2019 (12) TMI 1326

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ruptcy (Application to the Adjudicating Authority) Rules, 2016, seeking admission of the Petition, initiation of Corporate Insolvency Resolution Process, granting moratorium and appointment of Interim Resolution Professional as prescribed under the Code and Rules thereon. 2. The averments made in the Petition are as follows: A. The Petitioner had purchased various commodities viz. Chilly, Guar Gum, Guar Seeds from Respondent against which the Respondent has raised invoices on the Petitioner from time to time. B. The Petitioner cleared all the dues of the Respondent without any defaults. However, while making payments to the Respondent, the Petitioner failed to deduct TDS of Rs. 1,84,32,472/- (being TDS for the Financial year 2011- 21012 amounting to Rs. 59,30,408/- plus TDS for the Financial Year 2012-2013 amounting to Rs. 1,25,02,064/-) which was payable to the statutory authorities. Thus, amount of Rs. 1,84,32,472/- which was payable to the statutory authorities was paid to the Respondent. C. Thereafter, the Petitioner made additional payments to the tune of Rs. 1,84,32,472/- to the statutory authorities being the amount of TDS payable on the transac....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... proposals being rendered null, the group company of the Petitioner viz. Betul Oil Limited sent letter dated 17.10.2018 to the Respondent inter alia disassociating themselves and in effect their Group Companies from any transactions with Adinath Gems & Jewellery Private Limited and Adinath Global Private Limited and further reserving their right to claim damages and losses from the Respondent. K. The Petitioner regularly followed up with the Respondent regarding the payment of the balance amount but to no avail. Being left with no alternative, the Petitioner sent the Demand Notice under Form 3 to the Respondent on 29.03.2019, the same was received by Respondent on 01.04.2019. The Respondent replied to the said notice vide their letter dated 12.04.2019 which is 11 days after receiving the notice. L. It is averred that in reply notice though Respondent have denied that they are liable to pay any amount to the Petitioner, but through email dated 29.06.2017 they have agreed to pay. 3. The breif averments in the Counter are as follows: i. It is averred that the present Application ex-facie is not maintainable as the Petitioner is neither an "Operational Cre....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....oner as admitted by the Petitioner in the Application and the Respondent has received the sale consideration for the goods so supplied by it to the Petitioner. Therefore there is no debt due to the Petitioner by the Respondent. While confirming that there is no Operational Debt that is due by the Respondent to the Petitioner, the Respondent also confirms that there is no other due(s) that is payable by the Respondent to the Petitioner. vi. It is stated that it is the contention of the Petitioner that by not deducting the TDS, he has paid excess amount to the Respondent. Subsequently, the Petitioner delayed remittance and getting the same rectified does not confer any right whatsoever on him as an "Operational Creditor" and there is no "Operational Debt". Thus, the Respondent does not owe any money to the Petitioner. vii. It is stated when the Petitioner had issued the demand notice, the Respondent apart from disputing the contents of the same and questioning the same, also clearly stated that there exists a 'bona fide dispute' between the Parties and as such inter- alia, no sums are due or payable to the Petitioner. It is also stated that over the years, t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....TDS, but the corporate debtor failed to refund. 5. The learned counsel contended that the corporate debtor admitted the liability to refund the TDS to the operational creditor, but it was postponing the same on one or the other pretext. The learned counsel contended that the amount falls under the definition of 'operational debt' and the petitioner/ applicant is the operational creditor. The learned counsel relied on section 5, subsections (20) and (21) of Insolvency and Bankruptcy Code, 2016 and contended that any claim in respect of the provision of goods is an operational debt. The learned counsel contended that the petitioner has purchased material from the corporate debtor and that the corporate debtor received excess amount than what it was entitled to under the invoices and therefore, the claim relates to provision of goods purchased by the operational creditor from the corporate debtor and the entire transaction is in respect of sale, purchase and supply of goods and the claim is arising in connection with supply of material and as such it is an operational debt. 6. The learned counsel relied on e-mail message received from the corporate debtor on 29.06.2017, ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... the time being in force and payable to the Central or State Government or local authority. The counsel contended that the petitioner has not supplied any goods to the corporate debtor nor the petitioner rendered any services to the corporate debtor to prove existence of creditor and debtor relationship. The petitioner does not fall under the category of Central or State Government or local authority to whom any statutory dues are payable by the corporate debtor. The counsel contended that the petitioner does not fall within the definition of 'operational creditor'. As such the petition is liable to be rejected. In this connection the counsel relied on the decisions cited above in support of his contention that the transaction referred to in the petition does not establish existence of creditor and debtor relationship between them. The counsel also contended that it was the corporate debtor who supplied goods to the operational creditor and that the corporate debtor has received sale consideration for the goods supplied. Therefore, there is no operational debt due to the petitioner. Thus, the main contention of the counsel for the corporate debtor is that there is no operat....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....creditor'. 13. To decide whether the amount paid towards TDS is an 'operational debt' or not it is necessary to look into the definition given for 'operational debt' as provided in section 5(21) of the I&B Code, which is reproduced hereunder for convenience: "5(21) 'Operational Debt' means a claim in respect of the provision of goods or services including employment or a debt in respect of the repayment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or local authority." 14. The operational debt is a claim in respect of the provision of goods or services. If any amount is payable in respect of goods, then it becomes an 'operational debt'. Here the petitioner is claiming that it has paid TDS to the statutory-authorities without deducting the same from the invoices. Firstly, the petitioner is not supplier of goods. The petitioner is only a purchaser. Secondly, no amount is due in respect of the amount payable for purchase of material. The corporate debtor is the supplier. The petitioner being purchaser is said to have paid to the statutory authorities the TDS on th....