TaxTMI 
TaxTMI 
2020 (10) TMI 918
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....he impugned order dated 03.06.2020 at paragraph 18 to 20 had observed the following: - "18. A careful perusal of the reply filed by the respondent shows that it has not denied the procuring of the material/steel goods (i.e. MS Angle) from the petitioner and which were properly delivered to and have been utilised by the Corporate Debtor. The Corporate Debtor did not produce any document to show that it raised some objection in respect of lower quality of goods supplied to it or on price / rate of material supplied. Contrary to this, the petitioner made such declaration about the tax invoices wherein, TDS is stated to have been deducted on the invoices raised by the petitioner. It is also a matter of record that the Corporate Debtor has made a part payment and amount of Rs. 17,74,977/-. Thus, there is remaining balance of Rs. 9,42,841/- as on 22.09.2017. The Petitioner, by filing rebuttal document has refuted the allegation of the Corporate Debtor in respect of low quality of goods and defective material and produced copies of communication through email / WhatsApp screenshot for perusal of this Court along with its rebuttal documents which shows that there was certain communicatio....
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....to construct a Compound Wall and GI Chain link fencing around the 'Gujarat Refinery Township' and the period of work was from 21.05.2017 to 30.06.2017. The total bill submitted for the work is around INR 1.56 Crore. 4. The First Respondent / 'Operational Creditor' (a Sole Proprietorship Concern) used to supply MS Angle to the 'Corporate Debtor'. The primary use of this MS Angle was for executing this Works Contract / Work Order with 'Indian Oil Corporation' for 'Gujarat Refinery'. The total sum of money outstanding as per the version of the First Respondent / 'Operational Creditor' was INR 27,17,818 out of which INR 17,74,977 was paid and only INR 9,42,841 being the balance sum to be paid since 22.09.2017. 5. It is the case of the Appellant that the 'Demand Notice' under Form 3 and 4 dated 06.04.2018 was duly served and that the total amount of 'Debt' mentioned therein was INR 18,63,840. However, in the Application before the 'Adjudicating Authority' the total sum was mentioned as INR 27,17,818 and the discrepancy in the amount leads to the conclusion that post payment of INR 17,74,977 only a sum of 88,863 was left, which is less than the threshold limit of INR Rs. one Lakh. 6. ....
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....nce on record). Appellant's Contentions 9. The Learned Counsel for the Appellant submits that the 'Adjudicating Authority' had failed to consider the fact that the material defect in the 'Demand Notice' is fatal to the facts of the present case. Also, that the defense of the defective goods was brushed aside and that the impugned order is without jurisdiction. 10. The Learned Counsel for the Appellant contends that the impugned order runs contra to the judgement of this Appellate Tribunal dated 24.02.2020 in Company Appeal (AT) (Insolvency) No. 1354 of 2019 in the matter of 'Neeraj Jain' V. 'Cloudwalker Streaming Technologies Private Ltd.' wherein it was held that the amount in default as specified in the 'Demand Notice' must be in consonance with the 'Application' filed and the invoices sent but, in this case there is a serious discrepancy and a fatal error in the total amount of 'Debt' between the 'Demand Notice' and the application filed under Section 9 of the 'I&B' Code. 11. It is represented on behalf of the Appellant that if the amount due, if taken to be the sum as mentioned in the 'Demand Notice', then, the sum remains to be paid to the First Respondent / 'Operational C....
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....pellant contends that the Appellant in the present Appeal has filed IA 2375 of 2020(as an Applicant) seeking permission from this Tribunal to place on record (i) True copy of the order dated 22.09.2020 passed by this Tribunal in Company Appeal (AT)(Ins.) 592/2020 (ii) True copy of the order dated 06.01.2020 passed by the National Company Law Tribunal, Ahmedabad Bench, Ahmedabad in C.P. (IB) 227/NCLT/AHM/2018 (iii) True copy of the Work Order dated 20.09.2016 and the total bills submitted to 'Indian Oil Corporation' for the 'Contract' (iv) True copy of the e.mail dated 01.10.2017 and 14.10.2017 (v) True Copy of the e.mail dated 22.08.2020 (vi) True copy of the e.mail dated 16.07.2020 (vii) True copy of the letter dated 17.04.2017 (viii) True translated copy of the notice dated 02.04.2019 issued by VUDA regarding sealing of the premise (ix) True translated copy of the FIR dated 09.08.2020 on the file of Police Station Jawahar Nagar, Vadodara (x) Proof of service of additional affidavit and these additional documents came to the knowledge of the Appellant after passing of the impugned order by the 'Adjudicating Authority' and that the Appellant was precluded from filing the same befor....
