TaxTMI 
TaxTMI 
2022 (9) TMI 953
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....referred to as 'Impugned Order') passed by the Adjudicating Authority (National Company Law Tribunal, Delhi Bench-VI) in C.P.(IB) No. 2185(ND)/2019. By the Impugned Order, the Adjudicating Authority admitted the Section 9 application under IBC filed by the Operational creditor and initiated Corporate Insolvency Resolution Process ('CIRP' in short) against the Corporate Debtor with immediate effect. Aggrieved by this impugned order, the present appeal has been preferred by the Corporate Debtor. 2. The brief facts of the case necessary to be noticed for deciding the appeal are :- (a) The Corporate Debtor, Aarcity Infrastructure Pvt. Ltd., present Appellant issued a Work Order to Sun Control Systems, Operational Creditor/ Respondent No. 1 to supply and install UPVC Profile of doors and windows including toughened glasses of Tower-A (81 Units) and Tower - F (86 Units) @ Rs. 376.50/- per sq. ft. in the Regency Park Project of the Corporate Debtor/Appellant. This work order was issued on 10.06.2016. (b) The Corporate Debtor issued another work order on 05.05.2017 to supply and install UPVC Profile of doors and windows including toughened glasses for Tower-D (60 Units) of the above p....
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..... Stating that examination by the Adjudicating Authority on the dispute aspect of the debt is only of secondary importance, Learned Counsel for the Appellant in support of his contention referred to the judgement of Hon'ble Supreme Court in the matter of Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Private Limited (2018) 1 SCC 353 (hereinafter referred to as 'Mobilox') Elaborating further that the scope of work order was not limited to mere supply of UPVC profile of doors and windows alongwith toughened glasses but also for installation of the same, he argued that as the Respondent No. 1 had not carried out the installation work in its entirety, therefore, the payment terms were not triggered. In the absence of installation of goods, the payment demanded by the Respondent No. 1 under Section 8 Notice was therefore neither due nor payable. The Learned Counsel for Appellant has contended that without ascertaining the debt being due and payable, the Corporate Debtor has been wrongly subjected to the rigors of CIRP. 4. It has been further submitted that against bills for Rs. 1,18,61,393/- (Rupees one crore eighteen lakhs sixty one thousand three hundred ninety three only) raised ....
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....nly after complete installation at the respective towers and not flat-wise installation. Hence payment was not triggered and therefore no debt was either due or payable. It has also been claimed that the Corporate Debtor/Appellant had to engage third party to complete the installation work as the same could not be completed by the Respondent No.1. The Learned Counsel for Appellant has also contended that the Respondent No. 1 had charged price over and above what was specified in the work order. 6. Submission has also been made that the claim of Respondent No.1 that only Rs. 83,93,717/- (Rupees eighty three lakhs ninety three thousand seven hundred seventeen only) has been paid by the Corporate Debtor is false and baseless as it does not take into account part payment made towards WCT and TDS amounting Rs. 3,77,407/- (Rupees three lakhs seventy seven thousand four hundred seven only). Explaining that further payments could not be made because of non-reconciliation of accounts and submission of final invoices, reliance has also been placed on judgment of this Tribunal in Amitabh Roy Vs. Master Development Management(India)Pvt. Ltd. in Company Appeal (AT)(Ins.) No. 274 of 2022 that d....
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....dent No.1 and therefore these amounts need to be discounted. Further deductions of Rs. 3,77,407/- (Rupees three lakhs seventy seven thousand four hundred and seven only) made towards WCT and TDS by the Appellant/Corporate Debtor have not actually been deposited. Pointing out a few other instances where higher payments have been claimed while actually lesser amount has been remitted by Corporate Debtor/Appellant, it has been submitted that these are cases of intentional misrepresentation. 9. As regards the issue of exorbitant rate having been charged by the Respondent No. 1, this has been rebutted as a frivolous ground since no such dispute was raised prior to issue of demand notice. Pointing out that the Corporate Debtor/Appellant has failed to adduce any documentary evidence to substantiate the existence of any dispute prior to issue of demand notice, the Learned Counsel for the Respondent No.1 relied on the ratio of the Mobilox judgment (supra) that dispute raised should not be an assertion of fact unsupported by evidence or a feeble legal argument. 10. The Learned Counsel for the Respondent No.1 has further contended that the Corporate Debtor/Appellant has clearly admitted tha....
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....e case may be, depending upon the factors mentioned in Section 9(5) of the Act." 13. It is an admitted fact that three separate work orders were issued on 10.06.2016, 05.05.2017 and 16.08.2017 for supply and installation of UPVC profile of doors and windows including toughened glasses on payment terms as at para 2(d) above. Based on the said purchase orders, the Respondent No.1 raised invoices from 22.09.2015 till 28.12.2018 which have been duly recorded by Adjudicating Authority at para 1(iii) of the impugned order. Without going into the intricacies of minutely examining the account statements, the ledger accounts relied upon by the appellant (at pages 143-146 of the Appeal Paper Book) and also by the Respondent No. 1 in his written submissions before the NCLT (at pages 178-181 of the Appeal Paper Book) has also been considered by us alongwith other material records. It is further noted that while the Corporate Debtor/Appellant has claimed that bills raised against these invoices amounts to Rs. 1,18,61,393/- (Rupees one crore eighteen lakhs sixty one thousand three hundred ninety three only) the Respondent No.1 has claimed an amount of Rs. 1,18,61,078/- (Rupees one crore eightee....
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....m and that they have not agreed to accept this amount as a final payment. To our mind, this is a lame excuse to posit a justification to cover grounds for not having paid an admitted debt that had become due and payable. Moreover, when the operational debt had already arisen and become due, and invoice was also raised, in such circumstances, merely placing of conditions prior to release of payment, does not alter the colour and character of the operational debt and does not detract from its having become due and payable. The above findings clearly establish that the first two conditions laid down in the Mobilox judgment supra of operational debt exceeding Rs. 1 lakh and having become due and payable but not yet paid is squarely met. 15. This now brings us to the third aspect as to whether there is existence of dispute between the parties. Records reveal that no disputes were raised prior to the issuance of statutory demand notice on 03.06.2019 under Section 8 of the IBC. There is no exchange of correspondence raising any dispute prior to issue of demand notice. We note that three grounds have been raised but all post issue of demand notice. One ground is that there are defects in ....
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....xx xxx 78. The Legislature has consciously differentiated between Financial Creditors and Operational Creditors, as there is an innate difference between Financial Creditors, in the business of investment and financing, and Operational Creditors in the business of supply of goods and services. Financial credit is usually secured and of much longer duration. Such credits, which are often long term credits, on which the operation of the Corporate Debtor depends, cannot be equated to operational debts which are usually unsecured, of a shorter duration and of lesser amount. The financial strength and nature of business of a Financial Creditor cannot be compared with that of an Operational Creditor, engaged in supply of goods and services. The impact of the non-payment of admitted dues could be far more serious on an Operational Creditor than on a financial creditor. 79. As observed above, the financial strength and nature of business of Financial Creditors and Operational Creditors being different, as also the tenor and terms of agreements/contracts with financial creditors and operational creditors, the provisions in the IBC relating to commencement of CIRP at the behest of an Ope....