TaxTMI 
TaxTMI 
2018 (3) TMI 319
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....d the Rules framed thereunder. Copy of the license is at Annexure A-1 which shows that it was issued on 01.04.2003 and is being renewed from time to time. Lastly the license was renewed upto 31.03.2018. 2. Application has been filed by the petitioner in Form No.5 as prescribed in sub-rule (1) of Rule 6 of the Rules. The respondent company was incorporated on 25.03.2003 and is having the authorised share capital of Rs. 1,92,00,00,000 and paid up share capital of Rs. 1,91,40,00,000/-. It has its registered office at Chandigarh, therefore, the matter falls within the jurisdiction of this Tribunal. The respondent is exporter of rice and paddy. 3. The facts of the case briefly stated are that the respondent- corporate debtor placed the order for purchase of paddy from petitioner. The paddy was supplied to the respondent during the paddy season from 21.11.2014 to 21.12.2014. The total quantity of paddy sold to the respondent was 1683 quintals (Qtls) for the total price of Rs. 47,26,788.34. The corporate debtor is alleged to have made part payment of Rs. 39,52,749/- against the invoices raised by the operational creditor. Out of the above payment, an amount of Rs. 27,76,786/- was pa....
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....n on the same cause of action. Copy of the order of this Tribunal in the earlier petition is at Annexure A-10. 9. Thereafter the petitioner sent another demand notice dated 26.10.2017 (Annexure A-11) in form No.3 of the Rules containing detailed particulars, which have also been furnished in the application in Form No.5 in the instant petition. Along with the notice under Section 8 of the Code, the petitioner also attached the copy of Form VAT-D2, computation of default, the invoices, vide which the goods were sold to the respondent and the list of 23 invoices. This notice was sent by speed post vide postal receipt dated 27.10.2017. 10. The fact that the demand notice was served upon the respondent is not disputed. The petitioner, however, received a letter from the respondent on 06.11.2017, in which the respondent had shown his readiness to settle the matter, but on their own terms. The petitioner referred to this document Annexure A-12 as the letter dated 03.11.2017, but this document itself shows that it is dated 26.10.2017. The petitioner filed copy of postal receipt under which the aforesaid letter was sent by speed post to the petitioner. The copy of postal receipt at p....
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....ny one of the Director of the company was further authorised to appoint M/s Saxena and Saxena Law Chambers, Advocates for representing the corporate-debtor before the Tribunal. The corporate-debtor has filed the reply through the aforesaid law firm M/s Saxena and Saxena Law Chambers, Advocates and Mr. Dinesh Gupta, Managing Director has given the power of attorney. 17. In reply on merits, it is stated that the respondent-corporate debtor is engaged in the business of processing of rice and that the raw material being the paddy is purchased from the Mandi (Market) through various Pacca Arthias only. The respondent appointed Bhardwaj & Co. and Mangat Ram Pawan Kumar as Pacca Arthias/agents for purchase of paddy from Jind Mandi (Market). All the purchases were made by Pacca Arthias on behalf of the corporate debtor from Kaccha Arthias. If the goods supplied to the corporate debtor were of inferior quality, the Pacca Arthias were responsible for the settlement of Account with respect to any deductions on account of bad quality and substandard goods supplied. It is stated that there is no direct dealing for procurement of the paddy between the petitioner-operational creditor and the ....
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....lied. The deductions made are to the tune of Rs. 9,35,650/- and those facts are contained in reply dated 26.10.2017 of the corporate debtor sent to the operational creditor. 21. Accordingly, a letter dated 26.10.2017 was sent to the operational creditor intimating the amount of quality cut deduction as part of the full and final reconsideration and settlement letter. Copy of the invoices of quality cut along with the full and final settlement are at Annexure A-5 (Colly). 22. It is further stated that the operational creditor has not filed its ledger account being maintained in respect of the corporate debtor. However, the corporate debtor sent a copy of its ledger account along with reply to the demand notice. Copy of the ledger account is annexed with the reply as Annexure R-2 (colly) for the period from 01.04.2014 to 31.03.2017. 23. I have heard the learned counsel for the parties and carefully perused the record. 24. For initiating the corporate insolvency resolution process, the operational creditor has to first of all issue a demand notice as required by Section 8 of the Code. After the expiry of 10 days' period of demand notice, the application can be filed before....
