2018 (6) TMI 972

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....dent - M/s Vishnusudha Textiles (Operational Creditor) under Section 9 of the Insolvency and Bankruptcy Code, 2016 (in short 'I&B Code'), slapped Moratorium prohibiting certain activities in terms of provisions of Section 14 of the I&B Code and appointed the Interim Resolution Professional to take charge of the Corporate Debtor's management. 3. The issue raised in this appeal is that the Adjudicating Authority failed to notice the existence of a pre-existing dispute inter-se the parties warranting rejection of application under Section 9 of the I&B Code. 4. The factual matrix may briefly be adverted to as follows:- (i) The Respondent/Operational Creditor claimed to have supplied Polyster Staple Fibre products to the Appellant/Corporate Debtor between 15.02.2016 to 07.05.2016, in respect whereof she claimed an amount of Rs. 1,18,86,658/- from the Appellant/Corporate Debtor in terms of demand notice dated 28th August, 2017. (ii) Appellant/Corporate Debtor contested the claim on the ground that the amount owed to the Respondent/ Operational Creditor was settled. Appellant/Corporate Debtor further maintained that the Respondent/Operational Creditor had willfully suppressed materi....

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....ted 19.08.2017 to the Respondent disputing the amount claimed by the Respondent. Respondent is said to have sent 2nd demand notice dated 28.08.2017 reducing the claim amount from Rs. 95,21,232 to 94,61,148 alongwith interest @15% per annum. Appellant sent a short reply dated 07.09.2017 to the Respondent intimating the Respondent that he is collecting documents from Accounts Department and Bank and the detailed reply would follow. Appellant claims to have issued legal notice dated 27.09.2017 to Respondent highlighting transfer of Stage Carriage Permit and other issues. It is admitted that the Respondent had by then filed application under Section 9 of the I&B Code before the Adjudicating Authority (National Company Law Tribunal), Chennai on 16.09.2017. 6. In the counter affidavit filed by the Respondent, it is stated that the Respondent had issued demand notice dated 02.09.2016 claiming the sum of Rs. 98,10,525/- from the Appellant in respect of the invoices raised in regard to supply of Polyster Staple Fibre. The Appellant replied the notice claiming temporary setback in his business and sought time to repay the outstanding amount after verifying the accounts. Respondent further c....

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.... Section 9 of the I&B Code by an Operational Creditor are: (i) occurrence of a default; (ii) delivery of a demand notice of an unpaid operational debt; (iii) non-receipt of payment by the Operational Creditor from the Corporate Debtor within the period of 10 days of receipt of the demand notice or receipt of reply from the Corporate Debtor not indicating existence of a pre-existing dispute or repayment of the unpaid operational debt. If the aforesaid conditions exist, the Operational Creditor may file an application under Section 9(2) of the I&B Code in the prescribed manner alongwith the requisite fee. A copy of the invoice demanding payment or demand notice delivered by the Operational Creditor to the Corporate Debtor has to be furnished with the application. This is clearly borne out by conjoint reading of Section 8 and 9 (1) of the I&B Code. The Hon'ble Apex Court while dealing with this aspect in "Macquarie Bank Limited Vs Shilpi Cable Technologies Ltd." in Civil Appeals No. 15135, 15481 and 15447 of 2017 decided on 15th December, 2017 held that the requirement of an application filed under Section 9(2) of the I&B Code being accompanied by an invoice/ demand notice is a....

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....es against letter of credit opened by the Appellant in favour of the Respondent. The Respondent claims to have issued demand notice dated 28.08.2017 in respect of invoices raised between 15.02.2016 to 07.05.2016 for the Polyster Staple Fibre supplied to Appellant. This was replied to by the Appellant stating that he was in the process of collecting relevant documents including the bank statement. However, the Appellant does not appear to have either repayed the Operational Debt claimed by the Respondent or brought to his notice the existence of a dispute. In the given circumstances Respondent was within his rights to file application before the Adjudicating Authority for initiating Corporate Insolvency Resolution Process. 11. As regards Appellant's contention that the Respondent did not disclose the factum of buses being provided as security, be it seen that the transfer of buses was effected prior to the demand notice issued by the Respondent to the Appellant as has been claimed by the Respondent. Therefore, it cannot be said that this fact had been willfully suppressed and non-disclosure thereof justified rejection of the application. 12. In so far as the "Debt" and "Default" i....