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2020 (8) TMI 548

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....which required further investigation. 2. For reasons cited in the Affidavit, delay in filing the Appeal is condoned. The instant Appeal is being disposed of at the 'Admission Stage' itself. Hence, No Notice was issued to the Respondent. 3. Succinctly put, the facts in brief are, that the Operational Creditor was supplying NKV Gypsum to the Corporate Debtor from 29.05.2017 onwards and had raised invoices based on the supplies made. It is averred that out of the total invoices amounting to Rs. 50,16,306/-, the Corporate Debtor paid only 35,58,130/- and there was principal outstanding debt of Rs. 14,58,176/- together with outstanding interest of Rs. 1,46,776.85/-, for which the Operational Creditor preferred Application under Section 9. It is also averred that the Corporate Debtor had given two cheques amounting to Rs. 4,00,000/- and 2,00,000/- which when deposited on 20.11.2018 and 29.11.2018 were dishonored, subsequent to which, the Corporate Debtor had paid these amounts through RTGS. It is stated that the materials were continued to be supplied till 30.11.2018 and that the Corporate Debtor never raised any dispute regarding the quality or quantity and had accepted the said suppl....

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....idavit filed by the Corporate Debtor, before the Ld. Adjudicating Authority, it was specifically pleaded giving the details of the relevant invoices, that the Gypsum bags manufactured in the year September, 2017 were delivered on 23.11.2018, despite the fact that the shelf life of the said product was having a warranty of only a maximum of period of one year and that the same was duly intimated to the Operational Creditor. The internal communication, i.e. an e-mail dated 21.11.2018 directs the employees to find an alternative vendor to complete the work and not to allow the Operational Creditor inside the site as they were responsible for creating huge losses. 8. At this juncture, we find it fit to place reliance on the Principle laid down by the Hon'ble Supreme Court in 'Mobilox Innovations Private Limited vs. KIRUSA Software Pvt. Ltd.' reported in 2018 (1) SCC 353 in which the Hon'ble Supreme Court has held as follows: "33.The scheme under Sections 8 and 9 of the Code, appears to be that an Operational Creditor, as defined, may, on occurrence of a default (i.e. on non-payment of a debt, any part thereof has become due and payable and has not been repaid.), deliver a demand not....

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....ppellant that the supplies were terminated as the cheques had bounced and also because there was a clear outstanding of Rs. 14,58,176/-. It is an admitted fact that all the dishonored cheques were paid through RTGS to the Account of the Corporate Debtor. 12. Admittedly on 16.11.2018, there was a meeting held between both the parties and the e-mail dated 15.12.2018 refers to the pending works which could not be completed on account of insufficient supply of Gypsum bags and states that work orders henceforth would be terminated. The e-mail dated 17.12.2018 reads as follows: "On Mon, Dec 17, 2018 at 2:24 PM Uday <[email protected]> wrote: Read as committed On 17-Dec-2018, at 2:05 PM, Uday [email protected]> wrote: Dear Sir, We have long more than 25 lacks because of you. Since as Committee you are not done your work. So we have all the right to terminate. You have taken our money not rendered your job. Regards Uday Sent from my iPad On 15-Dec-2018, at 5:45 PM. Sridhar <[email protected]> wrote: Dear Sir, As per our MOM held at 16th November 2018, you have not completed below following works as per the commitment." 13. It is al....

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....es arising under any law for the time being in force and payable to the Government or to a local authority. This has to be contrasted with financial debts that may be owed to financial creditors, which was the subject matter of the judgment delivered by this Court on 31-8- 2017 in Innoventive Industries Ltd. v. ICICI Bank (Civil Appeals Nos. 8337-38 of 2017). In this judgment, we had held that the adjudicating authority under Section 7 of the Code has to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor within 14 days. The corporate debtor is entitled to point out to the adjudicating authority that a default has not occurred; in the sense that a debt, which may also include a disputed claim, is not due i.e. it is not payable in law or in fact. This Court then went on to state: (SCC p. 440, paras 29-30) 29. The scheme of Section 7 stands in contrast with the scheme under Section 8 where an operational creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the operational debtor in the manner provided in Section 8(1) of the Code. Under Section....

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....sion of being. Continued being as a living creature, life, esp. under adverse conditions. Something that exists; an entity, a being. All that exists. (P. 894, Oxford English Dictionary)" xx xx xx 51. It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the "existence" of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the "dispute" is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is like....