TaxTMI 
TaxTMI 
2022 (6) TMI 491
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....corporated on 11.01.2007 with CIN No. U72200KA2007PTC041464 with its registered office at Vaswani Presidio, Sy. No. 84/02, Unit Nos. 102 and 103, 1st Floor, Panathur Main Road, Varthur Hobli, Bengaluru-560103. Hence the jurisdiction lies with this Adjudicating Authority. The Nominal Share Capital of the Respondent Company is Rs. 5,00,000/- (Rupees Five Lakhs only) and its Paid up Share Capital is Rs. 5,00,000/- (Rupees Five Lakhs only). 3. Brief facts of the case, as stated in the Petition, are as under: i.) The proceedings arise from a transaction between the parties herein pertaining to supply of 1000 Nos. of VA 20001-0009 Components and PCB Population using Components along with Non-Recurring Engineering (NRE) charges and Compensation for the excess raw material (residual) after execution of 1000# PO arising due to minimum order quantity purchases as specified by component suppliers. Printed Circuit Board Assembly (PCBA) is the major product to be manufactured and supplied by the Operational Creditor to the Corporate Debtor. It involves procurement of Print Circuit Board, Components, assembling of the Components, populating the Components to the PCBA and the Final te....
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....ons, the Operational Creditor had a huge quantity of material procured by it specifically for the Corporate Debtor lying unused in stock with itself as well as with its vendors/suppliers. The Operational Creditor also lost its hard-earned goodwill and reputation with its vendors and suppliers for failing to take the stock of the material from the suppliers and vendors and for failing to pay them in time with respect to the stock of the material purchased by it. Thus, on both counts, the Operational Creditor had to suffer a loss in reputation and goodwill. vi.) Despite several meetings and exchange of mails between the parties herein, the Corporate Debtor did not have any intention to honour its commitments. The Operational Creditor had to make payment of the stock procured by it and the stock procured by its vendors and suppliers specifically for use by the Corporate Debtor in order to salvage its reputation and goodwill with its vendors and suppliers to prevent its other projects from suffering due to lack of supply of raw material by the very same suppliers and vendors. vii.) Upon realizing that the Corporate Debtor had no intention of honouring its commitments,....
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....ted in India in the year 2007. The Respondent is a global provider of turnkey mobile communications solutions that allow MNOs to serve off-grid markets. The Respondent is one of the market leaders in its area of business and has several employees across their offices in Gurgaon and Bangalore. The Respondent is a having a profit of Rs. 52,80,375/- for the financial year ended 31.03.2020. ii.) As part of its routine operations, the Respondent provides technology services to another Company called Himachal Futuristic Communications Limited ('HCFL'), which participated in a tender floated by Bharatiya Sanchar Nigam Limited ('BSNL') for mobile network rollout in the State of Arunachal Pradesh and two districts in the State of Assam. Post tender evaluation, HFCL was awarded L2 contract for mobile network rollout, which in turn issued a purchase order in-favour of the Respondent dt. 16.10.2018, for the supply of 1040 PCB Board. Based on HFCL's Purchase Order to the Respondent, the Respondent issued a Purchase Order dated 25.09.2018 bearing reference No. VANU/2018-19/007 ('Respondent Purchase Order') in favour of the Operational Creditor for the supply ....
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.... * SFO will submit invoices to Customer upon shipment of Products. Each invoice will, at a minimum, reference the customer purchase order number, part number, unit price and total price. Payment terms are applicable from the date of SFO's invoice to Customer. Customer agrees to notify SFO within 10 (ten) calendar days of any incorrect invoices received. On any correct invoices not paid by the due date, Customer shall pay finance charges at the rate of 3% per month. * Payment terms for NRE are 100% advance with PO." vi.) Accordingly, it was the obligation and contractual duty of the Operational Creditor to raise an invoice on the Respondent at the time of shipping, which would eventually become due and payable after being confirmed as a correct invoice by the Respondent. Moreover, only NRE charges were payable as advance, which constituted only USD 8625.75 as per the Operational Creditor Quotation and as confirmed in the Respondent Purchase Order to the tune of Rs. 6,21,055/- (calculated at the prevailing exchange rate of 1 USD = INR 72). The Operational Creditor did not raise any dispute to the Respondent Purchase Order issued and hence accepted that the NRE ....
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....ession of the Operational Creditor since May 2019. The Respondent is currently undertaking necessary actions for recovery of its equipment from the possession of the Operational Creditor. x.) To further the Respondent's statement of an existing dispute between the parties, the Respondent relies on email dated 4.2.2020 from the Respondent to the Operational Creditor, which states Respondent's intentions of putting in best efforts to resolve the issues between the parties and expecting similar efforts from the Operational Creditor. This email exchange between the parties shows that there were issues under the Respondent Purchase Order, which required resolution through amicable solutions by the parties. Further, the dispute existed is demonstrated from the notice of claim dated 05.11.2019 issued by the Operational Creditor to the Respondent by way of email dated 07.11.2019 which makes a demand of USD 8,02,883.53 on the Respondent. Upon receipt of said email of 04.02.2020 seeking reconciliation and resolution, the Operational Creditor replied on 12.02.2020 seeking an amount of USD 5,96,003.90 as against the original demand of USD 8,02,883.53. This stark difference in ....
