TMI Blog2020 (10) TMI 914X X X X Extracts X X X X X X X X Extracts X X X X ..... hin statutory period of 10 days as contemplated under Section 8(2) of IBC, should have analysed the documents placed before it, before taking such objection. Thus, the correspondences i.e., e-mail/letters show that there is existence of disputes prior to issuance of Demand Notice - Exchange of e-mails/correspondences, as referred above, clearly establishes that there is a pre-existing dispute between the parties regarding completion of the work and the Appellant/Corporate Debtor continuously made complaints regarding non-completion of work and deficiency in services, thereby loss caused to the Appellant/Corporate Debtor. Therefore, it is quite clear that there is pre-existing of dispute regarding completion of the work and the learned Adjudicating Authority ought not to have admitted the Application under Section 9 of IBC filed by the Respondent/ Operational Creditor. Even in the Reply filed by the Appellant/Corporate Debtor before the learned Adjudicating Authority pursuant to Section 9 Application, it is quite clear that there was sufficient material produced before the learned Adjudicating Authority and the learned Adjudicating Authority ought to have considered the materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since it is specifically mentioned in Section 8(2) of the Code that within ten days from the date of the receipt of the demand notice, the corporate-debtor is required to bring to the notice of the operational-creditor, the existence of dispute or the documents regarding the payment of debt, therefore, we have no option, but to hold that since the corporate-debtor fails to give the reply of the demand notice and raised the disputes, hence after his appearance in response to the notice, he cannot raise it by filing the reply to the application, filed on behalf of the operational-creditor and this has also been held by another NCLT, Delhi Bench in the case of M/s Jai Laxmi Traders v M/s Mayasheel Retail India Ltd. IB-2184/)ND)/2019. 14. Since, no dispute has been raised in pursuance of the demand notice issued under Section 8(1) of IBC, 2016, therefore, in our considered view, any dispute raised after the appearance of the respondent in pursuance to summons issued after filing the main application is not liable to be accepted. .. BRIEF FACTS: 4. The Appellant/Corporate Debtor is into business of Hotels, Tourism and Travel Services and operating and managing luxury ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Debtor on 11.01.2019 appointed IM Cost Management Private Limited (in short IMCMPL ), a team of consulting Engineers to carry out the audit of Civil structures, electrical, plumbing, finishing work and other miscellaneous packages. On 4th and 5th February, 2019, one Mr. Shiraj, Project Engineer of Respondent/ Operational Creditor along with representative of Appellant carried out joint inspection with IMCMPL and stated that subsequently no one came forward from Respondent to explain the measurement or deficiencies pointed out by IMCMPL. On 11.03.2019 (Page-272 Vol.-II), the Appellant/Corporate Debtor called upon the Respondent/Operational Creditor for meeting and resolving all the issues reflected in the Audit Report submitted by IMCMPL on 05.03.2019 (Page 31 of the Rejoinder, diary No. 21148). However, the Respondent/Operational Creditor did not attend the meeting, making bald observation through e-mail dated 20.03.2019 (Page 273 Vol. II). While so, the Respondent/Operational Creditor issued Demand Notice dated 11.04.2019 (Page 274 vol. II) under Section 8 of IBC for claiming an amount of ₹ 46,64,878/- against 50 invoices. Learned Senior Counsel further submitted that Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that by not filing Reply to the Demand Notice dated 11.04.2019 issued under Section 8(1) of IBC, it is admitted by the Appellant/Corporate Debtor that they have not raised any dispute. Learned Counsel further submits that in order to justify its malafide, illegal stand has been taken by the Appellant/Corporate Debtor which are contradictory pleas on the face of the record. It is also submitted by the learned Counsel for the Respondent, that Respondent/Operational Creditor has completed the work to the satisfaction of the Appellant/Corporate Debtor. He submitted that some alleged works were done by the third party contractor is false since the stand has been taken for the first time in the Reply filed to the Insolvency Petition. He submitted that the Project Director of the Appellant/Corporate Debtor i.e., Mr. Joshi was satisfied with the works, documents and Commissioning Reports of Respondent/Operational Creditor and he did not express any dissatisfaction on 29.12.2018. He further submitted that the Appellant/Corporate Debtor inspected the work in February, 2019 which was almost 10 months after the work was commissioned and Appellant/Corporate Debtor was making beneficial uses o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adings, the only issue fell for consideration is whether there is existence of dispute prior to issuance of Demand Notice dated 11.04.2019 or not? 8. Admittedly, the Respondent/Operational Creditor issued Demand Notice on 11.04.2019 to the Appellant/Corporate Debtor demanding ₹ 46,64,878/- and the Appellant/Corporate Debtor received the said Demand Notice. While so, the Appellant/Corporate Debtor, vide e-mail dated 29.04.2019 addressed to the Respondent/Operational Creditor whereby it has been stated as under: Dear Mr. Pankaj, This has reference to the