TMI Blog2022 (6) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... ment terms, 'sixty days from the date of Invoice'. However, the Respondent-Corporate Debtor issued the Annexure - 11(G) Purchase Order dated 25.09.2018 for a total amount of Rs. 9,52,83,286/- out of which the NRE Costs are Rs. 6,21,055/- and under the payment term 'sixty days from the date of Invoice'. It is not in dispute that since the products were not supplied to the Respondent-Corporate Debtor, no Invoice was issued by the Petitioner and hence the payment term of 60 days from the date of Invoice has no relevance. The Petitioner-Operational Creditor failed to prove the debt and default on the part of the Respondent-Corporate Debtor - Petition dismissed. - C. P. (IB) No. 49/BB/2021 - - - Dated:- 25-5-2022 - Ajay Kumar Vatsavayi, Member (J) And Manoj Kumar Dubey, Member (T) For the Appellant : C.K. Nandakumar, Sr. Advocate and Sushanth Venkatesh Pai, Adv. For the Respondents : Arjun K. Perikal, Adv. ORDER Per : Ajay Kumar Vatsavayi, Member (J) 1. The present petition is filed under section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'IBC/Code') r/w Rule 6 of the Insolvency and Bankruptcy (Applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Debtor cancelled or rescheduled the Purchase Order/s as the material so procured would be obsolete for the Operational Creditor in the event that the Corporate Debtor failed to honour its commitments. This was clearly indicated in the terms and conditions of the Quotation dated 12.09.2018 shared by the Operational Creditor with the Corporate Debtor. iii.) Thereafter, the Operational Creditor and Corporate Debtor had several rounds of negotiations with each other. The Corporate Debtor agreed with the terms and conditions stipulated in the above-mentioned Quotation and accordingly issued a Purchase Order dated 25.09.2018 bearing No. Vanu/2018-19/007 for supply of 1000 Nos. of VA 20001-0009, NRE Cost-PCB Tooling and excess material cost amounting to Rs. 9,52,83,286/- (Rupees Nine Crores Fifty-Two Lakhs Eighty-Three Thousand Two Hundred Eighty Six only). iv.) However, right from the outset the Corporate Debtor defaulted on its obligations and failed to make payment of the advance amount of Rs. 2,28,62,374.63/- (Rupees Two Crores Twenty-Eight Lakhs Sixty-Two Thousand Three Hundred Seventy Four and Sixty-Three Paise only) and therefore the contract could not go further. In f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rational Creditor reconciled its accounts and informed the Corporate Debtor vide its email dated 12.02.2020 that the Corporate Debtor was due and liable to pay a sum of USD 5,96,003 equivalent to sum of Rs. 3,03,42,000/- (Rupees Three Crores Three Lakhs Forty-Two Thousand only). It is significant to mention that there has been no reply from the Corporate Debtor till date to the said email which yet again demonstrates its conduct of delaying and denying the payment that it is legitimately and rightfully due to make to the Operational Creditor. x.) Hence, the Operational Creditor was constrained to issue a Demand Notice in Form-3 as contemplated under Rule 5 of the Insolvency and Bankruptcy (AAA) Rules, 2016 r/w section 8 of the Code. The said Demand Notice dt. 15.10.2020 was issued by the Operational Creditor to the Corporate Debtor on 16.10.2020 vide RPAD and it was served upon the Corporate Debtor on 20.10.2020. Thus, the ten days' period expired on 30.10.2020. Despite receiving the same, the Corporate Debtor failed to make any payment whatsoever towards the amount due and payable by it to the Operational Creditor and also, no notice of dispute has been received till date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, the Respondent has clearly disputed the dues alleged by the Operational Creditor, and despite the same the Operational Creditor filed the instant Application. iv.) It is contended that the Demand Notice dated 15.10.2020 u/s. 8 of the Code was received at the Corporate Debtor office only on 20.10.2020, when there were lockdown conditions prevailing across the country and the Respondent's offices were completely shut down and remained inoperative. Accordingly, the Respondent did not have any opportunity of informing the Operational Creditor regarding the existing dispute against the sums demanded in the Demand Notice. v.) Further, the current application filed by the Petitioner is incomplete on account of non-production of any invoice raised on the Respondent. In fact, no invoice has ever been raised by the Petitioner on the Respondent till date against which payment can be said to be due to the Petitioner. As per the terms of the Respondent Purchase Order, any payment was only to be made to the Operational Creditor against an invoice and within sixty days of such invoice. In the absence of any invoice from the Operational Creditor, no amount became payable and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. However, the Operational Creditor, has not delivered any contracted deliverable or finished product to the Respondent under the Respondent Purchase Order and accordingly has not raised any invoice on the Respondent either. The Respondent has also offered to source the built units from the Operational Creditor as contracted, even if the end-user, i.e. BSNL is not procuring the same, but the Operational Creditor has not been able to source the components required for completing the deliveries till date. In view of this, no amount becomes payable to the Operational Creditor as claimed for or in any other manner whatsoever. viii.) It is contended that the nature of the contracted deliverables is not such that the components or parts can be sourced from one vendor and the supply of finished goods from such sourced components can be awarded to another vendor. The