TaxTMI 
TaxTMI 
2021 (3) TMI 207
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....ditor is engaged in the business of, inter alia, trading in non-ferrous 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 supp....
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....019 to September 24, 2019. This amount was inclusive of adjustments on account of price fixation and debit and credit notes issued for other 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....
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.... a no objection certificate from and pay a security amount to the operational creditor. Prior to the execution of the settlement agreement, the TDT infra/corporate debtor had from time to time, 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 tr....
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....e Government and he has charged interest on the same. That out of the abovementioned amount of Rs. 4.89 crores (approximately), the operational creditor has issued debit notes to the corporate debtor in relation to the GST only for 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 mater....
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....e debtor to the operational creditor was less than USD 7.5 million. Further, vide the said e- mail the operational creditor also referred to the meeting held between the parties and indicated the terms of the contract of supply of material for 2019. The corporate debtor vide its e-mail 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, 20....
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....2019 regarding the reconciliation of accounts. (g) Vide an e-mail dated April 15, 2019 the operational creditor admitted and confirmed that there are several disputes remained to be resolved from the side of the operational creditor. In fact, a bare perusal of e-mail dated April 29, 2019 shows that the accounts are yet to be reconciled between 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 &nbs....
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.... final settlement of all amount. Without prejudice, the MSA was superseded by the settlement agreement, which superseded all previous agreements between the parties. (v) The corporate debtor has not specified which period the alleged GST deduction relates to, nor has it placed any document on record to substantiate its allegations. It is submitted that the operational creditor has adjusted the same against amounts due and payable by the corporate debtor. (vi) As per the 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 credito....
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....orate debtor has filed an application under section 8 of the Arbitration and Conciliation Act, 1996 for referring the matter before learned counsel for arbitrator by filing C. A. No. 585 of 2020. 10. In the light of that submissions, we have gone through the averments made in the application and the documents enclosed with the same and we find that the claim of the applicant is based on settlement agreement and on the basis of that the petitioner claimed that since the respondent violated the terms and conditions of settlement 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 fo....