audit team s ie IMCM s representative s visit to site and discussion with your team for verification of qualitative/quantitative work executed by your company. You are very well aware that your representative came on 4th February 2019 and 5th February 2019 date for measurement and verification required by the agency. And your representative were not been able to explain any measurements neither could explain any queries. Hence he committed and confirmed that the billing engineer from your end will be there on 6.2.2019 but the billing engineer did not turn up at site on 3rd day with the supporting. . Kindly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we have also noticed various exchange of e-mails between the parties. The Respondent/Operational Creditor, vide their e-mail dated 05.12.2017 addressed to the Appellant/Corporate Debtor whereby it has been stated that the Project is also delayed much beyond the original schedule leading to enhanced overheads and stated that they need funds to source materials with respect to work progress. The Respondent/Operational Creditor, vide e-mail dated 15.05.2018 (Annexure-R6 at page 74 of the Reply) addressed to the Appellant/Corporate Debtor stating that testing, commissioning and handing over of partial electrical works/services at the Triumph Reality Pvt. Ltd. and requested the Appellant to certify the equipment for the testing and commissioning and successfully handing over by listing out details of the items. However, the Appellant/Corporate Debtor has contended that the work was not completed by the Respondent/Operational Creditor and that they had given the Work Order to a third party vide Work Order dated 25.08.2018 (Annexure-A7 at page 248). In the e-mail dated 30.08.2018 (Annexure-A8 at page 249), the Appellant addressed to the Respondent whereby it has been stated in paragraph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hotel and the Company had to suffer huge financial loss. Learned Adjudicating Authority had taken note of the e-mail dated 29.04.2019 in the Impugned Order at paragraph-9 and came to a conclusion that the said e-mail dated 29.04.2019 was not the Reply in response to the Demand Notice dated 11.04.2019 and found that the Appellant/Corporate Debtor has not complied with the statutory provision of Section 8(2) of IBC. 14. We are of the view that the learned Adjudicating Authority instead of taking technical objection that the above e-mail dated 29.04.2019, may not be a Response/Reply to the Demand Notice issued by the Respondent/ Operational Creditor, however, the contents, as raised by the Appellant/Corporate Debtor should have been taken into consideration for the purpose of deciding the issue to elucidate any pre-existing dispute keeping in view of trail of exchange of e-mails regarding deficiency in service. 15. We are inclined to refer the letters/e-mails of the Respondent/Operational Creditor dated 29.12.2018 addressed to the Appellant/Corporate Debtor (Annexure-R7 at page 75 of the Reply filed by the Respondent) wherein it is stated as under: .. Dear Sir, We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [Section 8(1)]. Within a period of 10 days of the receipt of such demand notice or copy of invoice, the corporate debtor must bring to the notice of the operational creditor the existence of a dispute and/or the record of the pendency of a suit or arbitration proceeding filed before the receipt of such notice or invoice in relation to such dispute [Section 8(2)(a)]. What is important is that the existence of the dispute and/or the suit or arbitration proceeding must be pre-existing i.e. it must exist before the receipt of the demand notice or invoice, as the case may be. 20. The Hon ble Supreme Court clearly held that the dispute must exist before the receipt of the Demand Notice or Invoices as the case may be. Further, in the matter of Innoventive Industries Ltd. Vs. ICICI Bank and Anr. (2018)1 SCC 407, in paragraph 29 held which reads as under: .. 29. The scheme of Section 7 stands in contrast with the scheme under Section 8 where an operational creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the operational debtor in the manner provided in Section 8(1) of the Code. Under Section 8(2), the corporate debtor can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been rejected. Only by observing that the Respondent Corporate Debtor have not come forward to dispute the Application would not be sufficient to initiate CIRP, if the record already showed existence of dispute. .. And in the matter of Mr. Gajendra Parihar Vs. M/s Devi Industrial Engineers Anr. in Company Appeal(AT)(Insolvency) No. 1370 of 2019 this Bench dated 18.03.2020 was of the view that existence of dispute prior to the issuance of Demand Notice, the Application under Section 9 IBC is not maintainable and once there is existence of such dispute, the Operational Creditor gets out of the clutches of the Code. CONCLUSION: 22. Having gone through the records and the law laid down by the Hon ble Supreme Court and the precedents of this Tribunal, we are of the considered view that the correspondences i.e., e-mail/letters show that there is existence of disputes prior to issuance of Demand Notice. 23. Exchange of e-mails/correspondences, as referred above, clearly establishes that there is a pre-existing dispute between the parties regarding completion of the work and the Appellant/Corporate Debtor continuously made complaints regarding non-completion o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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