TaxTMI 
TaxTMI 
2019 (10) TMI 1242
X X X X Extracts X X X X
X X X X Extracts X X X X
....sional as prescribed under the Code and Rules thereon. BRIEFA VERMENTS (2) The averments made in the Petition in brief are:- (a) The Operational Creditor is a Company and has registration under the provisions of MSME Act. The Company is involved in the field of manufacture of conveyors, conveyor systems etc. The Corporate Debtor is a Company registered under Companies Act 1956 on 31.10.1994. (b) During the course of business, Corporate Debtor placed various purchase orders as per annexure-Il vide page Nos. I to 420 for supply of conveyors etc from 11.09.2015 to 25.05.2016 with a condition to pay the cost of material within 90 to 100 days from the date of receipt of material. (c) The Operational Creditor raised invoices, details of which are as per list annexed at page Nos. 57-94 and Corporate Debtor confirmed about delivery of materials vide material delivery challans at page Nos. 95 to 165 annexed to Annexure-I. Further Corporate Debtor vide email dated 13.03.2018 confirmed the details of invoices raised by the Corporate Debtor. (d) The Operational Creditor admits that the Corporate Debtor paid an amount of Rs. 2,46,87,742/- and balance of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Rs. 4.69 crores is withheld by the above clients. (d) It is contended the Corporate Debtor already raised dispute in the reply notice dated 27.02.2018 and submits there are disputes between it and Operational Creditor. (e) Further as per clause-18 of the General terms and conditions of the Purchase Order placed by the Corporate Debtor which provides for resolution of disputes by Arbitration and contends the Operational Creditor ought to have invoked arbitration clause. It is also the case of Corporate Debtor that the Operational Creditor is liable to pay damages to the Corporate Debtor. Hence, the Petition deserves to be dismissed. REJOINDER TO THE COUNTER: (4) Rejoinder is filed by the Operational Creditor to the counter filed by Corporate Debtor, reiterating the averments made in the Petition. (1) The Operational Creditor further averred that as per the conditions of purchase orders, it would rectifr the defects if any noticed and as informed or replace the defective goods free of cost on receipt of information from Corporate Debtor with in a period Of 18 months from the date of supply of material or within 12 months from the date of commission of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Ltd Vs Heritage Health Insurance TPA Pvt Limited. 6. The Learned Counsel for Corporate Debtor filed written submission and relied on the following decisions:_ (1) Hon'ble Allahabad High Court decision reported in (1964) 34 Comp Cas 963 in the matter of Federal Chemical Works Ltd. (2) Hon'ble High Court of Karnataka judgement reported in (1985) 58 Comp Cas 271 in the matter of Global Detective Agency Vs. Subbiah Machine Tools P. Ltd and Ors. (3) Hon'ble Madhya Pradesh High Court judgement reported in (1991) 71 Comp Cas 443 in the matter of Manulabai Vs Jayant Vitamins Ltd. (4) Hon'ble Gujarat High Court judgement reported in (2009) 149 Comp Cas 660 in the matter of Pankaj Aluminium Industries P Ltd Vs Pankaj Extrusions Ltd. (5) Hon'ble Supreme Court judgement reported in (2018) 1 SCC 353 in the matter of Mobilox Innovations Private Limited Vs Kirusa Software Private Limited. 7. The Learned Counsel for Operational Creditor would contend that Corporate Debtor in the course of its business placed Purchase Orders with the Operational Creditor for supply of Conveyor Structures like Gantry's, Testles, Head Frame, T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Orders under which the goods supplied were of defective quality. The contention of the Learned Counsel, the purchase orders referred to by the Corporate Debtor are not covered by the purchase orders referred to in the Demand Notice dated 02.02.2018. 11. Counsel contended it goes without saying that there is no dispute with regard to purchase orders referred to in the Demand Notice. Counsel contended, as per purchase orders if any defect is pointed out, it will be rectified within 18 months from the date of supply or within 12 months from the date of commission of equipment as per the terms of the purchase orders. The Counsel relied on Clause 12 of the purchase orders. However, the Corporate Debtor never raised alleged defects with the Operational Creditor. If such defects are pointed out they would have been attended. Counsel contended, the Corporate Debtor for the first time in the reply dated 27.02.2018 to the Demand Notice, raised contention that material supplied under PO Nos. 1510400324 dated 15.10.2015 and 151040382 dated 21.01.2016 are defective as if Corporate Debtor suffered loss to the tune of Rs. 1,38,17,420/-. However, these purchase orders are not part of the dema....