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....the maintainability of the application on this ground. 29. There is an affidavit dated 11.11.2017 filed by the proprietor of the petitioner concern that the respondent-corporate debtor has sent a reply dated 09.11.2017 to the demand notice relating to the dispute of unpaid operational debt and a frivolous ground has been taken to delay and defeat the claim and wriggle out of the Code. Rather, the claim of the operational creditor was admitted by the corporate debtor for a number of times by different modes. The question that would require adjudication is whether the reply of the respondent-corporate debtor amounts to a dispute within the definition of the said term as per sub-section (6) of Section 5 of the Code. 30. The petitioner has attached computation of default at Annexure A-3, which states that the total amount received by the petitioner- operational creditor from the respondent-corporate towards the outstanding amount is Rs. 27,76,786/- towards the principal and details of the payment received are also mentioned in the certificate from the Bank of India where the petitioner is maintaining the account, which is at Annexure A-15. Various payments have been received by t....
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....2016-17, the amount credited towards the interest in favour of the petitioner by the respondent is Rs. 5,98,000/-, over which the Tax of Rs. 59,800/- was deducted. Had there been a quality issue, there was no question of making these payments in the years 2015 and 2016 towards the interest over the outstanding amount. 35. Not only this, the respondent had also issued the cheques in favour of the petitioner. Annexure A-7 is the cheque dated 15.01.2017 for an amount of Rs. 4,29,877/- and the dishonoured cheque memo of the Bank is also annexed at page 83 of the paper book. Reference to another cheque dated 28.02.2017 for Rs. 1,93,445/- has also been made which was also dishonoured. Page 86 is the copy of the cheque dated 25.04.2017 for Rs. 1,93,445/-, which was also dishonoured and the other cheque is dated 30.06.2017 for Rs. 3,09,273.31 at page 88 of the paper book, which had also bounced. All these cheques are in the name of Hajura Singh Bhim Singh. The learned counsel for respondent vehemently contended that these were the post-dated cheques issued by way of security and it is further contended that the proceedings for the dishonoured cheques are continuing and are pending befor....
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....me, an issue was raised by the corporate debtor with regard to the quality of the goods in the reply dated 30.08.2017 to the earlier demand notice based on which a petition was filed, but on technical defect, the same was withdrawn. Before that there was absolutely no whisper by the respondent to challenge the claim of the petitioner on the ground of quality or any other issue. The respondent has rather shown in its ledger account the amount lying outstanding against the petitioner to the tune of Rs. 95,870/- as on 31.03.2017. The payments of Rs. 5,38,200/-, Rs. 2,38,821/- and Rs. 1,93,445/- are entered to have been made to the petitioner on 04.05.2015, 20.01.2017 and 29.03.2017 respectively. What was the occasion for the respondent to make over-payment to the petitioner despite relying upon its so called ledger account and the debit notes relating to the quality cut. Phrase quality cut has been very carefully used, but the above defence must fall to the ground as there is not an iota of evidence in nature of any communication, emails, letter to the alleged Pacca Arthias raising any grievance for about three years of the conclusion of the transaction of supply of the paddy. 39. ....
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....ikely 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 application." 42. The Hon'ble Supreme Court held that within a period of 10 days of the receipt of the 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 pendency of the suit or arbitration proceeding filed before the receipt of such notice or invoice in relation to such a dispute. 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. 43. This above principal laid down by the Hon'ble Supreme Court puts it obligatory on the Adjudicating Authority to see as to whether there is plausible defence which requires further investigation and that the dispute is not a patently feeble, legal argument or an assertion of facts unsupported by evidence. The Hon'ble Supreme Court fu....
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.... admitted and the moratorium is declared for prohibiting all the following in terms of sub-section (1) of Section 14 of the Code: (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. 48. It is further directed that the supply of essential goods or services to the Corporate Debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period. The provisions of sub- section (1) shall however not apply to ....