TMI Blog2022 (12) TMI 612X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2016 of Rs. 8,170/- were asked for by email dated 03.06.2016 which also said that subsequent payment has to be made with 18% interest. Paragraph 9 further gives a details of happening where the Operational Creditor denied to collect the goods and settlement was entered there between the parties that Operational Creditor shall not raise any demand of payment. When we look into the contents of allegations made in the Reply Notice, it is clear that Reply notice raises substantial and genuine issues to oppose the claim of the Operational Creditor s amount due. - Present is a case where it cannot be said that defence taken by the Corporate Debtor in Reply Notice is a moonshine defence unsupported by any evidence. Corporate Debtor having raised genuine disputes by sending a Reply Notice to the Demand Notice, the Adjudicating Authority ought not to have admitted the Section 9 Application. Appeal allowed. - Company Appeal (AT) (Insolvency) No. 1203 of 2022 - - - Dated:- 12-12-2022 - [ Justice Ashok Bhushan ] Chairperson , [ Dr. Alok Srivastava ] Member ( Technical ) And [ Mr. Barun Mitra ] Member ( Technical ) For the Appellant : Mr. Manish Paliwal , Ms. Megha Yada ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Corporate Debtor raised dispute regarding supply of poor/deteriorated quality products and requested to take back the same. The goods however were not taken back and an email was sent on 06th April, 2018 and thereafter demand notice was issued on 18th April, 2019 demanding the amount as noticed above. The Adjudicating Authority heard the parties and by Impugned Order admitted Section 9 Application. Aggrieved by the Impugned Order, the Appellant has come up in this Appeal. 3. Learned Counsel for the Appellant challenging the Order contends that no amount is due on the Corporate Debtor and the demand notice was mala fide issued. It is submitted that accounts between the parties were settled upto 31st March, 2016 and thereafter two purchases made on 25th May, 2016 were duly paid for and the last transaction with regard to which invoice dated 2nd June, 2016 was issued by Operational Creditor was not paid for, on account of quality issues and Corporate Debtor requested the Operational Creditor to take back the entire goods which was not taken back. There was no agreement between the parties to pay any interest, in any view of the matter. Email dated 3rd June, 2016 which was sent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor within a period of 10 days of the receipt of the Demand Notice bring to the notice of the Operational Creditor existence of dispute, if any. Section 8 of the Code is as follows: Section 8: Insolvency resolution by operational creditor.- (1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debt or copy of an invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed. (2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational creditor- (a) existence of a dispute, [if any, or] record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute; (b) the [payment] of unpaid operational debt- (i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or (ii) by sending an attested copy of record that the operational creditor has enca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r notice of the dispute under Sub-Section (2) of Section 8. 10. Now coming to the facts of the present case, after demand notice sent by the Operational Creditor on 18th April, 2019, Reply dated 01st May, 2019 was sent by the Corporate Debtor disputing the demand and categorically mentioning that no debt is due on the Corporate Debtor and all the accounts have been settled between the clients. 11. As noted above, Section 9(5)(ii) contemplates that Adjudicating Authority shall reject the Application if notice of dispute has been received by the Operational Creditor or there is record of dispute in the Information Utility. The object and purpose of IBC is to reorganize and revive the Corporate Debtor. Section 9 Application is not contemplated to decide the dispute between the parties regarding the operational dues. The law on the subject has been categorically laid down by the Hon ble Supreme Court in [2018] 1 SCC 353 Mobilox Innovations Private Limited Vs. Kirusa Software Prviate Limited . In Paragraph 33 of the Judgement, following has been laid down: What is important is that the existence of the dispute and/or the suit or arbitration proceeding must be pre-existing i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reiterated by Hon ble Supreme Court in [(2021) 10 SCC 483] Kay Bouvet Engineering Limited Vs. Overseas Infrastructure Alliance (India) Pvt. Ltd. where in paragraph 21, Hon ble Supreme Court again reiterated following: 21. It is thus clear that once the Operational Creditor has filed an application which is otherwise complete, the adjudicating authority has to reject the application under Section 9(5)(ii)(d) of IBC, if a notice has been received by Operational Creditor or if there is a record of dispute in the information utility. What is required is that the notice by the Corporate Debtor must bring to the notice of Operational Creditor the existence of a dispute or the fact that a suit or arbitration proceedings relating to a dispute is pending between the parties. All that the adjudicating authority is required 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 a mere bluster. It has been held that however, at this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase made by my client shall be clear on invoice to invoice basis i.e. the exact amount due shall be paid within three working da6ys or before any purchase is made and as such my client has cleared all the dues until the second last purchase which was made vide invoice no. SNTL/JDR/107 Dt. 25.05.2016 amounting to Rs. 2,13,188/- and invoice no. SNTL/JDR/108 dt. 25.05.2016 amounting to Rs. 2,13,188/- which was received by my client and as such the payment was made on 02.06.2016 of both the invoices together. 6. That my client again placed an order for purchase to you which was received by my client vide invoice no. SMPL/JDR/129 dt. 02.06.2016 amount to Rs. 4,21,633/- on which my client raised dispute that you have flouted the oral understanding and MOU and have again supplied poor/deteriorated quality products and as such my client requested you to take back the same on which you requested my client that if purchase are return back in entirely the image/goodwill of yourself in the market shall be put to stake and your business shall be adversely affected and as such you requested my client you shall take back the product in piecemeal. 17. The reply further refers to Em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her director of my client Sh. Abhilove Agarwal son of Sh. Sushil Agarwal again requested you in the month of October, 2016 to take back the products lying with my client so purchased on 02.06.2016 and it was then that you denied to take back the products and in turn you made an offer to my client to dispose of the entire purchase made on 02.06.2016 as it is very difficult for you to again collect the goods and it was settled between you and my client that you shall not raise any demand of payment and as such after the final communication between you and my client in October, 2016 the business relationship between you and my client came to an end and the entire accounts between you and my client were settled and since then no demand of any south was raised by you thereafter. 12. That you since the settlement of account you had oblique motive and as such sent the Email dated 06.04.2018 just to keep the issue pending in eyes of law and to cheat my client have dishonestly and in fraudulent manner have raised the dispute after more than three years which clearly speak volume about your dishonest conduct and as such my client shall initiated necessary legal action against you for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeding, the Adjudicating Authority is not to enter into final adjudication with regard to existing of dispute between the parties regarding the Operational Debt, what has to be looked into as to whether the defence raises a dispute which need further adjudication by competent court. The nature of dispute raised in Reply Notice required adjudication by Competent Court for finding out the validity of the claim of Operational Creditor. 22. The Adjudicating Authority in its Order although has referred to the Judgement of the Hon ble Supreme Court in the matter of Mobilox Innovations Pvt. Ltd. (Supra) but failed to apply the ratio of the Judgement in the facts of the present case. In the entire discussion, the Adjudicating Authority has not referred to email dated 3rd June, 2016 which was sent by the Operational Creditor to the Corporate Debtor much prior to Demand Notice dated 18th April, 2019. 23. The fact is that last invoice was issued on 2nd June, 2016 which was not paid by the Corporate Debtor. There is no material on record to indicate that any further demand, emails and letters were sent asking for payment of amount of Rs. 4,21,633/- of the last invoice till 06th Apri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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