TMI Blog2022 (5) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... rt Letter was requested to be issued by the Appellant to IOCL against the Purchase Order for the supply of instalment of Multitier Racks for Heavy Duty Shelving. The correspondence dated 16/08/2018 between the Appellant and IOCL further strengthens the argument of the Respondent that the payment would be realized by IOCL after complete erection of system and the balance after completion of entire racking system - It is the case of the Respondent/Corporate Debtor that even for the Review Meeting the Corporate Debtor was not present and it was held between IOCL and EIL and the Appellant herein. The Minutes too do not record the presence of the Corporate Debtor . From the aforenoted communication, this Tribunal is of the considered view that the payments were to be made, as per the Comfort Letter, by IOCL to the Appellant herein. Whether there is any Pre-Existing Dispute existing between the parties prior to the issuance of the Notice mandated under Section 8 of the Code? - HELD THAT:- The definition of the word dispute, is in fact, illustrative, the Corporate Debtor is not left with the only option of showing the existence of dispute by way of a pending Suit or Arbitration but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t yet undergone a safety audit and, therefore, was a non-certified weak racking. The Petitioner itself requested IOCL not to use the system any further as the same has not been certified for safe use . The Petitioner ends the letter by saying that Hope u find this in order and would ensure that the safety alert being raised is taken seriously and necessary correctives are undertaken without any further delay. The Bench notes that instead of rectifying the defective work, the Petitioner abandoned the Haldia project and did not carry out any work on the project. 15. The Bench also notes that both the work orders required 100% completion of the work as a pre-condition for payment. Admittedly, the project has not been completed and that is the reason that the Petitioner cannot claim the payment for such defective and incomplete work. The Bench also notes that demand notice was issued by the Petitioner on 23.10.2019. However, there are genuine pre-existing disputes much prior to the issuance of the demand notice. It is well settled that an applicant u/s 9 of the IBC is required to be dismissed if genuine dispute exists between the parties. In recent Judgment of Hon'ble Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the end user i.e., Indian Oil Corporation Ltd. (IOCL) at Haldia, West Bengal and Bongaigaon, Assam respectively. A Purchase Order dated 18/05/2017, for the supply of Multitier Heavy Duty Shelving amounting to Rs.1,43,94,240/- was issued for the Haldia Project along with a corresponding Work Order dated 18/05/2017, for the installation of the Multitier Heavy Duty Shelving amounting to Rs.8,05,000/-. The payment terms for Purchase Order inter alia comprised of 30% advance along with Advance Bank Guarantee , 60% against Letter of Credit (LC) before dispatch and 10% against commissioning. For the Project at Bongaigaon, a distinct Purchase Order dated 01/06/2017, for the supply of Multitier Heavy Duty Shelving amounting to Rs.83,40,030/- accompanied with Work Order bearing No. SEE/BJ/WO-038/2017-18 dated 01/06/2017, for the installation of the Multitier Heavy Duty Shelving amounting to Rs.4,60,000/- were issued by the Respondent. The payment terms for the Purchase Order mirrored the Haldia site i.e., 30% advance along with Advance Bank Guarantee , 60% against LC before dispatch and 10% against commissioning and the payments terms for the Work Order was identical to the terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt and requested the Appellant to deploy an experienced engineer for rectification of the same. On December 20, 2018, the Appellant addressed a letter to IOCL regarding the safety of the Godrej Racking System installed at the IOCL factory. It was pointed out that the racking material which was delivered, was lying outside in the open without adequate protection and exposed to direct rain and dust. The Appellant also stated that the same should be used after a safety check to avoid any mishaps. On December 27, 2018, the Appellant addressed a letter to IOCL that the request to start work as mentioned in the letter dated 27/10/2018 has not been issued. Thereafter vide an email dated 14/01/2019, the Appellant informed EIL that it would not be possible for the Appellant to execute the work without a formal Purchase Order from IOCL. On 11/07/2019, the Appellant addressed an email to the Corporate Debtor that as per the Purchase Order terms, the advance payments of only Rs.11,25,000/- was made (which is only to be 9% of the Order Value) against a total due of Rs.37,63,200/- and that Rs.1,40,74,240/- was overdue since last more than two years and that there was no response from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellant with offers and counter offers having been exchanged. It was further submitted that after rounds of negotiations, the Appellant had finally accepted the amounts offered by IOCL and that there was absolutely no privity of contract between the Corporate Debtor and the Appellant subsequent to 2018 and that disputes were raised by IOCL which required rectification by the Appellant only. 4. The main point for consideration is whether there were any Pre-Existing Disputes between the Corporate Debtor and the Appellant herein/ Operational Creditor and whether the Adjudicating Authority was justified in dismissing the Section 9 Application. 5. Learned Sr. Counsel for the Appellant drew our attention to the Purchase Order issued by the Appellant to the Corporate Debtor to specify that the payment terms are 30% advance payment, 50% against LC before dispatch and 10% against commission. 6. For better understanding of the case, the letter dated 23/01/2018 addressed by IOCL to the Appellant is being reproduced as hereunder: (Emphasis Supplied) 7. From the aforenoted letter, it is clear that the Corporate Debtor was undergoing financial crunch on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Kirusa Software Pvt. Ltd. (2018) 1 SCC 353, where in the Hon ble Apex Court has observed as follows:- 40. It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the existence of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the dispute is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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