TaxTMI 
TaxTMI 
2020 (9) TMI 948
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....or is Excel Tubes and Cones, Mumbai, Maharashtra (Respondent No.1). 2. The Adjudicating Authority has initiated 'Corporate Insolvency Resolution Process' (for short 'CIRP') against the Corporate Debtor and has appointed Mr. Kailash T.Shah, 'Interim Resolution Professional' and has directed him to follow the provisions of Section 13, 14 and other relevant provision of the Code. The Adjudicating Authority has observed that the petition has been filed within limitation period and has also established that the default of payment has occurred apart from other related issues. Reliance has been placed by the Adjudicating Authority on the settlement proposal of Corporate Debtor which has been received by the Operational Creditor on 05.07.2018 and has arrived at the conclusion that amount of Rs. 21 Lakhs is an undisputed amount and the Corporate Debtor has defaulted the payment, hence, initiation of CIRP. 3. The Appellant has submitted that the paper tubes supplied by the Respondent No.1 were of inferior quality as the core of the paper tubes used to get lapsed. He has further submitted that Mr. Ajit Thakur, 'Head of Production Department' of the Corporate Debtor, had written email da....
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....ch reflects that the Company is having total assets of Rs. 70 Crore approx. and the Company has become a loss making Company in the 'Financial Year 2018-19'. 6. On the question of using the goods without prior testing by the Corporate Debtor before forwarding the material for production, it was clarified by the counsel for the Appellant that technically after using the paper tubes supplied by the Respondent No.1, the Appellant comes to know that the paper tubes are perfect or defective. As far as the legal position is concerned under the Sale of Goods Act, 1930 vide Section 13 read with Section 59 if the goods supply are defective the buyer has two options (1) Either to reject goods and ask for resupply or (2) to accept/use goods and sue for damages or diminution or extinction of the price. 7. The Corporate Debtor/Appellant, therefore, claims, it has a right to claim damages, and has cited following cases: Eternit Everest Ltd. Vs. Abraham, AIR 2003 Ker 273 (Para 13 & 15), it is observed as under: Para - 13.Another argument advanced by the learned counsel for the appellant was that the 1st respondent had filed the suit for damages after using and retaining th....
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....such a condition in respect of sale of specific goods by description can be held to have been fulfilled as between parties. The first is that the goods must correspond to the description. The second is that, impliedly, they must be of merchantable quality. The rights of the buyer are not extinguished by the mere fact of acceptance, or the mere fact of passage of title in the goods to him. This has been made very clear by two decisions of this Court, where the applicable principles of law are stated and expounded. Para - 34. In Sha Thilokchand Poosaji v. Crystal and Co., MANU/TN/0192/1955: AIR 1955 MAD 481, the learned Chief Justice and Rajagopala Ayyangar, J. had occasion for expounding the law upon this aspect. As the learned Chief Justice observes, the right of a buyer for damages for breach of warranty proceeds upon the basis of acceptance of the goods delivered, and not a rejection thereof. In other words, the right of rejection of goods, and the right to sue for damages for breach of warranty, are alternative remedies. They are not cumulative. A buyer can (where goods not answering to the description contracted for are delivered) waive the condition and accept the goo....
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....ent of dispute out of Court and, as part of the settlement, suggests the withdrawal of a pending legal proceedings, he cannot, by that suggestion, be said to be interfering with the course of justice. Shibcharan Das Vs. (Firm) Gulabchand Chhotey Lal, AIR 1936 All 157, Para No. 4, it is observed as under: The defendant also called a Vakil, Pandit Behari Lal Sharma, who gave evidence corroborating that given by the defendant himself in our judgment this witness's evidence was not admissible. Negotiations were being conducted with a view to settlement, and that being so, we are bound to hold that these negotiations were being conducted without prejudice." In such circumstances it is not open for one of the parties to give evidence of an admission made by another. If negotiations are to result in a settlement each side must give away a certain amount. If one of the parties offers to take something less than what he later claims he is legally entitled, such must not be used against him; otherwise persons could not make offers during negotiations with a view to a settlement. Further, it appears to us that this vakil was at the time of these negotiations acting on be....
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....eing so, the case will be covered by the second condition laid down in Section 23, quoted above, and as such, the husband could claim privilege regarding the same. It has been ruled in a Bench decision of the Allahabad High Court in Shibcharan Das v. Firm, Gulabchand Chhotey Lal, AIR 1936 All 157, that where negotiations were being conducted with a view to a settlement, it should be held that those negotiations were so conducted without prejudice. " From this it follows that where the compromise is not binding on the parties, any recital is of no much value as evidence. The parties are often willing to make admissions for the purpose of affecting a compromise to which it would be unfair to hold them if the compromise falls through. 11. In view of the above discussions, there is no doubt in my mind that the statements made in the compromise petition even if treated as valid admissions, were not intended to be treated as evidence by any of the parties because of failure of the compromise petition. Surjit Kaur Vs. Gurcharan Singh, AIR 1973 P&H 18, Para No. 2, 3, 4&5, it is observed as under: Para - 4 . It is common ground that this letter was writte....
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....t the letter was written at a time when the parties had agreed that no evidence would be given regarding it. That being so, the case will be covered by the second condition laid down in Section 23, quoted above, and as such, the husband could claim privilege regarding the same. 9. The Resolution Professional has submitted a list of shareholders as on 31.03.2019 of the Corporate Debtor and the list contains the list of 198 shareholders. He has also informed that the Income Tax Department, Pan No. and GST Department is active in respect of Corporate Debtor. 10. The Respondent No.1 has submitted that there is no preexisting dispute and once the material is sold and used, it is the entire responsibility of Users. The damages may be due to the mistake of transportation of supply or the Corporate Debtor not keeping the material with proper packing and outside climate. They have alleged that the Corporate Debtor and its erstwhile management has swindled systematically the assets to the detriment and the prejudice to the rights and claims of numerous creditors. They have alleged that the Corporate Debtor is dragging the proceedings and misleading the courts. 11. We have gone throu....
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....f the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute; (b) the repayment of unpaid operational debt- (i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or (ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by the corporate debtor. Explanation.-For the purposes of this section, a "demand notice" means a notice served by an operational creditor to the corporate debtor demanding repayment of the operational debt in respect of which the default has occurred. Section 9-application for initiation of Corporate Insolvency Resolution Process by Operational Creditor: Section 9 -. (1) After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment under sub-section (1) of section 8, if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under sub-section (2) of section 8, the operational creditor may file an application before the A....