TaxTMI 
TaxTMI 
2022 (7) TMI 617
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....18, by which the application filed by the Operational Creditor Continental Piling & Excavation Pvt. Ltd. under section 9 of the IBC was dismissed by the Adjudicating Authority on the ground of a dispute which was existing between the Operational Creditor and Corporate Debtor prior to the serving of demand notice under section 8 to the Corporate Debtor. 2. In brief, the facts of the case are that the Corporate Debtor had given two work orders dated 17.8.2013 and 22.10.2013 to the Operational Creditor (attached at pp.57-61 of the appeal paperbook) relating to piling and foundation work in a project undertaken by the corporate debtor. The Appellant has stated that after completion of the work, certain invoices were raised by the Appellant/Operational Creditor for payment of the said invoices for work done (invoices attached at pp.62-72 of the appeal paperbook) and some payments were made by the corporate debtor against these invoices. He has further stated that he had submitted all the necessary documents such as Provident Fund challans, ESI challans, wage register copy etc. to the corporate debtor vide letter dated 13.8.2016 (attached at pg. 89 of the appeal paperbook). The Appell....
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....ed that Form 26AS amounts to a clear and unambiguous admission by the Respondent regarding the existence of debt which is payable to the Appellant. He has also submitted that the fact about depositing the TDS has also been admitted by the Respondent in reply to the section 8 demand notice (attached at pp.100-103 in paragraph 7). In addition, the Learned Counsel for Appellant has stated that the Respondent has also placed on record a ledger/statement of account (attached at pg. 151 of the appeal paperbook) as admission of the operational debt and, therefore, looking at all these admissions and evidences the existence of operational debt, that is due and payable to the appellant is clearly established. 5. Additionally, the Learned Counsel for Appellant has argued that while the Appellant was required to comply with labour laws under the work order payments that are due should have been made to the Appellant as the 'Terms and Conditions' in the work order makes it incumbent on the respondent/corporate debtor to make payment within 10 days of submission of invoice. He has stated that the Appellant has complied with labour regulations and subjected itself to regular audit from time t....
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....ached at pp.57-60 of the appeal paperbook) to claim that the contractor (the appellant in this case) has to abide by all the laws/provisions of the Central/State/Local authorities that may be related (whether directly or indirectly) to the construction activity at site and to also strictly follow the provisions of law related to labour e.g. minimum wages, working hours and conditions, ESIS and PF provisions etc. He has argued that the respondent received enquiries from labour/PF authorities regarding compliance of labour laws, and in support of his contention he has pointed out to the letter from EPFO dated 30.11.2018 (attached at pg. 23 of Respondent's reply, diary. No. 15053 dated 11.10.2019). 8. In rejoinder, the Learned Counsel for Appellant has stated that the appellant had submitted the documents relating to ESI/PF payments and other compliances for the period September, 2013 to February, 2014 with his letter dated 31.8.2016, and furthermore, the letter from the EPFO dated 30.11.2018 (attached at pg. 23 of Respondent's reply, diary. No. 15053 dated 11.10.2019) is a general letter addressed to the corporate debtor and is not specific to the work carried out by the operation....
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....ss a final order. In our considered view, the decision of the adjudicating authority to entertain and/or to allow the request of the appellant Bank for the filing of additional documents with supporting pleadings, and to consider such documents and pleadings did not call for interference in appeal. 11. It is noted that the appellant did not seek the permission of the Adjudicating Authority to place any additional documents in support of his section 9 application. As is evident from the judgment in Dena Bank (supra), the Adjudicating Authority can accept additional documents at the stage of adjudication of section 7 application. It stands to reason that a similar condition will apply in the matter of section 9 application.We find that in this case the applicant/appellant did not make any request to the Adjudicating Authority for accepting additional documents. We also note that the Adjudicating Authority, in accordance with the requirement of section 9, decided the application keeping in view the information and documents presented in the section 9 application. We, therefore, are of the view that it would not be appropriate that the additional documents placed before us through I....
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....ational creditor to submit necessary documents regarding labour law compliances. Aanother e-mail dated 12.10.2016 from the corporate debtor to operational creditor (attached at page 90 of the appeal paperbook) wherein it is stated as follows:- "Xx xx xx May we invite your kind attention to our communications dated 26/09/2016 and 30/10/2016, whereby we have had stressed upon you to kindly visit our office along with relevant documents in respect of labour compliances done by you under law and statement of accounts so that payment if any due after verification of the same, could be released? It is regretted that you have not so far complied with the requirements of documents and given undertaking as detailed in our letter of 3rd October, 2016 also. Hope you will do the needful at an early date to enable us to settle this issue, we therefore in write this to inform you that we shall await for period of thirty days (30 days) to enable you to comply the requirements as intimated failing which, we will be taking it for granted that the issue should be treated as closed from your side." Thereafter, an e-mail dated 12.11.2016 is sent by the operationa....
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....djudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and the "dispute" is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application." 17. We note from the reply sent by the corporate debtor to the section 9 application that the corporate debtor had been repeatedly pointing out the deficiency/insufficiency of documents relating to labour law compliances submitted by the operational creditor. At one point in his e-mail dated 12.11.2016, the operational creditor claims that the requirements of labour compliances are not relevant for the purpose of clearing the outstanding dues. The sections on 'Terms and Conditions' and 'Other Ter....