TaxTMI 
TaxTMI 
2022 (5) TMI 873
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....having its Registered office at 23, Brabourne Road, Kolkata-700001, (hereinafter referred as the Corporate Debtor). 3. It is submitted that the Operational Creditor is inter alia engaged in the business of acquiring and selling waste paper and agreed to supply paper to the Corporate Debtor, when it approached the Operational Creditor on mutually agreed terms and conditions. It is submitted that the Corporate Debtor is, inter alia, a trader, manufacturer, supplier and distributor of craft-paper, printing paper etc. For that purpose, the Corporate Debtor purchased the waste paper and with a proposal of purchasing waste paper had approached Operational Creditor. Pursuant to several discussions between the parties, the Operational Creditor started supplying waste paper to the Corporate Debtor and good relationship existed between them till June 2018. However beyond June, 2018 till 26th March, 2019. The Operational Creditor in good faith supplied goods to the Corporate Debtor from both its registered office at Kolkata and branch office at Jharkhand but did not receive any payment against the same. It is submitted that during this period waste paper was supplied by the Operational Cre....
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....Analysis Report along with Ledger maintained by Operational Creditor on account of Corporate Debtor with respect to goods supplied from the Operational Creditor' Kolkata Office, (Annexure IV B). vii. Table showing computation of interest and overdue amount (Annexure V) viii. Copy of Demand Notice dated 17/06/2019 in prescribed Form 3 and 4 under the IBC, 2016, along with postal receipts, acknowledgement due card and track record downloaded from the official website of Indian postal services (Annexure VI). ix. Bank Statement of Operational Creditor, (Annexure-VII). x. A copy of the Bank draft no. 473073 dated 05.08.2019.(Annexure-VIII). xi. Affidavit affirmed by the applicant under section 9(3)(a),(b) and (c) of the Insolvency and Bankruptcy Code, 2016.(Annexure-X) xii. A copy of affidavit of Service of application under section 9 by the Operational Creditor to Corporate Debtor (Annexure-X). 5. In the reply affidavit filed by the Corporate Debtor authorized signatory Mr. Manoj Kumar Singhania, It is submitted that the application has been filed by the Operational Creditor in abuse of process of law and is mala fide and vex....
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....quality of supply. The Corporate Debtor had further submitted that it has suffered loss of more than 4 Crore on this account (Annexure-F). It is stated that various similar letters were issued by the Corporate Debtor dated 25th September, 2015 regarding non cooperation from the Operational Creditor (Annexure-G). Letter dated 21st November, 2015 was issued by the Corporate Debtor to follow up the earlier letter issued in this regard. It is stated that letter dated 25th March, 2016 was written to inform the applicant that due to the failure and neglect of the Operational Creditor to take any steps to resolve the pending issues, the Corporate Debtor would be compelled to write off the balance in the books (Annexure-I). Even, thereafter innumerable letters are stated to have been written by the Corporate Debtor to Operational Creditor. 7. It is stated by the Corporate Debtor that the Corporate Debtor has made full payment to the Operational Creditor for the material of proper quality that were received by the Corporate Debtor. After adjusting for such payment made by the Corporate Debtor and taking into account inferior quality of materials supplied, for which the Operational Credit....
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.... protest on account of poor or low quality material supplied by the Operational Creditor. It is submitted that the Operational Creditor is willing to give inspection of the correspondences, if so requested by the Corporate Debtor. Operational Creditor has denied all the allegations made by the Corporate Debtor in its reply affidavit. 12. During the course of arguments, the Ld. Counsel for the Operational Creditor argued that the present application under section 9 of the Insolvency and Bankruptcy Code, 2016 has been filed by the Operational Creditor against the Corporate Debtor which does not have the financial wherewithal to pay off the operational debt to the Operational Creditor. The Operational debt aggregated is about Rs. 10,01,81,400/- on 6th August, 2019. 13. It is submitted by the Ld. Counsel for the Operational Creditor that till 26th March, 2019, the applicant supplied raw material to the corporate debtor, for which invoices were raised, remained unpaid. The Corporate Debtor received the raw materials along with invoices without raising any demur or protest. It is submitted that the applicant supplied waste paper to the corporate debtor. The product 'waste paper....
