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TMI Blog2023 (8) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 MB-IV/2021. By the impugned order, the Adjudicating Authority has admitted the petition under Section 9 of the IBC and allowed the initiation of Corporate Insolvency Resolution Process ("CIRP" in short) of the Corporate Debtor. Aggrieved by this impugned order, the present appeal has been preferred by the suspended Director of the Corporate Debtor. 2. Briefly put, the Corporate Debtor - Nik-San Engineering Company Ltd., which is the present Appellant was engaged in a business relationship with Sterling Enamelled Wires Pvt. Ltd. - Operational Creditor, the present Respondent No.1. The Operational Creditor supplied material to the Corporate Debtor for manufacture of transformers and raised several invoices upon the Corporate Debtor during February 2020. The Operational Creditor having not received his outstanding dues issued a demand notice under Section 8 of the IBC on 14.08.2021 claiming an amount of Rs. 2,07,11,209/-. This was followed by filing of Section 9 application before the Adjudicating Authority leading to the impugned order which has been challenged by the Corporate Debtor. 3. The Learned Counsel for the Appellant admitting that Section 8 demand notice had been receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority, and such pleas require investigation into facts, it was contended by the Learned Counsel for the Respondent No.1 that this may not be entertained by the Appellate Court. Additionally, it was stated that such purchase orders which had provision for creation of an LC of 90 days have in any case been excluded by the Operational Creditor and the invoices which have led to the operational debt did not have an LC of 90 days and hence the date of invoice was the date of default and this date did not fall within the window of Section 10A of IBC. It was submitted that these technical objections were being raised by the Corporate Debtor for the first time before the Appellate Authority which was merely a ploy to wriggle out of the liability to pay the outstanding debt. An emphatic assertion was also made that the Appellant did not send any reply to the Section 8 demand notice nor repaid the outstanding dues and hence the Adjudicating Authority rightly admitted the Section 9 application. 6. We have duly considered the arguments advanced by both the parties and perused the records carefully. The short points for determination are whether an amount exceeding Rs.1 crore was due for payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that disputes continued to subsist, it has been contended that the operational debt claimed by the Operational Creditor was a disputed debt and hence not admissible under Section 9 of IBC. 11. It is an undisputed fact that letters of dispute had been raised by the Corporate Debtor on several occasions. Since these letters pertain to the period June 2020 to September 2020, there is no dispute that these pertain to a period prior to the date of demand notice. The Adjudicating Authority at Para 20 of the impugned order has taken notice of these communications but also noted in Paras 21 and 22 that subsequent to these communications, the Corporate Debtor has acknowledged his liability on 23.07.2021. The relevant paragraphs are reproduced below for easy convenience. "20. The Corporate Debtor vide their letters dated 24.06.2020, 20.07.2020, 23.07.2020, 18.08.2020 and 17.09.2020 addressed to the Operational Creditor submits that the quality of materials supplied were not good and raised a contention that there is a pre-existing dispute as per section 8 (2) of the Code before filing the captioned company petition. 21. Further, the Corporate Debtor after their letters dated 24.06.202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Khushbu Dye Chem Private Limited in Company Appeal (AT) (Ins.) No. 621 of 2022 and XYKno Capital services Pvt Ltd vs Rattan India Power Ltd in Company Appeal (AT) (Ins.) No. 913 of 2022. However, the facts are distinguishable as in those cases the Corporate Debtor had not acknowledged outstanding amount unlike the present case where the outstanding debt has been clearly admitted. Hence these judgements do not come to the aid of the Appellant. 14. We are of the considered view that when the Corporate Debtor had admitted the outstanding debt and agreed to pay the same, it amounts to clear acknowledgment of debt being due and payable and belies the existence of any dispute. 15. This brings us to the second issue for determination as to whether the debt arising out of the invoices fell during the period which attracts the bar of Section 10A of IBC. It is the case of the Appellant that the Operational Creditor has not provided the date of default either in the Section 8 demand notice or in the Section 9 application. Further, it has been stated that payments were to be made by the Corporate Debtor by way of LC which was to be created within 90 days from each invoice and hence the da ..... X X X X Extracts X X X X X X X X Extracts X X X X
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