AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (12) TMI 1283
X X X X Extracts X X X X
X X X X Extracts X X X X
....he rate of 18% p.a. being Rs. 14,47,770/- (Rupees Five Lakh Twenty Nine Thousand Six Hundred and Sixty Four Only) calculated from the date of each invoice till the date of filing of this Petition. 2. Mr. Praveen Bohara, holding the position of Managing Director has filed this petition being duly authorised by Board Resolution dated 02.03.2020 passed by the Operational Creditor Company. Copy of the Board Resolution dated 02.03.2020 is annexed to the Petition. 3. Brief facts of the case, as mentioned in the Company Petition, which are relevant to the issue in question, are inter alia as follows: (1) The Applicant supplied furniture to the Respondent and raised invoices for the same. The Respondent has paid Rs. 71,30,412/- out of the invoice amounts and failed to pay an outstanding amount of Rs. 36,20,150/- which has been pending from the year 2017 and an interest of 18% p.a. is payable in case of delayed payment. Therefore the total claim amount is Rs. 50,67,926/- including interest. The calculation of the claim amount is annexed to the petition as the 'Workings for computation of default'. (2) The Applicant has listed out 92 Sales invoices against the supplies made to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t's reputable business. Further, it is stated that as there were innumerable complaints being raised by the Respondent, the Petitioner and the Respondent held meetings on 08.07.2017, 11.07.2017 and 24.07.2017 to resolve the issues at the Respondent Company's factory premises in Bengaluru. (4) It is stated that in the meeting dated 24.07.2017 the Applicant agreed to pay Rs. 20,00,000/- (Rupees Twenty Lakh only) as compensation to the Respondent for causing loss and disrepute to the Respondent. As per point No. 3 of the MoM, the Applicant was supposed to issue credit note of Rs. 20 Lakh to the Respondent after which the Respondent would release payments in 3 instalments. However, the Applicant has failed to issue the credit note till date. The same is recorded under the Minutes of Meeting dated 24.07.2017 which is annexed to the Statement of Objections. (5) It is submitted that the Respondent offered to repay Rs. 8,00,000/- owing to fact that the Respondent had spent monies out of its own pocket to rectify the shoddy work carried out by the Applicant. However, the said offer was rejected by the Applicant. (6) The Respondent submits that on account of the Applicant's....
X X X X Extracts X X X X
X X X X Extracts X X X X
....diately, you can send your person to school to address this 1 p.m. today. We don't want any students getting hurt or client being unhappy with our products.". (11) The Respondent has relied on the decisions of Hon'ble NCLAT in M/s. Kirusa Software Private Ltd. v. M/s. Mobilox Innovations Private Ltd. Company Appeal (AT) (Insol.) No. 6 of 2017 and M/s. MCL Global Steel Pvt. Ltd. & Anr. v. M/s. Essar Projects India Ltd. & Anr. to demonstrate that the existence of dispute referring to similar facts in the above said cases. Further, reliance is placed on the decision of Hon'ble NCLAT in Philips India Ltd. v. Karina Healthcare Private Limited, in support of its contention that the dispute is pre-existing and not a dispute that is raised for the sake of it. (12) The Respondent has also contended that the threshold for triggering section 4 of the IBC has been raised to Rs. 1 Crore vide Reference No. CG-DL-E-24032020-218898 dated 24.03.2020 issued by the Ministry of Corporate Affairs. The Petition having been filed after the notification deserves to be dismissed. 5. The Petitioner has filed its Rejoinder with the following contentions: (1) From para No. 6 of the Objectio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d be considered by this Tribunal in the adjudication of the instant petition. It is stated that in the above matter, a decree was taken cognisance of in IBC matter and CIRP was admitted against the Respondent. ii) M/s. Cortica Manufacturing (India) Private Limited v. M/s. Victory Electricals Limited in CP/872/IB/2018 by NCLT Chennai, where the Tribunal concluded that the Adjudicating Authority can take cognisance of the Decree passed by the Civil Court under which the claim has been crystallised and the Decree has been drawn in favour of the plaintiff/Operational Creditor. iii) The Applicant states that there is failure in managing the finances of the Company which is termed as 'Financial failure' being a persistent mismatch between payments by the enterprise and receivables into the enterprise, even though the business model is generating revenues. Therefore initiation of CIRP is necessary. In this regard the Applicant relies on the decision of Hon'ble Supreme Court in M/s. Innoventive Industries Ltd. v. ICICI Bank & Anr. in Civil Appeal Nos. 8337-8338 of 2017 stating that bankruptcy process is initiated not only for a business failure but also a financial failure.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty of the notification is to be applied and not the date of filing a Petition in this Tribunal. As the date of default is 03.06.2017 and onwards, the petition survives for consideration, on merits. 10. We may further clarify that it is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP for justified reasons as per the Code. The Hon'ble Supreme Court in the case of Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited (2018) 1 SCC 353, has inter alia held that I&B Code, 2016 is not intended to be substitute to a recovery forum. It is also laid down that whenever there is existence of real dispute, the IBC provisions cannot be invoked. In another latest judgement rendered in Transmission Corporation of A.P. Ltd. Vs. Equipment Conductors and Cables Ltd., (CA No. 9597 of 2018) dated 23rd October, 2018, (2018) 147 CLA 112 (SC) Hon'ble Supreme Court of India has inter alia held that existence of undisputed debt is sine qua non of initiating CIRP. As per para 34 of the judgement, it is stated that the Adjudicating Authority, while examining an application filed under S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....summary proceedings and do not envisage detailed investigation, enquiry or forensic audit. The contentions raised pointing out to a dispute regarding the quality of the goods being good at the time of delivery, the Respondents own shoddy work on the additional work, or supplies received from other suppliers etc., only makes it clear that these issues have to be dealt with by any other court or tribunal where evidence can be adduced in support of such contentions, but not under these summary proceedings under the I&B Code, 2016. 13. Further, proceedings under the Code are independent proceedings and proceedings in another forum cannot solely be made a basis for a decision by this Tribunal unless a prima facie case is made out by the Applicant under the provisions of section 9 of the Code, 2016. On a plain reading of the order dated 18.02.2019 of the MSMEC, it is clear that the Respondent has disputed the quality of goods supplied even before the Council and the same is a matter of record. The nature and purpose of proceedings before the MSME Council are completely different and cannot alone be a basis of this Tribunal's decision under IBC proceedings. This Tribunal is not a dis....