Respondent Purchase Order was necessarily a turn-key job awarded to the Operational Creditor, which it has failed to complete. ix.) It is further contended that the Respondent has been fully committed to the completion of its contractual obligations under the Respondent Purchase Order and also enabling fulfillment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 05.11.2019 and revised vide email dated 12.02.2020 shows that the amount to be paid was not determined and underwent serious reconsideration. Under such circumstances, it does not lie with the Operational Creditor to claim such disputed and undetermined amount as a debt due to it. The said claim is disputed by the Respondent on aforestated grounds. Further, the Operational Creditor has claimed an amount of Rs. 228,62,374.63/- without any contractual or legal basis. The documents produced by the Operational Creditor on record clearly state that advance was only towards an amount of Rs. 6,21,055/- and the claim of the Operational Creditor ought to be reduced to that extent. xiii.) It is submitted that the documents that the Operational Creditor has claimed reliance on with respect to claiming that the Respondent has acknowledged the debt are being read without the correct context and there is no express acknowledgement of the debt from the Respondent. Further, the Respondent does not owe any sums of money to the Operational Creditor and the same is disputed by the Respondent herein. 5. In response to the aforesaid objections, the Operational Creditor vide its rejoinder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pared to the amount claimed in the Demand letter dated 05.11.2019, as the Operational Creditor adjusted the value of some stock which could be put to use in other projects and the value of the stock wherever it could return the same to the suppliers by cancelling the Purchase Orders raised on them. The averment of the Corporate Debtor that the difference in the amounts claimed in the Demand Letter dated 05.11.2019 and the Demand Notice dated 15.10.2020 and email dated 12.02.2020 would show that the amount due is not crystallised is a false averment. v.) The Demand Notice was served at its registered office on 20.10.2020. The lockdown restrictions had been relaxed to a large extent in October, 2020 and the existence of such lockdown restrictions as a reason for not having replied to the Demand Notice is untenable. In any event, the Demand Notice having been issued by email as well to the Directors of the Corporate Debtor on 21.10.2020 is yet another ground on which the untenable defence of the Corporate Debtor for not having replied fails. vi.) The Quotation dated 12.09.2018 unequivocally stipulates that a sum of Rs. 2,28,62,374.63/- was payable as advance by the Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Corporate Debtor failed to make payment of the advance amount. Thus, the parties have acted in furtherance of the Quotation dated 12.09.2018 and the Corporate Debtor cannot back-track on its obligations at this point. The Operational Creditor, after adjusting for the material that it could use in other projects and return to the suppliers, wherever possible, so as to reduce the liability of the Corporate Debtor, communicated the cost and quantity of such material to the Corporate Debtor vide its email dated 12.02.2020, to which there was no reply. Subsequent to the issue of Demand Notice in Form-3 on 15.10.2020, the Corporate Debtor neither replied within the stipulated period of ten days or anytime thereafter nor has it notified any pre-existing dispute till date. Thus, there is a deemed admission of the liability. The learned Counsel for the Operational Creditor, in support of his submissions, has relied upon the following decisions: i.) Consolidated Construction Consortium Ltd. vs. Hitro Energy Solutions Pvt. Ltd.; (2022 SCC Online SC 142) ii.) Innoventive Industries Ltd. vs. ICICI Bank: (2018) 1 SCC 407; iii.) Pedersen Consultants India Pvt. Ltd. vs. Nitesh E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... editor has reused some of the stock for other projects, and this in turn has reduced the claim amount. It is however clarified that the said contention is an afterthought, and the reason the Operational Creditor had not crystalized the alleged claim is due to the fact that the Operational Creditor was well aware that no amounts were payable, and therefore it could attempt to browbeat the Corporate Debtor into paying some amounts by reducing its claim. iv.) A bare perusal of the workings (Annexure II-d of the Petition) would elucidate that the alleged total due amounts to Rs. 5,71,15,000/- (excluding the interest payable). However, the claim made in the Petition is Rs. 3,03,42,000/-, which clearly evinces that the amount alleged is not agreed and finalized between the parties to become due and payable. v.) The Purchase Order was subject to document validation and no advance was paid to the Operational Creditor to start production. The Corporate Debtor only asked the Operational Creditor to tie-up with the vendors and did not ask for Operational Creditor to place orders and procure materials but only to contact its vendors and enquire if the required materials were availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Sushanth Venkatesh Pai, learned Counsel for the Petitioner/Operational Creditor and Shri Arjun K. Perikal, learned Counsel for the Respondent/Corporate Debtor and carefully perused the pleadings on record. 10. The Hon'ble Supreme Court of India in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited, 2017 1 SCC Online SC 353 observed as under: 34. 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 Rs. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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