TaxTMI 
TaxTMI 
TaxTMI 
2020 (10) TMI 276
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....Debtor is a public limited company and started the manufacturing of corrugated boxes in 2009 & is one of the leading manufacturer of corrugated boxes in India. 4. Brief facts of the case are as follows: i. From June, 2017, the Operational Creditor had entered into a business relation with the Corporate Debtor. ii. The Operational Creditor in view of the purchase order supplied the ordered goods, material, paper material etc. as and whenever required by the corporate debtor from June 2017 till June 2018. iii. The corporate debtor started placing orders for the supply of Kraft papers, after settling upon terms and conditions and further negotiations upon the rates, qualities and brands. iv. In accordance with the terms and conditions as stated in various invoices issued by the operational creditor, 30 to 60 days credit period was generally allowed to the operational creditor to clear all the existing dues towards the invoices issued on different intervals of time. v. After settling upon the terms and conditions of the transactions, it was agreed and decided that the interest @2% p.m. on delayed period after due date will be charged and also penal interest @2% p.m. will be ....
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....es/bills. xviii. The corporate debtor acknowledged the amount of Rs. 16,36,686/- was outstanding vide an email dated 31.01.2019 sent to the operational creditor in respect of the clearance of the dues related to their business transactions. xix. The last payment received by operational creditor from the corporate debtor in respect of pending invoices was on 26.02.2019. xx. After making the part payments out of the total outstanding bill amount, as on 26.02.2019 by the corporate debtor, a principal amount of Rs. 8,04,540/- is still outstanding till 30.05.2019 along with interest and penalties accrued on payments made beyond due of Rs. 6.28.134/- along with pendent-lite future interest @24% p.a. as per terms and conditions mentioned on invoices. xxi. The total amount of Rs. 14,32,674/- is due as on 31.03.2019 inclusive of interest and penalties at an applicable rate and pendent-lite future interest, thereof remains due thereon as an outstanding liquidated liability is on the corporate debtor. xxii. Demand Notice dated 18.06.2019 was sent to the Corporate Debtor by the Operational creditor demanding the payment of the outstanding amount. xxiii. The Corporate Debtor sent a ....
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....e further submitted that there is a default of payment of Rs. 8,04,540/- as a principal amount and along with interest of Rs. 6,28,134/- as on 31.03.2019. 8. He further submitted that during the Financial Year 2016-17 and particularly from June-July 2017 to 26.02.2019, the Operational Creditor had supplied the ordered materials, goods to the Corporate Debtor under their acknowledgment and thereafter the Corporate Debtor utilized the same in its business activities without any objection or dissatisfaction for long tenure. He further submitted that after supplying the materials the Operational Creditor had issued various invoices/bills to the Corporate Debtor and Corporate Debtor had also made part payments against the invoices/bills and he further submitted that last payment of Rs. 3,94,999/- was made on 26.02.2019 and hence the debt fell due on 26.02.2019, therefore, the present application is well within the period of limitation. He further submitted that there is default of principal amount as well as interest. He further submitted that invoices clearly stipulates that in case the amount shown in the invoice is not cleared or remains unpaid upon presentation of the invoice, an i....
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.... made in the application as well as documents enclosed with the application as well as written submissions filed on behalf of operational creditor and we find that it is admitted fact that the Corporate Debtor has not filed the reply to the application filed by the Operational Creditor but Corporate Debtor sent the reply to the demand notice, which Operational Creditor has enclosed at page 74 of the paper book and we have gone through the reply to the demand notice and we find that it is specifically mentioned in para 6 of the reply to the demand notice that quality control department has detected that the supplied paper quality is less than 130 to 140 GSM and rejected on the ground that the said materials does not qualify the standard of paper quality of 180 GSM. 11. In the light of the aforesaid reply, we have gone through the averments made in the application and we find that nowhere, the petitioner has explained or revert to the submissions made in para 6 of the reply to the demand notice rather petitioner is silent on this point and we find that this matter has discussed with the Operational Creditor by the Company Director of Corporate Debtor in the month of June. 2018 and i....
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....;] (g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market value of such transaction shall be taken into account; (h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution; (i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clauses (a) to (h) of this clause; (21) "operational debt" means a claim in respect of the provision of goods or services including employment or a debt in respect of the 6[payment] of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority; 14. Mere plain reading of the provisions show that there is difference between the Financial Debt and Operational Debt. Operational Debt means a claim in respect of the provisions of goods or services including employment or a debt in respect of the dues arising under any law for the time being in force....
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....ould not help to Operational Creditor to substantiate its claim and so far the decision of Mumbai Bench, NCLT in CP No. 45/1 & BP/NCLT/MAH/2017 decided on 10.04.2017 in the case of M/s. DF Deutsche Forfait AG and Anr. Vs. M/s. Uttam Galva Steel Ltd. is concerned. We have carefully gone through that decision and we find that in para 76, of the order, the matter was discussed by the NCLT, Mumbai Bench and it is mentioned in that order that when we see the basis difference to financial debt and operational debt, it is clear the financial debt is money borrowed to repay on future date along with interest, here the money is lent for value addition to the money as agreed between the parties, whereas operational debt is normally based on an agreement to pay the goods or services. We further find thereafter, Mumbai Bench mentioned that it does not mean that interest cannot be claimed in the times to come, it is a normal practice that trade payables are payments deferred for a fixed time, if the party fails to repay within the fixed time, then interest will be claimed over operational debt as well, the same happened over here as well. The Corporate Debtor himself said in the written submiss....
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....ich attributes redundancy to the legislature will not be accepted except for compelling reasons such as obvious drafting errors." 20. In the light of that decision when we shall consider the decision of NCLT Mumbai Bench and the case in hand then We are of the considered view that there is no drafting error in section 5(21). while defining the Operational debt rather the legislature clearly omit the word interest in the definition of operational debt for the purpose of default in order to trigger Section 9 IBC. If it had been the intention of legislature to add interest in the debt, then like definition of financial debt, it must be described in the definition of operational debt but it is omitted, therefore, it had never been the intention of legislature to include interest in the definition of operational debt. Hence, in view of aforesaid discussions, we are of the considered view that we can always presume that the legislature inserted every part thereof for a purpose and the legislative intention is that every part of the statute should have effect. 21. For the reason discussed above and in view of decision of Hon'ble Supreme Court in the case of Natha Devi Vs. Radha Rani....