TMI Blog2022 (9) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... d rightly rejected the claim of the Appellant. The impugned order passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench Court-V) is hereby affirmed. The Appeal is hereby dismissed. - Company Appeal (AT) (Insolvency) No. 742 of 2020 - - - Dated:- 15-9-2022 - [ Justice Anant Bijay Singh ] Member ( Judicial ) And [ Ms. Shreesha Merla ] Member ( Technical ) For the Appellant : Mr. Krishnendu Datta , Sr. Advocate with Ms. Anjali Anchayil , Ms. Avni Sharma and Ms. Mehak Khurana , Advocates For the Respondent : Mr. Mayan Prasad , Advocate JUDGMENT Justice Anant Bijay Singh ; The Appellant preferred this Appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 (for short IBC) being aggrieved and dissatisfied by the order dated 15.07.2020 passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench Court-V) in Company Petition (IB) No. 2817/ND/2019, by which the Adjudicating Authority passed the following orders: 14. So far the contention of the Corporate Debtor that the matter may be referred to the Arbitration under Section 8 of the Arbitration and Conciliation Act is concerned, as we have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to supply the Material to the Respondent as specified in such purchase orders. iv) Further case is that in relation to each purchase order for the supply of the Material, the Appellant would raise invoices on the Respondent in respect of the INR amount of the provisional price payable by the Respondent with respect to deliveries of Material under such purchase order. In accordance with the terms of the MSA, such invoices issued by the Appellant for the supply of Material were required to be paid by the Respondent no later than 30 days from the date of the relevant invoice. v) Further case is that under the terms of the MSA, the Respondent was required to pay interest on the invoice amount at the rate of 7.5% per annum (compounded monthly) for the period starting from and including, the relevant delivery date and including the date on which the invoice amount was paid. If any invoice amount or part thereof was not paid by the Respondent within the timelines set out in the preceding paragraph, the Respondent was liable under the terms of the MSA to pay default interest on the unpaid amount at the rate of 4% per annum from (and including) the due date for payment to (and inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Agreement was extended to 15.05.2019. However, the Respondent failed to make payment of the outstanding amounts to the Appellant for the supply of copper cathodes in accordance with the terms of the extension notice. ix) Further case is that on 24.09.2019 (Annexure A/6 of the Appeal), the Appellant through its advocates, issued a demand notice under the Code on the Respondent calling upon it to pay the Appellant an amount of Rs. 64,13,59,330/. This amount consisted of the total outstanding amount under the MSA as on 15.05.2019 and interest on the aforesaid amount for the period from 16.05.2019 to 24.09.2019, the total some of which was acknowledged to be due and owing by the Respondent to the Appellant under the Settlement Agreement. Thereafter, in the reply the Respondent denied that it owed any amount to the Appellant. This was in complete contradiction to the Respondent's own position in the /settlement Agreement and its correspondence with the Appellant. The Respondent had as late as 09.05.2019 itself acknowledged, as per its calculation that an amount of Rs. 40.24 crores were due and payable by it to the Appellant. x) Further, the Appellant filed the Application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of INR 63.81 crores as on 31.08.2018 in the Settlement Agreement. The Respondent has subsequently in an email dated 09.05.2019 (Annexure A8, Vol- II of the Appeal), acknowledged that as per its own calculations, an amount of INR 40.25 crores is due and payable by it to the Appellant. 8. It is further submitted that the Adjudicating Authority while dismissing the Application filed by the Appellant under Section 9 on the simpliciter ground that unpaid amounts under a Settlement Agreement do not constitute operational debt under Section 5(21) of the IBC is erroneous. Based on these submissions the impugned order is fit to be set aside and the Appeal be allowed. 9. The Ld. Counsel for the Respondent during the course of arguments and in his reply along with written submissions submitted that the Appellant has filed the Section 9 Application in respect of claims arising under the Settlement Agreement dated 20.11.2018 and not under the MSA dated 27.01.2016. As per the pleadings of the Appellant before the Tribunal the cause of action for the application arose on the Corporate Debtor s alleged default in making payments under the Settlement Agreement. In this connection re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that only exposure amount was to be reduced by 30.04.2019 and the amount did not become due and payable. Pertinently, the Appellant has not demanded the payment of the outstanding amount by the said email. It is an admitted position that as on 15.05.2109, the credit exposure was not beyond USD 7.5 million. Therefore, the Appellant has defaulted on 15.05.2019 is without merit. 13. It is further submitted that under Section 9 of the Code, an Application can be filed only upon the occurrence of a default. Section 3(21) of the Code defines default to mean non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be. 14. The Ld. Counsel for the Respondent relying on the judgment of Hon'ble Supreme Court in the case of Kesoram Industries Cotton Mills Vs. Commissioner of Wealth Tax, reported in (1966) 2 SCR 688 . In para 20, explains as follows: ..... Standing alone, the word 'debt' is as applicable to a sum of money which has been promised at a future day as to a sum now due and payable. If we wish to distinguish between the two, we say of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Principal stands revised to INR 67,43,99,745/- as at 31 August 2018. It is further clarified that any purchases of material made by TDT after 28th February 2018 up until the date of this Settlement Agreement have been on a non-credit basis only. 5. TDT shall make payment of the Outstanding Principal together with the interest (set out at Clause4 above) and/or MTM (together the Outstanding Amount ) to Trafigura into its designated bank account as follows: a. TDT shall make any and all payments to Trafigura as necessary in order to reduce the Outstanding Amount to INR 52,50,00,000/- by 30 November, 2018 (the First Instalment ); and b. In the event that TDT fails to make the First Instalment within the timeframe set out above, the entire outstanding portion of the Outstanding Amount shall become immediately due ad owing, and Trafigura shall have the right to pursue TDT for that debt and Trafigura shall not be obliged to make any further supply of Material under the MSA; and c. In the event that the Parties fail to conclude a further contract for the supply of material for 2019 by 21 December 2018, TDT shall make any and all payments to Trafigura as necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X
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