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TMI Blog2023 (7) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... ed', into the 'Corporate Insolvency Resolution Process', in an 'Application', filed under Section 9 of the I & B Code, 2016, r/w Rule 6 of Insolvency and Bankruptcy (Application to Adjudicating Authority), Rules 2016, by the '1st Respondent / Operational Creditor / Petitioner'. 2. It is represented on behalf of the Petitioner /Appellant, as 'Third Party', the 'Petitioner / Appellant', has preferred the IA No. 23 / 2023 in Comp. App (AT) (CH) (INS.) 11 / 2023, seeking 'Leave', to file the instant Comp. App (AT) (CH) (INS.) 11 / 2023, before the 'Appellate Tribunal'. 3. It is the version of the Petitioner / Appellant, that numerous 'contentious points' / 'controversies', exists between the 'inter se Parties', including (a) Non production of test certificates; (b) Non submission of self inspection reports; (c) Poor quality of goods and the consequent non lifting of goods by BGR Energy Systems Ltd; (d) Legal Notice dated 27th April 2019 and corresponding Reply Notice dated 12th May 2019, which Reply Notice clearly disputed any liability to the 1st Respondent much prior to the date of Issuance of Notice under Section 8 of the Code and (e) No contractual obligation for interest and cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Resolution Process' starts in such case one of the aggrieved party being the 'Corporate Debtor' has a right to prefer an appeal under Section 61, apart from any other aggrieved person like Director(s) of the company or members, who do not cease to be Director(s) or member(s), as they are not suspended but their function as 'Board of Director(s)' is suspend. 19. The 'Corporate Debtor' if represented before the Adjudicating Authority through its Board of Directors or any person authorised by Board of Director or its officers, for the purpose of preferring an appeal, no objection can be raised that the 'Corporate Debtor' cannot appear through its Board of Directors or authorised person or officer through whom 'Corporate Debtor' represented before the Adjudicating Authority. Once a 'Corporate Debtor' appeared before the Adjudicating Authority through its Board of Director(s) or its officers or through authorised person and is heard before admission of an application under 'I & B Code', being aggrieved such 'Corporate Debtor' cannot prefer an appeal under Section 61 on the ground that the 'Corporate Debtor' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an 'Interlocutory Application / Petition' , filed by him, as per Rule 31 of the NCLAT Rules, 2016, by the 'Appellate Tribunal', exercising its 'Discretion' and 'Inherent Power', in terms of Rule 11 of the NCLAT Rules, 2016. Viewed in that perspective, the filing of IA No. 23 / 2023 in instant Comp. App (AT) (CH) (INS.) 11 / 2023 (seeking 'Leave', to prefer the instant 'Appeal', by the 'Promoter' / 'Shareholder' of the 'Corporate Debtor' / 'Third Party', is perfectly 'maintainable' in the 'eye of Law', and the same is 'allowed', for meeting the 'ends of Justice'. No costs. IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Company Appeal (AT) (CH) (INS.) No. 11 of 2023 JUDGMENT (Physical Mode) Justice M. Venugopal, Member (Judicial): Comp. App (AT) (CH) (INS.) No. 11 / 2023: The 'Appellant / Promoter / Shareholder' of the 'Corporate Debtor' / 'M/s. Vantage Machine Tools Private Limited', has preferred the instant Comp. App (AT) (CH) (INS.) 11 / 2023, as an 'Aggrieved Person', in respect of the 'impugned order', dated 28.11.2022, passed by the 'Adjudicating Authority', 'National Company Law Tribunal', Amaravati Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with regard to the BGRESL rejecting the materials in the first place and rejecting the material on the ground of the defective raw material in the second place, it cannot be said that the quality of the material was the reason for the BGRESL not lifting the material from the CD. Apart from that, a letter addressed by the CD to the Chairman and Managing Director APGENCO does not anywhere spell that the BGRESL has refused to lift the material on the ground of defective raw material. Moreover, it says that the CD executed works as a sub-contractor to M/s. BGR Energy Systems Limited for the