TMI Blog2018 (4) TMI 1848X X X X Extracts X X X X X X X X Extracts X X X X ..... had lead to issue of notice to CD and the attendant hearings of this Petition by this Tribunal. The attitude of the Petitioner in this regard stands strongly deprecated in invoking the provisions of IBC,2016 despite being aware that there is a dispute in existence and in any case that a notice of dispute is required to be brought to the notice of this Tribunal by filing an affidavit disclosing facts as required under Section 9(3)(b) on the date of moving the Petition before this Tribunal and thus the Petition deserves to be dismissed on this ground alone. The dispute between the OC and CD predates 2017 and there has been a running battle between the OC on the one hand and MSEDCL on the other with respect to CPP and CGP status of the OC and its users, all of which goes against the grain of Lol and subsequent PSA entered into between OC and CD. The contentions of the CD in this regard are not illusory or moon shine is vouched by the records that even as of today the issue with MSEDCL has not attained finality and the OC is required to approach Central Electricity Regulatory Commission (CERC) as per the latest order dated 29.12.2017 as it is having a pan India presence and the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Part-IV of the application, it is stated to be ₹ 6,98,03,036/- and that the date from which the debt fell due is stated to be 27.8.2016 and the transaction giving rise to the claim or the debt is stated by OC to be that of supply of power to CD and that the amount in default has been computed as provided in Annexure-V to the typed set of the application. 3. Under Part-V of the application it is stated that the claim is backed by Power Supply Agreement (PSA) dated 24.7.2016 as entered into between OC and CD and arising out of the said agreement, invoices have also been raised on 27.08.2016, 01.09.2016 and 1.10.2016 as against the CD by OC in relation to the transaction between OC and CD as contemplated under the above PSA. In order to back the claim of ₹ 6,98,03,036/-, OC has annexed the bank statement for the period 1.10.2017 to 31.10.2017 wherein it is stated by OC that there is no credit entry or evidence figuring in relation to the receipt of money from the CD. An affidavit of compliance under Section 9(3)(b) of IBC,2016 has also been filed duly verified by the Director of OC, wherein, it is stated that no notice of dispute has been given by the CD for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by CD are the major raw material for automobile engineering and forging industries and that the products Of CD are also exported and are ISO 9001-2000 compliant. It is further stated by CD that several leading industrial houses throughout India use the products manufactured by CD and it has got enough wherewithal to sustain the operations of CD and is a solvent company enjoying sufficient sanction limits from its bankers. In relation to the transaction it is averred by CD that based on the assurances of OC and as OC approached the CD for supply of power and as OC had guaranteed that it had all the necessary compliances of generation of captive power, as required under the provisions of Electricity Rules, 2005 and based on the said assurances, CD was led to believe that OC had all the compliances of requirements under the necessary laws and based on that premise an agreement for purchasing power from the OC was entered into 'in relation to the manufacturing plant situated at Aurangabad, Maharashtra. Letter of intent (Lol) was issued by CD to OC on 19.12.2015 and certain payments were also made in relation to the Lol consequent to which communication dated 29.4.2016 was received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember, 2016 was forced to approach MSEDCL to consider the application of M/S Adani Power even though a subsequent request was made by the OC to CD for rescheduling of power for the month of December, 2016, despite all the correspondence exchanged between the parties and termination letter as referred supra; however OC did not mention about the stoppage and about the CPP status and taking into consideration the above and in the circumstances was forced to purchase power at higher rate than the rate as agreed to between OC and CD and was also forced to incur huge cost. In the meanwhile, MSEDCL it is stated had addressed a letter dated 5.7.2017 to OC with a copy marked to CD questioning in relation to CPP status for the financial years 2015-16 and 2016-17 having not been fulfilled of the users and also to submit documents related to grant of captive status by other State DISCOM's/State Electricity Regulators fulfilling the norms prescribed in relation to its consumers. 5. In the meanwhile, OC it is contended by CD sought to initiate proceedings under Section 138 of Negotiable Instrument Act of 1881 for dishonor of cheques on the part of CD which was also adequately replied to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respective stand as taken in the pleadings filed before this Tribunal and relied upon annexures filed by them. I-d. Counsel appearing for OC stressed on the point that there has been no breach on the part of OC and that under the terms of the PSA as entered into between the parties failure to make payment in relation to invoices raised give rise to an event of default under clause 3.1 of PSA and in the circumstances OC taking into consideration clause 8.2 of PSA is not duty bound to continue to perform its part of the bargain and OC has discretion to stop power supply as it cannot be forced to supply power without receiving payments in relation to the invoices raised for the earlier months and jn the circumstances it was fully justified in stopping the power supply to CD. In relation to the CPP status, submission was made by Ld. Counsel for the OC that it is only a procedural aspect and compliance, if at alb is of the CD and further that it is not a material criteria for not making payment in relation to power which has already been supplied and which has also been consumed by CD and hence there is no justification for the stoppage of payment on this ground. 10. On the contrary, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t only from the Courts of India but as well as that of United Kingdom. However, in deciding the cases under IBC,2016, even though the enactment is of recent origin this Tribunal is primarily guided by the lucid exposition of law in relation to IBC,2016 as expounded by the Hon'ble Supreme Court which has virtually settled the aspect which this Tribunal is required to consider at the time of hearing a Petition by a Financial Creditor under Section 7 and by an Operational Creditor under Section 9, both under IBC,2016t for the purpose of admission of the Petition or its rejection. 