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ned Counsel further contended that Operational Creditor already approached Micro Small Enterprise Facilitation Counsel, Telangana (MSEFC) for adjudication of the amount claimed. However, Operational Creditor has withdrawn the same. Thus, there is bonafide dispute and the petition cannot be admitted. It is a running account maintained by Operational Creditor. It is also categorically admitted by Operational Creditor in the Demand Notice that it is a running account, therefore, debit notes raised to be taken into account before arriving at the balance, as such there is a dispute. So Learned Counsel prayed, the Petition to be rejected. 14. It is the case of Operational Creditor, it has supplied goods from time to time to the Corporate Debtor in pursuance of purchase orders placed from time to time and that it had raised invoices. The fact Corporate Debtor placed purchase orders with the Operational Creditor and received materials from the Operational Creditor and also raising of invoices from time to time are absolutely not in dispute. The Operational Creditor in support of its case, filed bulk of documents such as purchase orders placed by Corporate Debtor and also raising of invo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aid there is a pre-existing dispute with reference to the purchase orders referred to in the Demand Notice and also the invoices annexed there to. 16. Interesting to note, there was no dispute raised prior to the Demand Notice dated 02.02.2018. If debit notes raised were also admitted and even if some debit notes were not accepted, yet they are for different purchase orders which are not covered by the Demand Notice. Therefore, it can be safely concluded that there is no prior dispute with regard to the purchase order referred to in the demand notice. The Corporate Debtor cannot take shelter under the cover of the alleged dispute in respect of purchase orders / invoices which are not covered by the Demand Notice as if there was a pre-existing dispute. 17. The Demand Notice is dated 02.02.2018. It was served on Corporate Debtor on 05.02.2018. However, reply was not given within 10 days from the date of delivery. Admittedly, reply was given on 27.02.2018 which is beyond 10 days. Therefore, reply is not in accordance with provisions of Section 8 of IBC, 2016. 18. The Learned Counsel for Corporate Debtor had relied on the decision stated supra. The decisions are on the point w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Corporate Debtor raised dispute in respect of particular purchase orders / invoices. They are not covered by demand notice. They are separate transactions. So raising of alleged debit notes in respect of other invoices is not a ground to conclude that there was a pre-existing dispute. 21. The contention of the Learned Counsel for Corporate Debtor that there is a counter claim raised by the Corporate Debtor. Raising of debit notes does not amount to counter claim and at best the Corporate Debtor can ask for set-off. Counter claim must always be over and above the claim made by the Operational Creditor. The alleged debit notes is far below the claim made by the Operational Creditor. Therefore, there is no question of any counter claim involved in the alleged contention raised by the Corporate Debtor. A set-off is a plea in defence, pure and simple, which by adjustment would wipe off, or, reduce the Operational creditoFs claim. The Learned Counsel for Corporate Debtor contended that Operational Creditor approached the Telangana State Micro and Small Enterprises Facilitation Council (MSMEFC) by filing an Application under Section 18 of Micro Small and Medium Enterprises Development ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ss further action started or initiated under the provisions of MSME Act. So, Corporate Debtor cannot take any advantage to contend dispute pending on the ground that application was filed before the MSMEFC under Section 18(1) of the MSME Act. So this objection cannot be a ground for rejecting the Petition. The objection cannot be sustained under the law. Therefore, in view of above discussions, the Operational Creditor is able to establish that Corporate Debtor committed default of operational debt and Petition is liable to be admitted. 25. The Operational Creditor failed to name anyone as Interim Resolution Professional and has requested the Tribunal to appoint one for the Corporate Insolvency Resolution Process. The Insolvency and Bankruptcy Board of India (IBBI) has recommended a panel of Insolvency Professionals for appointment as Insolvency Resolution Professional for the period 1st July 2019 to 31st December, 2019 in compliance with Section 16(3)(a) of the Code in order to avoid delay. Accordingly, this Tribunal appoints Shri Ahalada Rao Vummenthala having Registration no. IBBI/IPA-002/1P-N00074/2017-18/10172 #R/o Flat No. 113, Block-B, Sri Data Sai Commercial Complex, Opp....