works allotted by APGENCO. It is stated that the CD has to receive an amount of Rs.4.25 Lakhs towards settlement of bills for executed and completed works and that they have contacted M/s.BGR Energy Systems Limited, but there was no positive response. It is mentioned that they are facing severe liquidity crises as most of the funds were stuck up in the bills. It is only mentioned that material worth Rs.40 tonnes for which they have completed the allotted works is waiting for lifting from the end to M/s.BGR Energy Systems Limited. It is requested that the APGENCO advises and directs the officials o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 'Company Petition', and appointed a 'Interim Resolution Professional', and declared 'Moratorium', etc. Appellant's Submissions : 3. According to the Learned Counsel for the Appellant, the 'impugned order', dated 28.11.2022, passed by the 'Adjudicating Authority', 'National Company Law Tribunal', Amaravati Bench, in CP (IB) No. 51 / 9 / AMR / 2021, in admitting the Section 9 Application, filed by the 1st Respondent / Operational Creditor / Petitioner, is an 'illegal' one, because of the fact that numerous 'Pre-existing Disputes', between the 'Parties', were not taken note of in proper and real perspective. 4. The Learned Counsel for the Appellant submits that there is 'no evidence on record', to exhibit that the 'Test Certificates', were given to the 'Corporate Debtor', in compliance with the conditions in the 'Purchase Order', but, this vital fact was not taken into consideration, by the 'Adjudicating Authority / Tribunal', at the time of passing the 'Impugned Order'. 5. The Learned Counsel for the Appellant proceeds to point out that the emails dated 26.09.2017 and 04.10.2017 of the Corporate Debtor wherein, a request was made for 'Test Certificates', but, they were not con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yalakshmi Steel Traders'; 'M/s Shine Steels', 'M/s. WHM Visakhapatnam'; and 'M/s. BM BSO', Vishakapatnam, and they were dated before the 'Dates of Purchase Order', thereby, showing that they do not relate to the 'Corporate Debtor. 12. It is pointed out on behalf of the Appellant that the main Contractor, namely BGR Energy Systems Limited, had lifted only 85 MT out of 300 MT of Steel ordered, as BGR Energy System Ltd was unwilling to lift steel for which Test Certificates were not produced. Moreover, BGR Energy Systems Limited were of the view that the material supplied, by the 1st Respondent had not matched the 'quality standards', prescribed by them, which were back-to-back applicable to the 1st Respondent and were set out in the 'Purchase Orders', issued to the 1st Respondent. 13. Continuing further, on behalf of the Appellant, it is pointed out that the 1st Respondent, had approached the 'Corporate Debtor', with a promise that they would produce the 'Test Certificates', that were due and requested the 'Corporate Debtor', to issue a Post Dated Cheque for a Sum of Rs.50 Lakhs, so as to enable them, to finalise their Accounts, for the Financial Year 2018-19, and believing the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... editor 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 the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Mr. Chivers draws attention to Re Bayoil SA [1999] 1 WLR 147, which deals with a case not involving a disputed debt but involving a cross-claim by the company, the subject of the petition or the intended petition, where the amount of the cross-claim exceeds the petition debt. The headnote to Re Bayoil recites the essential facts. The petitioner claimed for freight. The established law is there is no defence of set-off available in relation to a claim to freight. The claim went to arbitration and the arbitrators made an award in favour of the petitioner. The petitioner then presented a petition on the basis of the sum determined by the arbitration award. The company applied for the petition to be dismissed or stayed on the ground that it had a genuine and serious counterclaim in an amount which exceeded the petition debt. It was a matter of detail in that case, which the company put forward to advance its case, that it had not been able to litigate that counterclaim. Later cases discussing Re Bayoil make it clear that the ability, or inability, to litigate the counterclaim is not of the essence of the principle in this case. So I put that on one side......" "32. I therefore have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral 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." 