12. While M/S Innoventive Industries Ltd. v. ICICI Bank Another, Civil Appeal Nos. 8337-8338, the decision of the Apex Court deals with pre-dominantly in relation to a Petition filed by a Financial creditor under Section 7 of IBC,2016, the case of Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software (P) Limited 2017 SCC OnLine SC 1154 , deals with pre-dominantly a Petition concerning Operational Creditor filed under Section 9 of IBC, 2016 seeking to invoke CIRP against a Corporate Debtor. 13. Even though M/S Innoventive Industries Ltd. deals with a Petition under Section 7 filed by a Financial Credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the dispute and/or the suit pr 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. In case the unpaid operational debt has been repaid, the corporate debtor shall within a period of the selfsame 10 days send an attested copy of the record of the electronic transfer of the unpaid amount from the bank account of the corporate debtor or send an attested copy of the record that the operational creditor has encashed a cheque or otherwise received payment from the corporate debtor (Section it is only if, after the expiry of the period of the said 10 days, the operational creditor does not either receive payment from the corporate debtor or notice of dispute, that the operational creditor may trigger the insolvency process by filing an application before the adjudicating authority under Sections 9(1) and 9(2). This application is to be filed under Rule 6 Of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 in Form 5, accompanied with documents and records that are required under the said form. Under Rule 6(2), the applicant is to dispatch by registered post or speed po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is a record of dispute in the information utility (Section 9(5)(ii)(d)). Section 9(5)(ii)(d) refers to the notice of an existing dispute that has so been received, as it must be read with Section 8(2)(a). Also, if any disciplinary proceeding is pending against any proposed resolution professional, the application may be rejected (Section 9(5)(ii)(e)). 25. Therefore, the adjudicating authority, when examining an application under Section 9 of the Act will have to determine: (i) Whether there is an operational 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 operational 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 particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that only due to the same (i.e.) pre-existing dispute, the amount remains, if at all, unpaid. To the question as to the extent or standard or degree to which the CD is required to demonstrate a pre-existing dispute, and which is not a mere moonshine or illusory to stave off the process of initiation of CIRP, the Hon'ble Supreme Court, after a detailed consideration of the earlier winding up dispensation under Companies Act, 1956, wherein a bona fide dispute in existence between a Petitioner and a debtor Company was required to be established to stave off the process of winding up against the Company as compared to the present one under IBC,2016. Thus, in comparison to the demonstration of a bona fide dispute being a high bench mark set under 1956 Act, , under IBC,2016 the standard or degree or yardstick seems to be less stringent in so far as the Corporate Debtor is concerned, namely to stave off CIRP, to that of establishing a plausible contention based on which the claim of an OC is disputed, the rider being that the defense put up by CD should not be a moonshine or illusory and solely raised for the purpose of raising a dispute, subsequent to issue and receipt of Notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Insolvency and Banlsuptcv Code, 2016 (p.69-70) I, Sunil Kumar Singh, S/o Mr.Hari Shanker Singh aged 43, Director of M/S OPGS Power Gujarat Limited having its office at No.6, Sardar Patel Road Guindy Chennai-600032, Tamil Nadu, do hereby solemnly affirm and sincerely state on oath as follows: 1. I'm the authorized signatory(Director) of the operational creditor and I am authorized to swear the affidavit on its behalf, I am also fully conversant with the facts and circumstances of the case. 2. I submit that operational creditor was established in the year 2007 and it deals in supply of power. 3. The corporate debtor company R.L.Steels Energy Limited was incorporated on 6 th August, 1985 under the Companies Act, 1956. The corporate debtor has a Nominal Share Capital of Twenty Five Crore only) and Paid up Share Capital of ₹ 21.93,72,280 (Rupees twenty one crore ninety three lakhs seventy two thousand two hundred and eighty only), 4. I affirm that the Corporate Debtor approached the Operational Creditor for supply of power. As per the agreement dated 24th July, 2016 the Corporate Debtor is required to make payment as per the following terms and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it is submitted that OC had thought it fit to enclose the same along with the Petition as an Annexure at page 76 onwards with the typed set of documents listed as Serial No. 13 in the index page. It is the contention of the Learned Counsel for CD that on this ground alone, notice of the Petition in the first place, taking into consideration Section 9(5) (ii)(d) should not have been given to CD to defend the action herein and in any case ought to be rejected outright and costs should be imposed. 19. Further, it is also pointed out by Ld. Counsel for CD that there has been an deliberate attempt to play fraud in relation to date of notice of default stated to be 12.9.2017 in the notice, however the notice of default itself having been dispatched only on 6.10.2017 at Chennai through India Post and ultimately served on the CD only on 9.10.2017 all of which is evidenced by tracking consignment annexed as Annexure 43 to typed set of documents filed along with the counter Affidavit of the Respondent/Corporate Debtor and reproduced hereunder: TRACKING CONSIGNMENT Booked at Booked on Destination Pincode Tariff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SPC Chennai Counter Item Bagged for NSH Chennai 6/10/2017 16:33:50 SPC Chennai Counter Item Booke 20. Perusal of tracking report clearly shows that the date of dispatch to be only on 6.10.2017 and service on 9.10.2017 even though the date given in the notice of default to be 12.9.2017. The above fact becomes material as rightly contended by the Ld. Counsel for CD, that CD had acted with alacrity in sending the notice of dispute dated 19.10.2017(i.e) within 10 days from the date of receipt of the notice of default. 21. Thus there is some credence in the arguments of the Ld. Counsel for the CD. Perusal of the affidavit filed under Section 9(3)(b) and as extracted above clearly shows that even though the notice of default has been received by OC prior to the filing of this Petition and which incidentally has also been annexed as mentioned in the earlier part of the order, there seems to be a covert attempt on the part of the Petitioner at least at the stage of moving this Petition to not to state anything in Affidavit filed under Section 9(3)(b) of IBC, 2016 with a vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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