TaxTMI 
TaxTMI 
2021 (3) TMI 207
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....ous metals including copper, zinc, tin, aluminium, iron ore, coal and other refined metals and concentrates of such non-ferrous metals in various forms. 3. The corporate debtor is engaged in the business of manufacture and supply of a wide range of copper products using copper cathodes. 4. Facts of the application in short are as follows : (i) In 2016, the corporate debtor approached the operational creditor for purchasing a specified quantity of copper cathodes from the operational creditor. Pursuant to negotiations, the operational creditor and the corporate debtor entered into a master sale agreement dated January 27, 2016 (as amended from time to time, the "MSA") under which the corporate debtor agreed to buy and the operational creditor agreed to sell, on the terms and conditions set out in the MSA, a specified quantity of copper cathodes (defined as "material" in the MSA). The rights and obligations of the par ties were governed by the terms of the MSA. (ii) Further, in accordance with the provisions of the MSA, the corporate debtor was to place purchase orders for the supply of material upon the operational creditor on a regular basis. Pursuant to such purchase ord....
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....er adjustments over and above the amount mentioned in the settlement agreement. (viii) Further, the corporate debtor, sent a reply to the demand notice dated October 12, 2019 denying the alleged amount in default being Rs. 64,13,59,330 on the following grounds : (a) While contractually it was agreed between the parties that repayment would be on mutual agreement, therefore the present demand notice is illegal and untenable. Thus, there is absolutely no reason for Trafigura to claim the alleged amount or any other amount as payable. (b) Separately, various disputes are pending between the parties, which include, and are not limited to (i) loss on account of non-supply of copper cathode in breach of the MSA ; (ii) non-adjustment of payment made to Trafigura ; (iii) intentional non-reconciliation of accounts ; (iv) not releasing the security interest for which payment has been received, among others things. All these disputes are pre-existing and covered in correspondence between the parties. (c) Without prejudice to aforesaid, the alleged amount in default being Rs. 64,13,59,330 is also disputed and denied, you have not placed any statement of account maintained by Trafigura ....
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....approached the operational creditor for the sale of certain plots of the mortgaged property, which were sold by them with the assent of the operational creditor and the proceeds of the sale paid to the operational creditor. Following the execution of the settlement agreement, the corporate debtor had, in relation to the sale of plots 19 and 60 forming part of the mortgaged property, exchanged several e-mails with the operational creditor to obtain a no objection certificate. Vide e-mail dated June 18, 2019 the corporate debtor wrote to the operational creditor stating that an amount of Rs. 49,94,550 had been transferred and requesting the operational creditor to give its no objection certificate in respect of plots 19 and 60. However, the operational creditor did not receive any such amount. Upon enquiries being made by the operational creditor, the corporate debtor vide e-mail dated June 21, 2019 swiftly reversed its stand and informed the operational creditor that the funds had not been transferred. Following the same, no communication was received from the corporate debtor by the operational creditor for obtaining and no objection certificate in relation to the aforesaid plots o....
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....or an amount of Rs. 2.51 crores (approximately) till date and is yet to deposit with the Government GST of Rs. 2.38 crores (approximately) and issue the debit notes to corporate debtor to the extent of Rs. 2.38 crores (approximately) in relation to the abovementioned GST amount. (b) In breach of the master sale agreement, the operational creditor failed to supply materials as per the requirements of the corporate debtor during major part of the year 2016 to the year 2018. (c) E-mail dated May 16, 2019 was sent by the operational creditor to the corporate debtor which clearly shows that various issues with respect to interest calculation, GST, MTM, open foreign exchange remained unresolved. (d) The issue in respect of payment of GST amounts have not been concluded. Further, the accounts are yet to be reconciled. (iii) In connection with the said master sale agreement, the parties entered into a contract for supply of material for every year for the supply of LME Registered Grade A copper cathode for that particular year. The abovementioned disputes between the parties remained unsettled and the corporate debtor continued to raise its grievances against the operational credit....
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....l dated April 25, 2019 confirmed and agreed to the terms mentioned in the e-mail dated April 25, 2019 and as such a valid and binding contract came into existence between the par ties for supply of material for the year 2019. The corporate debtor vide the same e-mail requested the operational creditor to share a formal contract for its records. (viii) Thereafter, a covering letter dated April 25, 2019 along with a formal contract was provided by the operational creditor to the corporate debtor itself shows that no amounts were due and payable on May 15, 2019 because the parties were doing business under the master sale agreement read with the contract for supply of material dated April 25, 2019 which was forwarded on June 2, 2019, i. e., after the date on which the said amounts allegedly became due and payable. (ix) It is an admitted position that between August, 2018 and November, 2018, the corporate debtor paid a sum of Rs. 12,30,59,615 to the operational creditor thereby reduced the outstanding liability from Rs. 63,81,63,368 to Rs. 51,51,03,753. (x) Although, the corporate debtor performed its sole obligation under the said settlement agreement, all the reducing exposure ....
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....the parties. Trafigura vide the said e-mail called upon TDT to travel to Mumbai to close accounts/ledgers thereby making it clear that the accounts/ledgers were not closed as on the date of execution of the settlement agreement. (xi) As per the corporate debtor, it has to recover a sum of Rs. 24,95,18,655.41 from the operational creditor after adjusting all the amounts which are reflected in the settlement agreement. These amounts are in relation to quality claims, shortage claims, freight, excess interest paid, work material processed and returned and high seas sales amount. The said amounts are, inter alia, reflected in the five ledger accounts main tained by the corporate debtor in respect of the account of the operational creditor : Sl. No. Debit Credit Remarks Annexure-1 135,944,578.25 Debit note issued for quality claim, shortage, freight, LC interest excess paid, custom duty and others Annexure-2 92,637,571.00 Proof of export not provided by Trafigura and hence TDT liable to pay to the Government. Annexure-3 5,796,706.84 HSS amount Annexure-4 424,547,927.00 JW material processed and returned invoiced with GST. Anne....
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....he correspondence annexed as annexure R5 to the reply, the events in relation to the purported loss on account of non-supply of copper cathodes arose in 2016-17. However, no debit note was raised by the corporate debtor in respect of the same. Thereafter, on account of delay in lifting stock by the corporate debtor, the operational creditor had raised a debit note on the corporate debtor for the interest charges towards such delay by the corporate debtor. The same was communicated to the corporate debtor vide e-mail dated February 21, 2017 (annexed as annexure 15 to the application) by supplying the relevant balance ledger from April 1, 2016 to February 20, 2017. (vii) The operational creditor never coerced the corporate debtor to enter into a settlement agreement. (viii) It was never assured by the operational creditor that grievances of the corporate debtor which remained unresolved would be addressed by the operational creditor after the execution of the settlement agreement. (ix) The parties did not enter into a fresh contract for the supply of materials for 2019 by the cut-off date stipulated in clause 5(c) of the settlement agreement, i. e., December 21, 2018 as claimed....
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....ettlement and there is default in payment of the settlement amount, therefore, the petitioner filed the present application for initiation of CIRP for default in payment of operational debt. Therefore, we would like to consider at first whether the terms and condition of settlement agreement comes under the definition of operational debt, therefore, we would like to refer definition of operational debt, default and debt and the same is quoted below : Section 5(21) of the IBC : "'operational debt' means a claim in respect of the provision of goods or services including employment or a debt in respect of the 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 ;" Section 3(12) of the IBC : "'default' means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be ;" and debt is defined under section 3(11) of the IBC and same is quoted below : "'debt' means a liability or obligation in respect of a claim which is due from any person and i....