19. The Learned Counsel for the Appellant, adverts to the 'Order' of this 'Tribunal', dated 13.01.2022, in the matter of Sherbahadur D. Yadav v. Rohan Dyes and Intermediates Ltd. (vide Comp. App (AT) (INS.) No. 472 of 2021), wherein, at Paragraphs 8 and 9, it is observed as under: 8. "When the allegations against each other are serious allegations including allegations of offence against each other, we are not convinced by the Appellant that police complaint do not evidence any dispute between the parties. It is to be noted that all the aforesaid complaints are much before initiation of proceedings u/s 9 by the Appellant. The Adjudicating Authority has not committed any error in relying of the facts and materials on record to come to the conclusion that there was pre-existing di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premises, damages to the property were noticed for which the Operational Creditor is claiming damage charges from the Corporate Debtor for the damage caused to articles such as AC, Chairs and Tables, false roofing, flooring, plumbing and carpet based on estimated repair charges. 36. In this case, the question, 'whether lease Rent falls under the category of 'operational debt' or not', loses its significance when the alleged lease rent itself is disputed. The undisputed claim is the sine qua non for initiating CIRP U/S 9 of the Code." 22. The Learned Counsel for the Appellant, refers to the 'Judgment' of this 'Tribunal', dated 24.02.2020, in the matter of Neeraj Jain v. Cloud Walker Streaming Technologies Private Limited (vide Company Appeal No. 1354 of 2019), wherein, at Paragraphs 74 and 75, it is observed as under: 74. "The claims in the heads mentioned above, seeking damages on account of Custom Charges; interest charges; interest amount; and loss on account non-taking of delivery of items imported based on the order and assurance of the Corporate Debtor has not been crystallized, and the Adjudicating Authority under summary jurisdiction cannot adjudicate an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank, MANU/SC/1063/2017 : (2018) 1 SCC 407) (Civil Appeals Nos. 8337 - 38 of 2017). "29. The scheme of Section 7 stands in contrast with the scheme under Section 8 where an operational creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the operational debtor in the manner provided in Section 8(1) of the Code. Under Section 8(2), the corporate debtor can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned in sub-section (1), bring to the notice of the operational creditor the existence of a dispute or the record of the pendency of a suit or arbitration proceedings, which is pre-existing - i.e. before such notice or invoice was received by the corporate debtor. The moment there is existence of such a dispute, the operational creditor gets out of the clutches of the Code. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as under: 4. "The question about existence of a dispute fell for consideration before the Hon'ble Supreme Court in "Mobilox Innovations Private Ltd v. Kirusa Software Private Ltd, MANU/SC/116/2017". Taking into consideration the provisions in the 'I&B Code', the Hon'ble Supreme Court observed and held as follows: - "33. The scheme under Sections 8 and 9 of the Code, appears to be that an operational creditor, as defined, may, on the occurrence of a default (i.e, on non-payment of a debt, any part whereof has become due and payable and has not been repaid), deliver a demand notice of such unpaid operational debt or deliver the copy of an invoice demanding payment of such amount to the corporate debtor in the form set out in Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Form 3 or 4, as the case may be (Section 8(1)). Within a period of 10 days of the receipt of such demand notice or copy of invoice, the corporate debtor must bring to the notice of the operational creditor the existence of a dispute and/or the record of the pendency of a suit or arbitration proceeding filed before the receipt of such notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no repayment of the unpaid operational debt after the invoice (Section 9(5)(i)(b)) or the invoice or notice of payment to the corporate debtor has been delivered by the operational creditor (Section 9(5)(i)(c)), or that no notice of dispute has been received by the operational creditor from the corporate debtor or that there is no record of such dispute in the information utility (Section 9(5)(i)(d)), or that there is no disciplinary proceeding pending against any resolution professional proposed by the operational creditor (Section 9(5)(i)(e)), it shall admit the application within 14 days of the receipt of the application, after which the corporate insolvency resolution process gets triggered. On the other hand, the adjudicating authority shall, within 14 days of the receipt of an application by the operational creditor, reject such application if the application is incomplete and has not been completed within the period of 7 days granted by the proviso (Section 9(5) (ii) (a)). It may also reject the application where there has been repayment of the operational debt (Section 9(5)(ii)(b)), or the creditor has not delivered the invoice or notice for payment to the corporate debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the operational debtor in the manner provided in Section 8(1) of the Code. Under Section 8(2), the corporate debtor can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned in sub-section (1), bring to the notice of the operational creditor the existence of a dispute or the record of the pendency of a suit or arbitration proceedings, which is pre-existing - i.e before such notice or \ invoice was received by the corporate debtor. The moment there is existence of such a dispute, the operational creditor gets out of the clutches of the Code. 30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced. by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is "due" i.e payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39; have already been paid. 6. In view of the fact that there was a dispute between the parties and the decision of the present case is covered by the Hon'ble Supreme Court in "Mobilox Innovations Private Ltd v. Kirusa Software Private Ltd" we have no other option but to set aside the impugned order dated 7th September, 2017 passed in CP (IB) No. 415/KB/2017. The said order is accordingly, set aside." 25. The Learned Counsel for the Appellant, cites the 'Order' of this 'Tribunal', dated 22.11.2019, in the matter of P.M. Mahendran v. Tharuvai Ramachandran Ravichandran & Ors. (vide Comp. App (AT) (INS.) No. 642 of 2019), wherein, at Paragraphs 9, 12 & 13, it is observed as under: 9. "From the documents at page 128, Annexure-A7, a letter from Factum Law Advocates to King and Partridge, Advocates dated 13.11.2018 whereby the Lawyers of Corporate Debtor i.e., M/s A.M. Clean Air Engineering Private Limited replied to the notice dated 25.10.2018 issued by the Operational Creditor under Section 138 of the Negotiable Instruments Act. However, from the letter dated 13.11.2018 at paragraph-7, it is stated that the Operational Creditor did not complete the supply of RTU as agreed. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand notice or invoice, as the case may be. ....." At paragraph 51 it is held: "51. ..... 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." .... [Emphasis supplied] 13. From the aforesaid correspondences it is clear that there is pre-existence dispute with regard to quality and service prior to issuance of Demand Notice. In view of the decision of the Hon'ble Supreme Court and this Appellate Tribunal in the matter of R.S Cottmark (India) Pvt. Ltd. Vs. Rajvir Industries Ltd. in Company Appeal (AT) (Insolvency) No. 653 of 2018, dated 5th August, 2019 the appeal needs to be allowed." 1st Respondent's Contentions: 26. The Learned Counsel for the 1st Respondent / Operational Creditor / Petitioner, submits that the Appellant, had secured a 'Sub-Contract', through Purchase Order Bearing No.350000008275 dated 17.08.2017, for a Sum of Rs.2,12,40,000/- plus GST from BGR Energy Systems Ltd. for supply of 300 MT of 'Fabricated Structural', as per BGRESL technical specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18, the change in 'Composition', was 'registered', and that the Corporate Debtor, had decided to make further part payment of Rs.50,00,000/- through Cheque dated 04.04.2019 and on 11.04.2019, the 1st Respondent had presented the Cheque and the Cheque 'got returned', on 12.04.2019, with an endorsement 'insufficient funds'. 