2020 (8) TMI 391

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....td., preferred this Appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016. 2. Succinctly put, the facts in brief are that the Corporate Debtor was a regular buyer of Aluminium Ingots and Wire Rods and had a running account with the Operational Creditor. Appellant claims that the Principle Operational Debt claimed by the Operational Creditor pertains to purchase of Aluminium Ingots and Wire Rods for the period 06.12.2017 to 16.04.2018, for an aggregate amount of 16,18,18,265/-. While admitting the Application under Section 9, the Adjudicating Authority observed as follows: '22. After hearing submissions of both the Parties and perusing the documents placed on record, this Bench has observed that the Corporate Debtor has not made any specific averments in its Notice of Dispute dated 05.11.2018 as regards to payment of the debt owed to the Operational Creditor to the other concerns namely, M/s Olympus Metal Private Limited, M/s Simla Holdings and M/ s Oyster Steels and Iron Pvt. Ltd. Further, on comparison of the Ledger of Operational Creditor and Corporate Debtor with the Bank Statements, it is apparent on the face of the record that the Corporate Debtor has made pay....

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....on to entries dated 21.10.2017 and 10.11.2017 for account of Rs. 1,95,34,823/- and Rs. 1,95,79,294/- respectively and submitted that the journal entries were also committed between M/s Simla Holdings and the Operational Creditors in the confirmation of accounts for the period 01.04.2017 to 31.03.2018. It is the case of the Appellant that M/s Oyster Steel and Iron Pvt. Ltd., another sister concern of the Operational Creditor confirmed the accounting entry in the ledger of the Corporate Debtor. 4. Per contra, Learned Counsel for the Respondent denied that any such confirmation of accounts was ever entered into with the Corporate Debtor. He submitted that none of the letters were signed by any of their Directors and that the said letters authorising adjustments/entries were forged and fabricated and drew our attention to the Rubber stamps with apparent error even in the name of Operational Creditor and signatures on these documents stating that the signatures on the alleged authorising letter were purportedly done by clerical employees who had no authority whatsoever to sign any such documents, and pointed out an employee's record who had left service much before. Learned Counsel poi....

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....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 any one of the aforesaid conditions is lacking, the application would have to be rejected. Apart from the above, the adjudicating authority must follow the mandate of Section 9, as outlined above, and in particular the mandate of Section 9(5) of the Act, and admit or reject the application, as the case may be, depending upon the factors mentioned in Section 9(5) of the Act." 18. From the aforesaid decision, it is clear that the existence of dispute must be pre-existing i.e. it must exist before the receipt of the demand notice or invoice. If it comes to the notice of the Adjudicating Authority that the 'operational debt' is exceeding Rs. 1 lakh and the application shows that the aforesaid debt is due and payable and has not been paid, in such case, in absence of any 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 u....

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.... by the Corporate Debtor for having sent a letter authorising the transfer of the same amount in favour of a third Party, when the same amounts have admittedly been paid to the Operational Creditor itself. Hence, we find force in the contention of the Learned Counsel appearing for Operational Creditor that these two amounts were never claimed as 'Operational debt' as they have already been paid. In the reply to the legal notice, the Corporate Debtor has specifically stated that as on 31.03.2018 all amounts have been reconciled between both the Parties, but remain silent about any subsequent transactions. Even in the reply to the demand notice dated 05.04.2018 there is no specific pleading with respect to any dispute regarding quality, quantity, price of the goods and services per se. It is significant to mention that in the statement of 'Confirmation of Accounts', relied upon by the Appellant, is dated 01.04.2019 and is for the period subsequent to 31.03.2018. This document date is subsequent to the issuance of the demand notice and there are no tenable grounds to explain the reasons for the Operational Creditor to have signed this document, specially keeping in view that the 'Conf....