TMI Blog2023 (6) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Respondent / Corporate Debtor, filed an Appeal, in terms of Section 34 of the Act. The very fact that an Appeal, was filed against the Ex-parte Award, by the Respondent, Prima Facie, there exists a Pre-existing Dispute - It cannot be gainsaid that, for initiating a Corporate Insolvency Resolution Process, against the Corporate Debtor, there ought to be no real dispute, existing between the respective Parties, to the Debt, owed in question. So long as the Arbitration Award, was challenged under the relevant Section of the Arbitration and Conciliation Act, 1996, the Operational Debt, in the instant Appeal, is considered to be under Dispute, as opined by this Tribunal. In so far as the amount awarded in Award, is not Disputed, and in reality, due to efflux of time, the Interest, gets added on the Award Due Amount. As such, the difference in the Amount, mentioned in the Demand Notice, dated 21.02.2019, in the main Petition, and in service Record of Default, with the Information Utility, produced by the Appellant with Affidavit, dated 09.03.2021, will not exhibit any incompatibility, so as to be of any assistance, to the Respondent / Corporate Debtor. This Tribunal, comes to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Respondent filed an Appeal u/s 34 of the Arbitration and Conciliation Act, 1996 before the Hon ble High Court of Delhi, impugning the award, which is still pending. Further, the Respondent herein has sought to procure documents pertaining to the said appeal as well as documents necessary to rebut the claim of the Petitioner herein. However, the said documents are presently in New Delhi and due to the present Covid-related situation, the said appeal and documents connected therewith could not be produced along with the present reply. (2) It is settled law that a Petition u/s 9 of the Code is not maintainable when the arbitral award in question is disputed by way of a Section 34 appeal and the said appeal is pending. They have relied upon the Judgment rendered by Hon ble Apex Court in K. Kishan v. Vijay Nirman Co. (P) Ltd., (2018) 17 SCC 662. (3) The amount claimed under the present Petition by the Operational Creditor is more than the amount claimed in Demand Notice issued by the Petitioner to the Respondent under Rule 5 of the IBC Rules, 2016. The Petitioner, in its demand notice dated 21.02.2019, has alleged that the total amount of debt (or amount claimed to be in de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nexus with the insolvency of the Debtor must exist. Therefore, the Petitioner, invoking of provisions of the Code for implementation of Award and to recover awarded amount is against object of the Code. The Petitioner has not furnished any data prima facie showing that the Respondent has become insolvent, so as to get defence/response from the Respondent. 7. As stated supra, aggrieved by the Award in question, the Respondent has taken steps to carry the matter to the Higher Judicial forum, whereas, the Petitioner failed to take appropriate legal steps to execute the Award in question, except invoking provisions of Code by issuing Demand Notice dated 21.02.2019, wherein, the Petitioner had demanded the Respondent to repay the un-paid operational debt in default, within 10 days. However, the Present Petition has been filed only on 20th June, 2019, after a period of lapse of about 4 months from the date of demand notice that too for implementation of Award dated 29th November, 2018. Therefore, the Petitioner has invoked provisions of the Code, which are supposed to be invoked for bonafide and genuine/justified reasons, in a casual way. And the Petitioner has not explained r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity , propriety and legality of the impugned order , dated 27.04.2021 in CP (IB) No. 276 / BB / 2019, the Adjudicating Authority ( National Company Law Tribunal , Bengaluru Bench), the Learned Counsel for the Appellant / Petitioner / Operational Creditor , submits that the impugned order of dismissal , suffers from legal infirmities , and the same is unsustainable in Law . 4. According to the Learned Counsel for the Appellant / Petitioner / Operational / Creditor , the Respondent / Corporate Debtor , was desirous of occupying and operating a Food Court , under the name and style of UPSOUTH , in the Complex, owned by the Appellant , situated at Savoy Greens . 5. It is represented on behalf of the Appellant , that the Respondent / Corporate Debtor , had approached the Appellant , and entered into a Lease / Rent Agreement , dated 09.03.2015 ( Lease Agreement ) with the Appellant , and undertook to occupy space of approximately 250 sq. ft. built up area translated to 1125 sq. ft. of super area to be called Shop 2 at the ground floor along with an additional area of approximately 200 sq. ft. of super area in the basement along with 92 sq. ft of washing ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Payment Methods , which were not feasible and the Appellant, was perforced to move the Hon ble High Court of Delhi, as per Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking for an Appointment of an Arbitrator . 12. The Learned Counsel for the Appellant takes a plea that the Respondent, had not produced any details / documents , showing the pendency of the Application , under Section 34 of the Act, but the Adjudicating Authority , after Hearing the Parties , had adjourned the matter, reserving it For Orders , and gave the Respondent , an opportunity , to file its Objections , after the conclusion of arguments , without providing an opportunity , to the Appellant , to respond to the Objections . 13. The Learned Counsel for the Appellant, advances an argument that the Adjudicating Authority , had wrongly concluded that the Appellant, had invoked the Provisions of the I B Code, 2016, for implementing the Award , passed by the Arbitral Tribunal , and this was against the Object of the Code . 