32. The Learned Counsel for the 1st Respondent submits that the 1st Respondent, had issued a Legal Notice on 27.04.2019, under Section 138 of the Negotiable Instruments Act, 1881, to the Corporate Debtor, and a 'Reply', was sent to the 1st Respondent by the 'Corporate Debtor', on 12.05.2019, mentioning that there is 'no Debt payable', since the 'Test Certificates', were not produced. In fact, the Corporate Debtor had consumed the entire lot of 'Goods', supplied by the 1st Respondent and that the 1st Respondent, issued a 'Demand Notice', on 30.07.2021, as per Section 8 of the I & B Code, 2016, and later, the 1st Respondent the CP(IB) No. 51 / 9 / AMR / 2021, before the 'Adjudicating Authority' / 'Tribunal'. 33. The core contention advanced on behalf of the 1st Respondent / Operational Creditor / Petitioner is that, the entire alleged 'Dispute', is a smokescreen, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Wire Products) b. GST : 18% Extra c. Delivery : Immediately as per material priority list d. Payment : 30 days credit after receiving the material e. Inspection : Self Inspection Report signed by you. f. Test Certificate : The above material should be delivered along with test certificate, and in each test certificate you need to mention Heat number, chemical properties and mechanical properties in 'test certificates'. 40. The Learned Counsel for the 1st Respondent, submits that the last Invoice was dated 24.10.2017, and that the 'Period of Limitation' for filing any 'Suit', is 'three years', from the 'Date of Violation of Contract', and hence, any action, sought to be 'invoked', by the 'Appellant', is 'barred by Limitation'. 41. According to the 1st Respondent, email dated 08.02.2019 from 'BGRESL' to the 'Corporate Debtor', reliance being placed by the 'Appellant', was not 'produced', before the 'Adjudicating Authority' / 'Tribunal', and no reasons were furnished, as to why it was not 'produced', and hence, the said 'Document', may not be taken on record, and to be discarded. 42. The Learned Counsel for the 1st Respondent, points out that the 'alleged Letter', dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of a suit or arbitration proceeding filed before the receipt of such notice or invoice in relation to such dispute (Section 8(2)(a)). What is important is that the existence of the dispute and/or the suit or arbitration proceeding must be pre-existing - i.e it must exist before the receipt of the demand notice or invoice, as the case may be. In case the unpaid operational debt has been repaid, the corporate debtor shall within a period of the self-same 10 days send an attested copy of the record of the electronic transfer of the unpaid amount from the bank account of the corporate debtor or send an attested copy of the record that the operational creditor has encashed a cheque or otherwise received payment from the corporate debtor (Section 8(2)(b)). It is only if, after the expiry of the period of the said 10 days, the operational creditor does not either receive payment from the corporate debtor or notice of dispute, that the operational creditor may trigger the insolvency process by filing an application before the adjudicating authority under Sections 9(1) and 9(2). This application is to be filed under Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor has not delivered the invoice or notice for payment to the corporate debtor (Section 9(5)(ii)(c)). It may also reject the application if the notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility (Section 9(5)(ii)(d)). Section 9(5)(ii)(d) refers to the notice of an existing dispute that has so been received, as it must be read with Section 8(2)(a). Also, if any disciplinary proceeding is pending against any proposed resolution professional, the application may be rejected (Section 9(5)(ii)(e)). 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent', between the 'Parties', for the purpose of 'Transferring Title' in 'Goods'. Further, 'Right to reject the Goods', is not equivalent to 'Right for cancelling the Contract'. 