercising its power under Insolvency and Bankruptcy Code 2016, cannot give finding regarding default in payment of lease rent, because it requires further investigation (Emphasis Supplied) 14. Learned Counsel for the Respondent relied on Judgements of this Tribunal in Sarla Tantia V/s. Nadia Healthcare Pvt. Ltd. [Company Appeal (AT) (Ins) No. 513 of 2018] and in Jindal Steel and Power Pvt. Ltd. V/s. DCM International Ltd. [Company Appeal (AT) (Ins) 288 of 2017. 15. In Sarla Tantia V/s. Ramaanil Hotels Resorts Pvt Ltd., this Tribunal while dealing with dues arising from the terms of the Leave and Licence Agreement held and observed it to be an Operational Debt . This Tribunal in Citycare Super Specialty Hospital V/s. Vighnaharta Health Visionaries Pvt. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defines essential goods or services as follows; (1) Electricity (2) Water (3) Telecommunication Services (4) Information Technology Services To the extent, these are not direct input to the output produced or supplied by the Corporate Debtor. 19. The contention of the Learned Counsel for the Appellant that Regulation 32 read with Section 14 (2) is applicable to the facts of this case and that cold storage facilities cannot be construed as essential service and, therefore, does not fall within the meaning of Operational Debt as defined under Section 5 (21), is untenable, having regard to the fact that Regulation 32 read with Section 14 (2) only mentions essential goods and services whose supply cannot be terminated during the course of CIRP. The Code does not anywhere specify that the goods so mentioned under Regulation 32 are the same as those which fall within the ambit of the definition of Section 5 (21). Annexure 1D of the Leave and Licence Agreement stipulates that the cold storage with the machinery and equipment has been designed for storage of all agricultural commodities. The Lessee being in need of a cold storage participated in the tender floated by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the ambit of the definition of Operational Debt as defined under Section 5 (21) of the Code. 23. The other issue raised by the Counsel for the Appellant is that the Agreement was terminated on 23.08.2017, and that the dues demanded in that Demand Notice dated 26.09.2018, pertain to the period subsequent to the termination of the Agreement and, therefore, cannot be construed as debt due and payable , and that there is a Pre-Existing Dispute prior to the issuance of Demand Notice which can be seen from the various letters dated 23.08.2017, 11.09.2017, 15.09.2017, 15.02.2018, 19.09.2018 and 10.11.2019. 24. Section 5(6) defines dispute which reads as follows; (6) dispute includes a suit or arbitration proceedings relating to- (a) The existence of the amount of debt; (b) The quality of goods or service; or (c) The breach of a representation or warranty; 25. A perusal of the letter dated 01.06.2017, depicts that the following rents and electricity dues were pending from the Corporate Debtor; Month Rent Tds Net Payable Amt. April 1177715 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old storage and no parties further deposited their goods in nafed cold storage due to the panic created by you through said display. 5. Say from date 15 February 2018 Onwards the nafed cold storage is always near to empty. Therefore after display of such notice, nafed has no right to claim monthly rent. From date 15 February 2018 onwards. 6. Till date your not a single officials visited my office for taking charge of cold storage. 7. As regards bank guarantee from the day one we are ready to submit the bank guarantee as per agreement but always your office pressurised us to submit the bank guarantee only from nationalized bank. 8. Finally as proposed by us vide our proposal dated 12-09-2018, if nafed will extend to leave and licence for further two years, we are ready to make all the payment as stipulate in our letter. 9. Otherwise we are ready to vacate your cold storage subjected to minimum 30 days notice period to enable us to inform our existing reliable parties who till date have faith on us and kept their some stocks to lift it. Hoping and waiting favourable reply from your side as assured during the meeting with you in your chamber. (Empha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the communication relied upon by the Counsel for the Appellant does not establish any substantial Pre-Existing Dispute . Applying the test of existence of a dispute it is evident that without going into merits of the disputes, the argument raised by the Appellant cannot be construed as a plausible contention requiring further investigation or an assertion of facts supported by evidence. The defence is spurious, mere bluster and not a tenable one in the eye of law, in the considered opinion of this Tribunal. A dispute does not truly exist in fact between the Parties and, therefore, this Tribunal holds that the communication on record specifically the letter dated 19.09.2018, addressed by the Appellant themselves prior to the issuance of the Demand Notice clearly establishes that there is a Debt due and payable and there is no Pre-Existing Dispute , in the teeth of the observations made by the Hon ble Supreme Court in Mobilox (Supra). 30. For all the aforenoted reasons, this Tribunal holds that there is no illegality or infirmity in the Impugned Order of the Adjudicating Authority in admitting the Application. Hence, the present Appeal fails and the same is dismissed accor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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