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....cellation or any other change. The Corporate Debtor is also aware such products have a limited shelf-life and if the same were not put to use within their shelf-life, the same would be rendered obsolete, and still the Corporate Debtor has failed to provide specific delivery instructions till date. Hence, there is no question of it trying to wriggle out of its liability by contending that the Operational Creditor has not raised any invoice upon it. Unless and until the Corporate Debtor communicates a firm delivery date with firm instructions, the Operational Creditor would not be in a position to revert confirming the same or asking for modification thereof. ii.) Vide email dated 9.11.2018, the Operational Creditor communicated issues with regard to procurement and supply of the raw material and components. The Corporate Debtor vide its reply email asked the Operational Creditor to proceed and further stated that it could expect the delivery date to be in February, 2019. However, there has been no subsequent communication from the Corporate Debtor issuing any specific delivery instructions. Vide subsequent emails the Operational Creditor kept calling upon the Corporate Debt....
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.... the project did not proceed due to issues that the Corporate Debtor faced with the end customer. vii.) The averment pertaining to the project being a turn-key project has no bearing on the fact that the Corporate Debtor is due and liable to pay the cost of the material procured by the Operational Creditor and the payment of the advance amount, as stipulated in the Quotation dated 12.09.2018. Further, it has never been mentioned in any document/email, including the Purchase Order that the project was a turn-key project. viii.) The fact that the Corporate Debtor had sent some equipment to the Operational Creditor only for the purpose of carrying out testing is a matter of record. The said equipment is still kept intact by the Operational Creditor. The contention of the Corporate Debtor that the Operational Creditor has not supplied any contracted deliverable product and that the parties had agreed on any timeline for delivery of the product is false and denied. ix.) It is further submitted that when the Quotation dated 12.09.2018 itself stipulates the payment of the advance amount as well as the Material Liability for excess/obsolete material due to re-sch....
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....gments of the Hon'ble Apex Court and Hon'ble NCLAT make it clear that there is an unpaid operational debt in the instant case and the claim is maintainable before this Tribunal as it arises from a contract in relation to provision of goods though it did not materialize in actual supply of goods. The Corporate Debtor is well aware of its liability to pay the same and its failure to do so is a 'default' in terms of Section 3(12) of the Code. 7. The Corporate Debtor has filed written submissions vide Diary No. 821 dated 02.03.2022 by inter alia stating as under: i.) The Corporate Debtor being satisfied with the said Quotation issued the Purchase Order dated 25.09.2018 in favour of the Operational Creditor and also had duly informed that the Purchase Order was a turn-key job awarded to Operational Creditor. No invoice has ever been raised by the Operational Creditor on the Corporate Debtor till date and in the absence of the same, no amount became payable and due for the purported debt alleged by the Operational Creditor. It is therefore submitted that since the Operational Creditor has failed to perform its obligations under the Purchase Order, no debt is d....
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.... the Operational Creditor. Further, the Corporate Debtor has also informed the Operational Creditor that the HFCL's Purchase Order clearly stated that in the event the Purchase Order issued by BSNL is cancelled for any reason whatsoever, the HFCL's Purchase Order would be treated as cancelled without any financial reparation on HFCL. vi.) The documents produced by the Operational Creditor on record clearly state that the advance payable was only towards an amount of Rs. 6,21,055/-, being the NRE Charges and the claim of the Operational Creditor ought to be reduced to that extent. Since the said amount falls below the threshold limit under which a Section 9 application can be filed, the petition is liable to be rejected. vii.) The Corporate Debtor is a profit-making Company, providing value to its shareholders and has made a profit of Rs. 52,80,375/- for the FY ended 31.03.2020. It has several employees across its offices in Gurgaon and Bengaluru and is ably running its administration. It is also submitted that in the instant case, the aspect of the existence of a pre-existing dispute was raised well before the issuance of the Demand Notice under Section 8,....
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....) of the Act." 11. A careful examination of the facts as narrated by both the sides and submissions made on their behalf, reveals that the Petitioner issued Annexure - 11(F) Quotation dated 12.09.2018 to the Respondent-Corporate Debtor where under it was mentioned that out of the total cost of the products, the total advance payment required was Rs. 2,28,62,374.63/-. It was further mentioned therein under the payment terms, 'sixty days from the date of Invoice'. However, the Respondent-Corporate Debtor issued the Annexure - 11(G) Purchase Order dated 25.09.2018 for a total amount of Rs. 9,52,83,286/- out of which the NRE Costs are Rs. 6,21,055/- and under the payment term 'sixty days from the date of Invoice'. It is not in dispute that since the products were not supplied to the Respondent-Corporate Debtor, no Invoice was issued by the Petitioner and hence the payment term of 60 days from the date of Invoice has no relevance. The only remaining issue is that the Petitioner is claiming that the Respondent-Corporate Debtor was required to pay an advance amount of Rs. 2,28,62,374.63/- and whereas the Respondent-Corporate Debtor is denying liability to pay any advanc....