48. As a matter of fact, 'Price', means 'Money Consideration', for the 'Sale of Goods', is a 'prime element', in a 'Transaction of Sale'. Moreover, the 'measure' of 'compensation', is the 'difference between the 'Contract Price', and the 'Price', at which, the 'Goods', were finally 'Sold', and 'incidental expenses'. 49. A 'Seller', can 'Claim' as 'Damages', the 'difference between the 'Contract Price', and the Sum 'realised', on 'Resale of Goods', where he has a 'Right to Resale'. 50. However, in case of 'Breach', by a 'Seller', the 'Buyer' might have sued for 'Money' and 'Damages' or for 'Shares' and 'Damages' or for 'Interest' of 'Money' or 'Damages'. Adjudicating Authority / Tribunal: 51. An 'Adjudicating Authority' / 'Tribunal', under the I & B Code, 2016, is not a 'Court of Law', and it does not determine a 'Money Claim' or 'Suit'. Admittedly, an 'Adjudicating Authority' / Tribunal', is not a 'Recovery Forum' or 'Court'. 52. Section 5 (20) of the I & B Code, 2016, defines 'Operational Creditor', m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder 'Particulars of Operational Debt', the 'Total Debt', as on 22.07.2021, was mentioned as Rs.3,04,76,004/-, and the 'Principal Outstanding', was mentioned as Rs.1,53,16,611/-. The interest outstanding, as on 22.07.2021, was Rs.1,51,59,393/-, and that the total Outstanding as on 22.07.2021, was Rs.3,04,76,004/-. 59. Before the 'Adjudicating Authority' / 'Tribunal', the 'Corporate Debtor' / 'M/s. Vantage Machine Tools Private Limited', in its 'Counter' to CP (IB) No. 51 / 9 / AMR / 2021, had averred among other things that the 1st Respondent / Operational Creditor / Petitioner, had supplied structural Steel on credit basis, under 18 Invoices from 20.09.2017 to 24.10.2017, for Rs.1,83,16,611/-, with such assurance that the 1st Respondent will share 'Test Certificates', in due course of time, trusting the same, the 'Corporate Debtor', had accepted the material. Also that, the 1st Respondent / Petitioner, had enclosed 'Test Certificates', only to Invoice No.2192 & 2207 dated 20.09.2017 and 21.09.2017, respectively and failed to produce 'Test Certificates', for remaining Invoices. Moreover, the Corporate Debtor, to maintain cordial relationship with the 1st Respondent / Petitioner, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority. When there is a breach of contract, the party who commits the breach does not eo instanti incur any pecuniary obligation nor does the party complaining of the breach becomes entitled to a debt due from the other party. The only right which the party aggrieved by the breach has is the right to sue for damages and this is not an actionable claim." 64. The Corporate Debtor, before the 'Adjudicating Authority' / 'Tribunal', took a stand that the 'alleged Claim', of the 1st Respondent / Operational Creditor / Petitioner, was based on 'misconstruction of facts', 'devoid of merits', and as such, the 'Company Petition', was not 'maintainable in Law', and the same was 'liable' to be 'dismissed'. 65. Before the 'Adjudicating Authority' / 'Tribunal', the 1st Respondent / Operational Creditor / Petitioner', in main CP (IB) No. 51 / 9 / AMR / 2021, had averred that it never gave any assurances to the 'Corporate Debtor', to issue 'Test Certificates' and that the 'whole transactions and the documents', pertaining thereto, do not indicate, that it was transpired between the 'Corporate Debtor' and the 1st Respondent / Operational Creditor that a 'Test Certificate', shall be issued as 'cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was 'no Chief Executive', it is for the 'Corporate Debtor' to explain, how the 'Balance Confirmation', was generated by a person, describing himself as 'Chief Executive' of the Corporate Debtor, through the email of the 'Corporate Debtor'. 71. At this juncture, this 'Tribunal', points out that the 1st Respondent / Operational Creditor / Petitioner, through its Advocates, had issued a 'Registered Legal Notice', dated 27.04.2019, with 'Acknowledgment Due', to the 'Corporate Debtor' / 'M/s. Vantage Machine Tools Private Limited', Sri Potlru Mohana Murali Krishna, Managing Director of Corporate Debtor, Sri Somasekhar Potluru, Director of Corporate Debtor / M/s. Vantage Machine Tools Private Ltd. and Smt. Nandamuri Meena Latha, Director of M/s. Vantage Machine Tools Pvt. Ltd. (Corporate Debtor), wherein, at Paragraph 3, it was mentioned among other things that the 'Corporate Debtor', was liable to pay the remaining balance Sum of Rs.1,53,16,611/- with interest at 24% per annum, for a Sum of Rs.18,25,320/- and in total, the Company was liable to pay Rs.1,71,41,931/-, as on 26.04.2018. In fact, the 1st Respondent / Operational Creditor / Petitioner in the 'Legal Notice', dated 27.