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....ns of the corporate debtor in its affidavit of reply are: a. That the operational creditor had purportedly supplied substandard raw material and b. Accounts between the parties have been settled. 17. It is submitted that in its reply, the Corporate Debtor has heavily relied upon a few documents being Annexures B, C, D, E, F, G and H to the said reply. Annexure B to F of the said Reply appearing at pages 22-30 of the said Reply, are all related to a period which are not relevant to the instant case. 18. It is submitted that in its Rejoinder affidavit, the Operational Creditor has submitted that the said documents are not only forged, fabricated and manufactured for the purpose of playing fraud upon the operational creditor as well as this Adjudicating Authority. 19. It is submitted that with respect to the document appearing at page 31 of the Reply filed by the Corporate Debtor, i.e. Annexure M, there is clear admission by the Corporate Debtor that a sum of Rs. 3,09,09,776/- is in fact due and payable. The settlement as indicated in the said letter was neither agreed upon nor acted upon by the parties. The aforesaid document cannot be enforced upon the pre....
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....nts, the Ld. Counsel for the Corporate Debtor argued that the present petition under section 9 of the Insolvency and Bankruptcy Code, 2016 is in respect of an alleged claim arising out of transactions for sale and delivery of waste paper. The petition is not maintainable inasmuch as there are serious pre-existing disputes between the parties. It is submitted that Pre-existing disputes between the parties would be evident from the following facts which have all been suppressed in the section 9 application:- (a) While it is being contended in the course of submissions that the relationship between the parties started souring from 2018, that is not the actual position. From 2006, supplies were being made by the Corporate Debtor to Operational Creditor. Business transactions started in 2006 and have continued without any problems till 2014-15. (b) From the year 2015, there were quality issues, which were raised by the Corporate Debtor. The Goods were of deficient quality and were therefore not acceptable to the Corporate Debtor. Moreover, damage was caused to the Corporate Debtor and its machines entitling the Corporate Debtor to compensation. That the quality issues ....
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....(g) The fact that the Corporate Debtor had suffered losses is again recorded in letter dated 30th November, 2018 @ page 42. This letter records that the Corporate Debtor has incurred losses of approximately Rs. 2,50,00,000/- due to use of the sub standard material supplied by the Operational Creditor and that the Corporate Debtor has paid Rs. 32,28,470/- in excess to the Operational Creditor. Further, a letter dated 13th April, 2019 recording the loss for deficient quality of supply was issued by Corporate Debtor @ page 43, postal receipt @ page 44, proof of delivery @ page 45, confirmation by postal authorities @ page 46. In the said letter dated 13th April, 2019, the Corporate Debtor clearly recorded that in view of the deficient quality, no further sums would be received by Operational Creditor and there would be complete settlement between the parties. There is no dispute by Operational Creditor to the receipt of this letter. However, the Operational Creditor has baselessly and with mala fide purpose in the Rejoinder sought to allege that a 'Panjikas' was sent by such communication (page 16 of Rejoinder).This is a totally false allegation and the Whatsapp message disclo....
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....he Corporate Debtor from opposing the petition particularly in view of the serious pre-existing disputes that have been demonstrated in the Reply Affidavit. The applicant will be required to prove its case even in the absence of a reply by the Corporate Debtor to the Form-3 notice. 25. We have gone through and considered all the pleadings and documents placed before us and heard the parties in detail. It would be clear from the record that the Corporate Debtor did not respond to Section 8 Notice served on it, which was an opportunity provided to the Corporate Debtor to place its defence by informing the Operational Creditor about any payments as and when made, out of the outstanding operational debt being claimed by the Operational Creditor. At that stage, the Corporate Debtor could have also informed the Operational Creditor as regards any pre-existing disputes. We notice with surprise that when the Corporate Debtor did not place anything by way of any reply to the said notice, in its reply affidavit filed in response to the petition, he came out with so many so called pre-existing disputes which have been clearly denied by the Operational Creditor. The Operational Creditor sub....
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.... iii) Moratorium is declared for the purposes referred to in Section 14 of the Insolvency & Bankruptcy Code, 2016. The I.R.P. shall cause a public announcement of the initiation of Corporate Insolvency Resolution Process and call for the submission of claims under Section 15. The public announcement referred to in clause (b) of sub-section (1) of Section 15 of Insolvency & Bankruptcy Code, 2016 shall be made immediately. iv) Moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016 prohibits the following: a) The institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; b) Transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein; c) Any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, ....