TMI Blog2019 (12) TMI 1396X X X X Extracts X X X X X X X X Extracts X X X X ..... or the differing stands taken by the Corporate Debtor in the letter dated 24.05.2012 and in the reply to the Demand Notice dated 12.12.2018 and in the reply to the Petition dated 03.06.2019. If the material was custom-made, then it could not have been diverted to any other customer. If it was, then it could not have been sold as scrap - So, the contradictory stands taken by the Corporate Debtor is not tenable and therefore deserves to be rejected. Refund of advance amounts paid - HELD THAT:- The claim has to be in connection with the provision of goods or services including employment, or a debt in respect of the payment of dues arising under any law for the time being in force. In the present case, payment of advance by the Operational Creditor would not satisfy the definition of Operational Debt under the IBC - In the present case also, the claim relates to non-payment of advance money and hence the same is not covered under the definition of Operational Debt . Time Limitation - HELD THAT:- Since the date of default even according to the Operational Creditor is 22.09.2014, and applying the principles laid down by the Hon'ble Supreme Court in B.K. Educational Serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Corporate Debtor on 15.02.2012; (b) The LoI clearly specified that the entire scope of supply should be completed in six to eight weeks from the date on which the LoI was issued. As per the terms of payment, 25% advance amounting to ₹ 16,21,592/- was paid by the Operational Creditor along with the LoI. A further extension order was given by the Operational Creditor vide LoI dated 28.02.2012, issued on 16.03.2012. In this case also, the Operational Creditor paid 25% advance amounting to ₹ 9,20,736/- along with the extension LoI in favour of the Corporate Debtor. Thus, the total advance paid to the Corporate Debtor under both the LoIs amounted to ₹ 25,42,328/-; (c) On 13.04.2012, the Corporate Debtor requested the Operational Creditor to take inspection of only 45 mm tubes, and not all the various items ordered. Thus, it was only part inspection and not complete inspection. Therefore, the Operational Creditor refused to take inspection unless the entire goods were offered for inspection as it did not want to have the materials in parts; (d) On 24.05.2012, the Corporate Debtor wrote to the Operational Creditor, stating that since the Operational Cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of the material from ₹ 184/- per kg to ₹ 195/- per kg in view of the delay in lifting the material by the Operational Creditor. There was a telephonic conversation on 25.05.2018 between the representatives of the Operational Creditor and the Corporate Debtor, wherein it was stated that the Corporate Debtor was not seeking an increase in rates, but was ready to supply the material at the same contracted rate, i.e., ₹ 184/- per kg., and the Operational Creditor was requested to send its representatives for inspection without further delay. A reminder letter was also sent on 05.09.2012 by registered post. 9. The Corporate Debtor has further stated in the reply to the Demand Notice that the Operational Creditor sought to cancel the purchase order after the material was made ready, which was illegal. In view of this, the Corporate Debtor wrote a letter dated 29.11.2012 to the effect that it could not refund the advance payment, and that in case there was no response for inspection of the materials within fifteen working days, the Corporate Debtor would be constrained to scrap the material and debit the amount to the account of the Operational Creditor. The mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btor (para 13 at page 6-7 of the Reply); (e) The total amount due and payable by the Operational Creditor to the Corporate Debtor under the two Purchase Orders was of the value of ₹ 1,16,85,703.65. After adjusting the amount received from selling the material as scrap at the rate of ₹ 55,41,472/- and after factoring in the advance payment of ₹ 25,42,328/-, the Operational Creditor was liable to pay an amount of ₹ 36,01,903/- along with interest at the rate of 18% per annum (para 14 at page 7 of the Reply). 14. We have heard the arguments of both sides and perused the records. Our findings are as follows: On the ground of prior dispute 15. The Corporate Debtor has stated that the claim of the Operational Creditor is not valid, inter alia on the ground that there is a preexisting dispute. The Operational Creditor had filed Special Civil Suit No. 209/2013 against the Corporate Debtor, and the same constitutes prior dispute as laid down by the Hon'ble Supreme Court in Mobilox Innovations Private Limited vs. Kirusa Software. 16. This argument is untenable, because the remedies under the IBC are in addition to, and not in derogation of, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23. In Tata Chemicals Limited Vs. Raj Process Equipments and systems Private Limited (CP No. 21/2018, order delivered on 30.11.2018), this Bench had held that refund of advance money is not in connection with goods or services. Therefore, the same would not be covered under the definition of Operational Debt. The service was to be rendered not by the Operational Creditor but the Corporate Debtor. 24. Similar is the view previously held by the NCLT, Kolkata in SHRM Biotechnologies Private Limited vs. VAB Commercial Private Limited (CP (IB) No. 799/KBB/2018, order delivered on 11.10.2018). 25. In the present case also, the claim relates to non-payment of advance money and hence the same is not covered under the definition of Operational Debt . On limitation 26. The date of default mentioned in the Petition is 13.02.2012. 27. This claim pertains to transactions in the year 2012. The date of default mentioned in the Petition is 13.02.2012. However, this is of no material significance because even if we assume the date of default to be 23.09.2014, i.e., the day after the last invoice was raised on 22.09.2014, the question of limitation has to be considered. 28. ..... 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