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like 'grant of interest', 'rate of interest', is also, in the 'discretion of the 'Court', in a reasonable manner, and the 'exercise of discretion', is to be a 'sound and prudent' one, and not based on any 'arbitrariness' or 'capriciousness', as the case, may be. 78. It is to be remembered that the 'Proceedings', under the I & B Code, 2016, are 'Summary in Character', and that an 'Adjudicating Authority', not being a 'Recovery Fora' or 'Court', (no elaborate enquiry is conducted like that of a 'Regular Trial' of a 'Civil' case, and also, it does not determine, a 'Money Claim' or 'Civil Suit', this 'Tribunal', is of the earnest opinion, that the 'Controversy' / 'Dispute' / 'Claim', in respect of 'Interest', based on 'Privity of Contract' or 'otherwise', has no relevance / significance, if the 'Debt', payable is more than the 'threshold limit' of Section 4 of the I & B Code, 2016, considering the fact that the 'Principal Outstanding', as mentioned in Form 3 of the Demand Notice dated 30.07.2021, was Rs.1,53,16,611/- (which is more than Rs.1 Crore), to be paid by the 'Corporate Debtor' / 'M/s. Vantage Machine Tools Private Limited'. 79. Also that, the 'Dispute', relating to 'Violatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017, the final 'Violation', would be on 24.10.2017, and at this distant point of time, if the 'Appellant' initiates any 'Legal' action, it will be clearly barred by time, in the considered opinion of this 'Tribunal'. That apart, even, in respect of the 'Test Certificates', and the 'Quality of Steel', supplied was not proper, and there is alleged 'Deficiency', admittedly, 'no steps were taken', by the 'Corporate Debtor', to get it 'decided', by the 'Appropriate Forum'. In the absence of the same, the 'Dispute', at best, if it exists, then, at the maximum, it only pertains to a 'Out-of-date Claim', and as such, it is only an 'Otiose' one, as opined by this 'Tribunal'. 87. In regard to the email dated 08.02.2019 (the plea of the 1st Respondent / Operational Creditor is that, it was not produced, before the 'Adjudicating Authority' / 'Tribunal', and it relates to 40 MT, out of 300 MT, which could not be lifted and that too, for the reason that 'Goods Manufactured', by the 'Appellant', was not upto the 'Specifications' of 'BGRESL', it is the stand of the '1st Respondent / Operational Creditor', is that 75 MT of Steel using the same 'raw material', was accepted by 'BGRESL', and in any e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not arise for the purpose of triggering the 'Corporate Insolvency Resolution Process', because of the fact that an initiation of 'Corporate Insolvency Resolution Process', under Section 7 or 9 of the I & B Code, 2016, will not amount to a 'Recovery Proceeding'. 93. It cannot be lost sight off that it is incumbent upon the 'Corporate Debtor', to show that its 'Liability', is in 'Dispute', as to the 'Debt', and not a just demand, made by it, to satisfy certain obligations, on the part of the '1st Respondent / Operational Creditor / Petitioner'. 94. As far as the present case is concerned, the 'Corporate Debtor in its 'Reply', before the 'Adjudicating Authority' / 'Tribunal', took a plea, that it was not in receipt of the 'Demand Notice', dated 30.07.2021, issued by the 1st Respondent / Operational Creditor / Petitioner. But, the 1st Respondent / Operational Creditor / Petitioner's stand was that the 'Notice', was addressed to the 'Corporate Debtor' / 'Company', as per 'MCA Portal', and as such, this 'Tribunal', holds that the 'Notice', served at the 'Company's Registered Office Address', was a 'Sufficient Service', as per ingredients of 'Section 12 of the Companies Act, 2013' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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