TaxTMI 
TaxTMI 
2022 (2) TMI 625
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....r - B.Y. Agro & Infra Limited is a registered company, registered under the Companies Act, 1956. Respondent No.1, the Operational Creditor is a company incorporated under the laws of Denmark, having its registered address at Vedbaek, Denmark. (ii) The Corporate Debtor entered into a contract dated 25th March, 2012 with the Operational Creditor for purchasing PUF Sandwich Panels, installation accessories, PRV and Doors for fruits and vegetables processing units for an amount of Euros 275,410/-. The Operational Creditor delivered the materials to the Corporate Debtor in the month of July 2012 and thereafter completed its installation work in April, 2013 at premises located at Nagpur, state of Maharashtra. The Operational Creditor raised invoices dated 28th May, 2012 for an amount of Euros 94,103.86; invoice dated 1st June, 2012 for an amount of Euros 19,791.85; and invoice dated 17th June, 2012 for an amount of Euros 24,900. The Corporate Debtor gave its provisional installation certificates dated 2nd March, 2013. (iii) By letter dated 15th June, 2013, the Corporate Debtor acknowledged outstanding payment of Euros 246,940.70 and sought some more time to clear the ou....
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....nd permanent solution was sought for. (vi) The Adjudicating Authority gave several opportunities to the Corporate Debtor to file its reply and finally opportunity to file reply was closed vide order dated 15th July, 2019. The Corporate Debtor, however, filed written submission along with compilation of judgments before the Adjudicating Authority. The Adjudicating Authority by the impugned judgment had held that there was default committed by Corporate Debtor in payment of outstanding dues. The Corporate Debtor had admitted default unequivocally. Regarding the submission of the Corporate Debtor that there being arbitration Agreement, Application under Section 9 was not maintainable and was to be rejected, it was held by the Adjudicating Authority that registered office of the Corporate Debtor being in the territorial jurisdiction of National Company Law Tribunal, Section 9 Application was fully maintainable. The Application was admitted. Interim Resolution Professional was appointed and Moratorium was declared by the Adjudicating Authority. (vii) Aggrieved by the judgment and order dated 26th May, 2020, this Appeal has been filed by the Suspended Director of the Co....
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....nd in their communications, they have not said about any dispute. The Appellant had filed two Resolution Plans during the Corporate Insolvency Resolution Process (CIRP), which could not be approved and on 26th November, 2021, the Committee of Creditors has voted for liquidation. The Application for liquidation has already been filed before the Adjudicating Authority on 08.12.2021. 8. Shri Kaushik, learned Counsel for the Appellant submits that company is a solvent company and the Counsel for Respondent No.2 has no authority to address submission on the merits of the Application. 9. Although, no one has appeared on behalf of Respondent No.1, but they have filed their detailed reply in the appeal on 14th December, 2020. We have perused the reply of Respondent No.1 and the documents filed along with the reply. 10. From the submissions and the pleadings on record, following are the questions, which arise for consideration in this Appeal: (1) Whether in view of Clause 8 of the Agreement between the parties dated 25th March, 2012 for settlement of dispute by the Court of Arbitration of Switzerland, Application under Section 9 could not have been entertained by Adjudicat....
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....he Statement of Objects and Reasons of the enactment provides as follows: "Statement of Objects and Reasons.-There is no single law in India that deals with insolvency and bankruptcy. Provisions relating to insolvency and bankruptcy for companies can be found in the Sick Industrial Companies (Special Provisions) Act, 1985, the Recovery of Debt Due to Banks and Financial Institutions Act, 1993, the Securitisation and reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Companies Act, 2013. These statues provide for creation of multiple for a such as Board of Industrial and Financial Reconstruction (BIFR), Debt Recovery Tribunal (DRT) and National Company Law Tribunal (NCLT) and their respective Appellate Tribunals. Liquidation of companies is handled by the High Courts. Individual bankruptcy and insolvency is dealt with under the Presidency Towns Insolvency Act, 1909, and the Provincial Insolvency Act, 1920 and is dealt with the Courts. The existing framework and insolvency and bankruptcy is inadequate, ineffective and results in undue delays in resolution, therefore, the proposed legislation. 2. The objective of the Insolvency ....
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....supplier or assignee of such supplier may have a foreign banker who is not within Section 3(14) of the Code. The fact that such foreign supplier is an operational creditor is established from a reading of the definition of "person" contained in Section 3(23), as including persons resident outside India, together with the definition of "operational creditor" contained in Section 5(20), which in turn is defined as "a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred". 16. In the Macquarie Bank Ltd., the Corporate Debtor was the corporate person within the meaning of Code and the Operational Creditor was assignee from foreign entity. The submission of Shri Kaushik that Section 9 Application was not maintainable in view of Clause 8 of the Agreement also has no merit. The Code has been given an overriding effect on other laws including any instrument having effect by virtue of such law. The Section 238 of the Code is as follows: "238. Provisions of this Code to override other laws. - The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other ....