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....sp; 13.06.2017 35627 124 24.07.2017 859796 11.09.2017 50000 469 15.09.2017 133045 FY2017-18 Total 1863840 885627 Grand Total 2717818 1774977 20. The aforesaid table clearly exhibits that the sum in default is Rs. 9,42,841/- and it is the same amount that was specified in the demand notice as well as in the Application before the 'Adjudicating Authority' filed under Section 9 of the Code. Besides this, the account was a 'running account' and that total sales will have to be taken into consideration while accounting for the total payments received. All the six sales invoices were sent along with the 'Demand Notice' and the requirement was complied with. 21. The 'Adjudicating Authority' had only taken a cursory look into the WhatsApp communication to hold that there was no objection taken in regard to the quality of goods and that the mere presentation of screenshots of 'WhatsApp Communication' by the First Respondent could not be faulted with. 22. The 'Corporate Debtor' had neglected the 'Demand Noti....
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....t must exist before the receipt of the demand notice or invoice, as the case may be." 25. The Learned Counsel for the First Respondent adverts to the decision of Hon'ble Supreme Court in 'Macquarie Bank Ltd.' V. 'Shilpi Cable Technologies Ltd., reported in (2018) 2 SCC page 674 wherein it is observed as follows:- "13. The first thing to be noticed on a conjoint reading of Sections 8 and 9 of the Code, as explained in Mobilox Innovations (P) Ltd. V. Kirusa Software (P) Ltd. [Mobilox Innovations (P) Ltd. v. Kirusa Software(P) Ltd., (2018 1 SCC 353: (2018) 1 SCC (Civ) 311] decided on 21.09.2017, at paras 33 to 36, is that Section 9(1) contains the conditions precedent for triggering the Code in so far as an operational creditor is concerned. The requisite elements necessary to trigger the Code are: (i) Occurrence of a default; (ii) Delivery of a demand notice of an unpaid operational debt or invoice demanding payment of the amount involved; and (iii) the fact that the operational creditor has not received payment from the corporate debtor within a period of 10 days of receipt of the demand notice or copy of invoice demanding payment, or received a reply from the corporate deb....
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....) of the 'I&B' Code, the 'Corporate Debtor' is to bring to the notice of the 'Operational Creditor' about the existence of a dispute and / or the record of the pendency of a suit or arbitration proceeding filed before the receipt of such notice or invoice in relation to such dispute within a period of ten days from the date of receipt of such demand notice or copy of invoice(vide Section 8(2)(a) of the Code) 29. The First Respondent / 'Operational Creditor' is not a party to the documents which reflect the communication between the Appellant and their customer and as such they are not helpful to the Appellant / Applicant. The Appellant / Applicant has not offered any bonafide reason as to why the documents were not produced before the 'Adjudicating Authority'. The words 'substantial cause' mentioned in Order 41 Rule 27(b) of the Civil Procedure Code have not been demonstrated by the Appellant / Applicant through pleadings, before this Tribunal. 30. The Learned Counsel for the First Respondent refers to the ambit of Order 41 Rule 27(b) of the Civil Procedure Code, explained by the Hon'ble Supreme Court in the decision 'Mahavir Singh' V. 'Naresh Chandra, (2001) 1 SCC at page 309 wh....