14. The Learned Counsel for the Appellant submits that, it is apparent that the Award , passed in favour of the Appellant , is in the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al , by setting aside the impugned order , dated 27.04.2021, passed by the Adjudicating Authority ( National Company Law Tribunal , Bengaluru Bench) in Comp. App (AT) (CH) (INS.) No. 246 / 2021. Appellant s Decisions : 21. The Learned Counsel for the Appellant, refers to the decision of the Hon ble Supreme Court in K. Kishan v. Vijay Nirman Company Private Limited (vide Civil Appeals No. 21824 of 2017 with 21825 of 2017 dated 14.08.2018), reported in 2018, 17 SCC Page 662, at Spl. Pgs.670, 671-673, 675 and 676, wherein, at Paragraphs, 14, 15, 19 to 22, 27 to 31, it is observed as under: 14. A reading of Section 9(5)(ii)(d) would show that an application under Section 8 must be rejected if notice of a dispute has been received by the operational creditor. In the present case, it is clear on facts that the entire basis for the notice under Section 8 of the Code is the fact that an arbitral award was passed on 21-7-2017 against the Appellant. As has been pointed out by us, this clearly appears from the gist of the case that was filed along with the insolvency petition. The fact that the reply of 16-2-2017 to the notice given under Section 8 was within 10 days, and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actors mentioned in Section 9(5). 21. In para 38, this Court cautioned: (Mobilox Innovations case3, SCC p. 396) 38. We have also seen that one of the objects of the Code qua operational debts is to ensure that the amount of such debts, which is usually smaller than that of financial debts, does not enable operational creditors to put the corporate debtor into the insolvency resolution process prematurely or initiate the process for extraneous considerations. It is for this reason that it is enough that a dispute exists between the parties. Finally, the law was summed up as follows:- (SCC p. 403, para 51) 51. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37 has taken place. 28. We may hasten to add that there may be cases where a Section 34 petition challenging an arbitral award may clearly and unequivocally be barred by limitation, in that it can be demonstrated to the Court that the period of 90 days plus the discretionary period of 30 days has clearly expired, after which either no petition under Section 34 has been filed or a belated petition under Section 34 has been filed. It is only in such clear cases that the insolvency process may then be put into operation. 29. We may hasten to add that there may also be other cases where a Section 34 petition may have been instituted in the wrong court, as a result of which the petitioner may claim the application of Section 14 of the Limitation Act to get over the bar of limitation laid down in Section 34(3) of the Arbitration Act. In such cases also, it is obvious that the insolvency process cannot be put into operation without an adjudication on the applicability of Section 14 of the Limitation Act. 30. With regard to the submission of learned counsel for the respondent, that the amount of Rs.1.71 Crores stood admitted by Mr. Banerji s client, as was recorded in the ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority. 22. By following the above stated legal provisions and perusal of the material available on record, it is evident that the Petitioner / Operational-Creditor has provided its services of cargo by transporting and shipping the goods of Corporate Debtor, i.e. bulk salt from Kandla Port (India) to Chittagong Port (Bangladesh). Since, the Corporate Debtor has failed to pay the due amount towards demurrage and transporting charges, which lead to an Arbitration Proceedings and thereby an Arbitral Award has been passed in favour of the Petitioner and against the Corporate Debtor. Hence, we are of the view that the claimed amount of demurrage which has been awarded is still unpaid. Hence, it has become due and payable and a default of Arbitral amount can be treated as good as an Operational Debt. Thus, the default of debts has been occurred and is well established. Hence, a Corporate Insolvency Resolution Process ( CIRP ) can be triggered in respect of the Corporate Debtor Company. That apart, the present L.B. Petition is filed through its authorised signatory, Mr. Rohit Parmar of the Petitioner Company. Hence, its filing is found to be in order and well within the limit. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting Authority , the Respondent / Corporate Debtor , filed its Objections , by taking a stand that the Defaulted Sum , purportedly arose from the Award , dated 29.11.2018, made in Arbitration Proceedings , in reference No. DAC/1854/12-17, by the Arbitrator , Delhi International Arbitration Centre, and the Award , came to be passed in an Ex-parte manner. 29. The Respondent / Corporate Debtor, preferred an Appeal , before the Hon ble High Court of Delhi (as per Section 34 of the Arbitration and Conciliation Act, 1996), assailing the Award . 30. The primordial question that arises for determination in the instant Appeal , is that whether the main CP (IB) No. 276 / BB / 2019 (filed by the Appellant / Petitioner / Operational Creditor ), is per se maintainable , for the purpose of executing the Award . 31. By virtue of the Arbitration Clause , as per Agreement , the Appellant , had secured the Ex-parte Award , and as against the same, the Respondent / Corporate Debtor , filed an Appeal , in terms of Section 34 of the Act. The very fact that an Appeal , was filed against the Ex-parte Award , by the Respondent, Prima Facie , there exists a Pre-exis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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