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....dependent consideration of the same dehors the application filed under Section 7 of IB Code and materials produced therewith will not arise. The adjudicating authority is duty-bound to advert to the material available before him as made available along with the application under Section 7 of IB Code by the financial creditor to indicate default along with the version of the corporate debtor. This is for the reason that, keeping in perspective the scope of the proceedings under the IB Code and there being a timeline for the consideration to be made by the adjudicating authority, the process cannot be defeated by a corporate debtor by raising moonshine defence only to delay the process. In that view, even if an application under Section 8 of the 1996 Act is filed, the adjudicating authority has a duty to advert to contentions put forth on the application filed under Section 7 of IB Code, examine the material placed before it by the financial creditor and record a satisfaction as to whether there is default or not. While doing so the contention put forth by the corporate debtor shall also be noted to determine as to whether there is substance in the defence and to arrive at the conclu....
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....given overriding effect, the right to initiate Application under Section 9 shall not be taken away by the Operational Creditor by any Agreement of arbitration in the contract, when Operational Creditor elect to initiate proceedings under Section 9, it cannot be rejected on the aforesaid ground. We, thus, do not find any substance in the above submission of learned Counsel for the Appellant. Question No.2 20. The contract between the Corporate Debtor and the Operational Creditor was entered on 25th March, 2012, under which Corporate Debtor was to purchase PUF Sandwich Panels, installation accessories, PRV and Doors for fruits and vegetables processing units. The Operational Creditor delivered the material to the Corporate Debtor and completed the installation work in April 2013. The three invoices were also issued, duly supported with relevant packaging details and bills of lading. The Corporate Debtor himself has given a provisional installation certificate dated 2nd March, 2013, which certificate contain following "We whereby confirm that the job has been performed as per above mentioned contract and has been taken over as of today". The Operational Creditor had issued three....
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....enovic' Subject: FW: Delayed payment of CT Technologies Attachments: BOI_CT. pdf Dear Mr. Carsten, Forwarding you the approval letter received from bank for making payments in instalments to Ct Technologies. Company Appeal (AT) (Insolvency) No. 802 of 2020 19 Will start making payments from second week April onwards. Hope you must have read the EOI report of Mega Food Park, I have spoken to Mr Sivakumar and forwarded a copy to him as well, awaiting his reply and future action plan. Regards Hasan Shafiq Director B.Y. Agro & Infra Pvt Ltd 1 982 303 4461 www.byagroinfra.com" 22. On July 14, 2015, after remitting 5000 Euros, the Corporate Debtor by email again acknowledged the debt and assured to speed the payments in bullet installments. The email dated 14th July, 2015 stated: "Til: Carsten Thorsen Cc: Hasan Shafiq - B.Y. Agro & Infra Pvt. Ltd.; Sarah Shafiq - B.Y. Agro & Infra Pvt. Ltd. Emne: Re: Payment of installments Dear Mr Carsten, We are happy to inform that today we have remitted 5000 Euros to your account as part ....
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.... not being as desired. The process of turnaround have started and inshallah very soon it will start giving results. Warm regards" 25. It is on 6th November, 2017 that legal notice was sent by Operational Creditor to the Corporate Debtor demanding outstanding payment of Euros 245,450. Legal notice was replied on 2nd January, 2018 by Corporate Debtor, which has also been brought on record in the reply of Respondent No.1 and was also part of the Section 9 Application. In the reply, there is a clear acknowledgement of supply and delivery of material on site. It was admitted that only Euros 30000 has been paid. In the whole reply, no kind of any dispute was referred, rather all details were given including further promise to clear the outstanding dues. It shall be useful to notice only paragraph 2, 4 and 13 of the reply to the following effect: "2) Yes in the year 2012 our company approached your clients seeking quotation for design, supply, and installation of PUF sandwich panels, installation accessories, PRV Doors and fruit and vegetables processing unit. Thereafter a quotation no.173.02.12.b dated 16march 2012 was received, subsequently we and your clie....
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....ening only in room No.2, then it looks like the joint between the two last ceiling panels of the rooms had opened and air can get in some places. Although your client had advised some steps to be taken, but the same were of no avail. As a result of which the problem still persists. Thus my client is not liable to make any payment to your client till the time the problem reported is fixed permanently. Your client has deliberately concealed the said fact as a result of which there is no reference to the e-mail dated 05.08.2014 in your notice under reply. As a result of an ongoing dispute between my client and your client on the subject matter of the demand notice served upon my client, amongst other averments made herein, this letter should be treated as a notice of existence of a dispute under section 8(2)(a) of the Insolvency & Bankruptcy Code, 2016." 27. Section 9 Application was filed, copy of which has been brought on record along with Appeal. In Section 9 Application Operational Creditor has filed all correspondence, all relevant documents, which are referred to in Item No.8 of Part V. All e-mails and correspondence exchanged between the parties from 2012 to 2018 were filed ....
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....x Innovations Private Limited vs. Kirusa Software Private Limited, (2018) 1 SCC 353, what Hon'ble Supreme Court has laid down is that, all that Adjudicating Authority has to see as to whether there is a plausible contention which requires further investigation and that the "dispute" is not patently feeble legal argument or an assertion of fact unsupported by evidence. In paragraph 51 of the judgment, following has been laid down: "51. It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the "existence" of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the "dispute" is not a patently feeble legal argument or....