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....orporation'. Except for the e.mails annexed as A7 in IA No. 2375 of 2020, all other documents were in possession of the Appellant much earlier to the date on which the order was reserved by the 'Adjudicating Authority' and hence, it cannot be said that the Appellant was unable to submit the documents in question before the Authority. As such, the IA No. 2375/2020 seeking to place on record the additional documents is unsustainable in law and liable to be dismissed at the threshold. Gist of 2nd Respondent's Status Report 33. On various occasions, the 'Resolution Professional' addressed numerous communications to the suspended management of the 'Corporate Debtor' (including the Appellant) intimating them about the initiation of 'Insolvency Resolution Process' against the 'Corporate Debtor' and seeking cooperation and information from the suspended management. As a matter of fact, individual communications through hard copy, speed post and mail were sent on 10.06.2020, 13.06.2020, 22.06.2020, 26.06.2020 and 06.07.2020 but the suspended management of the Company as well as the Appellant had failed to cooperate with the second Respondent. Till date, no information is forthcoming from ....
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....s Rs. 18,63,840/- sales account (GST - 18%) 22.09.2017. In S.No. 2, the amount claimed to be in default is described as 9,42,841/-(repayment due date 22.09.2017). 38. It comes to be known that an additional affidavit pursuant to an order dated 28.02.2019 passed by the 'Adjudicating Authority' was filed by the Proprietor of the First Respondent, before the said Authority whereby and whereunder it was mentioned that the defect in Part-V of Form 5 submitted by the Applicant was raised as in point no. 1 to 5 were replied as 'Not Applicable' and in point no. 8 it was replied as 'Separate Application' and because of the said defect raised, a rectified Form 5 with the additional affidavit towards rectification of defect pursuant to notice issued under Section 9(5) by the 'Adjudicating Authority' was submitted and on 14.10.2019, the 'Adjudicating Authority' had opined that there was no prejudice to the 'Corporate Debtor' in allowing the amendment by way of an additional affidavit filed by the First Respondent / 'Operational Creditor' and that the 'Corporate Debtor' may get further opportunity for filing reply if necessary amendment in the main IB Petition was permitted and accordingly the....
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....nd that the dispute existed between the parties regarding the quality of the goods supplied but failed to raise the dispute within ten days of the receipt of 'Statutory Notice' under Section 8 of the 'I&B' Code, it is held that the petition is maintainable. 44. If a dispute truly exists in fact and is not a hypothetical or an illusory one, then, the 'Adjudicating Authority' is to reject the Application. A defence being a mere bluster can also be rejected by an 'Adjudicating Authority'. 45. Section 8 of 'I&B' Code adopts the test to all classes of Applications that may initiate Insolvency proceedings against the 'Corporate Debtor'. An 'Operational Creditor' is to show refusal of the 'Debtor' to repay the 'debt' despite 'Statutory Notice' issued under Section 8 of the Code. 46. It cannot be lost sight off that an unpaid 'Demand Notice' is evidence of Debtor's inability to pay its debts for the purpose of bankruptcy proceedings and it is a just ground for a creditor to justify the filing of the petition. An 'Adjudicating Authority' is not to decide how much due is. Further, an 'Adjudicating Authority' is required to examine before admitting or rejecting an application u/s 9 of the ....
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....permitted to be received. 50. Also, that the non-realisation of the importance of the documents due to inadvertence or lack of proper legal advice would not bring the case within the expression 'other substantial cause' under order 41 Rule 27 of the Civil Procedure Code, as per decision 'Haryana State Industrial Development Corporation' V. 'Cork Manufacturing Company' reported in AIR 2008 SC page 56. 51. It is significantly pointed out that the true copy of the order dated 22.09.2020 in Company Appeal (AT) (Insolvency) No. 592 of 2020(A1), true copy of the order dated 06.01.2020 (A2) passed by the 'Adjudicating Authority', National Company Law Tribunal, Ahmedabad Bench, Ahmedabad in C.P. (IB) 227/7/NCLT/AHM/2018, true copy of e.mail dated 22.08.2020 and the two translated copies of the notice dated 02.04.2019 issued by 'VUDA' regarding sealing of premises (A9) are the documents that are very much available before the filing of the instant Appeal and this Tribunal permits the Appellant to place on record in this Appeal before this Tribunal the aforesaid Annexure A1 and A2 judicial orders. In so far as other documents are concerned, their communications (including the Annexure A3-t....