TaxTMI 
TaxTMI 
2020 (9) TMI 797
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..../s. BASF India Limited (herein after referred to as Petitioner/ Operational Creditor) is a Company incorporated under the Indian Companies Act, 1913 and engaged in carrying on business of Chemicals, Materials, Industrial Solutions, Surface Technologies, Nutrition and Care and Agriculture Solutions. (2) M/s. Prakash Seating Private Limited (herein after referred to as Respondent/Corporate Debtor) is a Company was incorporated on 01.02.2013, under the Indian Companies Act, 1913, bearing CIN: U25200KA2013PTC067709. Its Authorised Share Capital of the Company is Rs. 5,00,00,000/- and Paid-up Capital of the Company is Rs. 5,00,00,000/-. The main objects of the Company are engaged in the business of manufacturing and sale of seats. During the course of business, the Corporate Debtor approached and requested the Operational Creditor to supply MDI Grade Polyol EW5038 CA and Isocyanate B4002 (MDI System) and Isocyanate B5009/1 and Elastoflex EW 5585/104C-A(MT Grade) used in manufacturing of foam for seats. Accordingly, invoices were raised towards the supply made to the Corporate Debtor on numerous occasions. (3) On account of goods supplies, a balance sum of Rs. 20,33,226/- which inclu....
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....s a part of the BASF Group, which is the second largest chemical supplier in the world, and deals regularly in the supply of chemical systems of all nature. On the basis of the Operational Creditor's reputation, and relying on its expertise, the Corporate Debtor engaged the Operational Creditor for the supply of chemical systems to the Corporate Debtor, for the purpose of manufacturing foam, which is an essential component of the seats manufactured by the Corporate Debtor. (3) Initially, the Operational Creditor was supplying a chemical system consisting of MDI Grade Polyol ES5038 CA and Isocyanate B4002 ('MDI System') to the Corporate Debtor. In term of the engagement and under various purchase orders, the Operational Creditor on an average supplied to the Corporate Debtor 15 tons of the MDI System per month, at the rate of INR.194/- per kilogram for Polyol EW5038CA and INR 194/- per kilogram of Isocyanate B4002. In or around June 2017, the Operational Creditor had proposed to supply to the Corporate Debtor a new and cost effected chemical system comprising of Isocyanate B5009/1 and Elastoflex EW 5585/104 C-A. (4) On the basis of the Operational Creditor express re....
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....When this was brought to the Operational Creditor notice, with the intention of rejecting the entire consignment vide the Corporate Debtor's email dated 24.05.2018, the Operational Creditor vide its email dated the same day, merely issued a "revalidation certificate" to the Corporate Debtor, forcing the Corporate Debtor to accept this consignment on the Operational Creditor specific assurance on the quality of the consignment. It is alleged that the Operational Creditor forcing the Corporate Debtor to accept the MT Grade system, as the Corporate Debtor had already altered all its equipment and production systems incurring huge costs only on the basis of several false representations made by the Operational Creditor to entice the Corporate. (7) Around November, 2018, on account of the increase complaints regarding the inferior quality and deficiency of the MT Grade System, the Corporate Debtor was forced to replace cushions in around 590 buses run and managed by a customer State Transport Undertaking and suffered further losses on account of the same. Since the losses suffered by the Corporate Debtor on account of using the MT Grade system are solely attributable to the Operat....
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....ted under Section 12A of the Commercial Courts Act, 2015 against the Operational Creditor in PIM No. 25 of 2019, before the Bengaluru Rural District Legal Services Authority, with the hope of arriving at a mutual settlement of its disputes with the Operational Creditor. When the Operational Creditor received notice of the same, the Operational Creditor refused to participate in the mediation, and non-starter report was drawn up. In view of the refusal of the Operational Creditor to participate in pre-institution mediation, the Corporate Debtor is now in the process of filing a civil suit against the Operational Creditor before the Honfale Commercial Court, at Bengaluru Rural. In the meanwhile the Operational Creditor had dishonestly instituted the instant proceedings against the Corporate Debtor under the IBC, 2016 with a mala fide intention of harassing and brow-beating the Corporate Debtor into making payments to the Operational Creditor, that the Operational Creditor is not entitled to. (10) It is alleged that the Operational Creditor has failed to place all the facts on record with regard to existence of dispute. As per Section 65 (Fraudulent or malicious initiation of procee....
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....r though duly authorized representative or Counsel on 16.01.2020 at 3.00 P.M. However, since there is no possibility of settlement, Mediation has not started and Non-Starter Report filed in Form-3: Non-Starter Report was dated 14.02.2020. The Respondent has claimed damages to the amount of Rs. 1,05,43,407/-, out of which the invoices claimed amount of Rs. 17,85,149/- total outstanding amount. Therefore, she urged the Adjudicating Authority to dismiss the Company Petition as not maintainable. 7. As stated supra, prior to the issue of Demand Notice by the Petitioner to the Respondent, the Respondent has already issued Legal Notice dated 20.03.2019, to the Petitioner to compensation for supply of low grade and defective chemicals systems, by inter alia stating as follows: "All the losses suffered by our Client on account of our Client using the MT Grade system are solely attributable to you, and you are liable to compensate our Client for the losses suffered by it in a total extent of INR 56,14,700. Thus, it is evident that you are liable to compensate our Client for the losses suffered by our Client for the replacement of the defective cushions. In lights of an amount of INR 17,78....
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....2 has inter alia, held that IBC, 2016 is not intended to be substitute to a recovery forum. In another latest judgment rendered in Transmission Corporation of A.P. Ltd. Vs. Equipment Conductors and Cables Ltd., (CA No. 9597 of 2018) dated 23rd October, 2018, (2018) 147 CLA 112 (SC) Hon'ble Supreme Court of India, it is inter alia held that existence of undisputed debt is sine qua non of initiating CIRP. As per para 34 of judgment, it is stated that Adjudicating Authority, while examining an Application filed under Section 9 of the Code, will have to determine: i. Whether there is an 'operational debt' as defined exceeding Rs. lLakh? ii. Whether documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid? iii. Whether there is existence of dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before receipt of demand notice of the unpaid operational debt in relation to such dispute? If any one of aforesaid conditions is lacking, the application would have to be rejected. 11. In view of the above facts and circumstances of the case, we are of the ....