TaxTMI 
TaxTMI 
2022 (9) TMI 1349
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....er referred to as 'I&B Code') filed by the Appellant. The Appellant aggrieved by said order has come up in this Appeal. 2. The brief facts of the case necessary to be noticed for deciding this Appeal are: (i) The Respondent - Corporate Debtor issued Notice Inviting Tender (NIT) on 18.08.2015, in pursuance of which two work orders for Hospital & Township and Plants & Headquarter were issued and a performa agreement was executed between the parties on 28.09.2016. The Operational Creditor was to provide round the clock security arrangement of all three plants, Headquarter, Hospital and township. (ii) An email dated 04.10.2018 was sent by the Corporate Debtor to the Appellant informing about the absenteeism of the workers. (iii) On 14.12.2018 again an email was sent by the Corporate Debtor to the Appellant that while executing the contract Appellant has short supplied supervisors and security personnel in the month of August, 2018 and September, 2018. Reference was made to Clause 25(a) of the Special Terms and Conditions. (iv) Another email dated 11.02.2019 was issued by the Corporate Debtor informing the Operational Creditor about the short supply of Supervisor and security p....
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....sponse from the Operational Creditor. (xii) In pursuance of notice issued by the Adjudicating Authority in Section 9 Application, the Corporate Debtor filed its reply dated 06.08.2021. In the reply, the Corporate Debtor denied the claim of Appellant and reiterated the facts stated in the letter dated 05.02.2021, where it is pleaded that the claim of the Appellant was never acknowledged. In reference to email dated 14.12.2018, 17.12.2018, 11.02.2019, 26.02.2019 and 16.04.2019, it was stated in the reply that the Corporate Debtor had categorically informed the Appellant of short supply of Supervisor and unarmed security personnel. The claim of the Appellant was disputed. (xiii) The Adjudicating Authority after hearing the parties by impugned order dated 31.01.2022 dismissed Section 9 application holding that there being pre-existing dispute between the parties the claim under Section 9 is to be rejected. Aggrieved by the order dated 31.01.2022 rejecting Section 9 Application, this Appeal has been filed. 3. We have heard Shri Ramji Srinivasan, learned senior counsel for the Appellant and Ms. Madhavi Divan, learned ASG appearing for the Respondent. 4. Learned counsel for the Appe....
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.... The submission of the Appellant that even if dispute was raised earlier, the same came to an end after meeting dated 07.06.2019 is incorrect. There has been no reconciliation by the Corporate Debtor or settlement of the claim of the Appellant in meeting dated 07.06.2019. The Minutes of the Meeting brought on the record by the Appellant does not bear signature of any of the officials from the Corporate Debtor and the minutes are self-generated minutes by the Appellant. There was pre-existing dispute with regard to execution of contract by the Appellant, there were serious issues regarding short supply of supervisor and security personnel. Before issuance of the Demand Notice by the Appellant, the Corporate Debtor has already communicated about short supply of the personnel for which penalty has to be imposed at the end of the contract. There has been no denial about the fact which was communicated by the Corporate Debtor to the Appellant by the emails as noted above. The Respondent at no point of the time admitted claim of the Appellant. The email dated 20.12.2019 only communicated that reconciliation is in progress. The breach of contract terms by the Appellant has serious penal c....
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.... dispute", it is clear that without going into the merits of the dispute, the appellant has raised a plausible contention requiring further investigation which is not a patently feeble legal argument or an assertion of facts unsupported by evidence. The defense is not spurious, mere bluster, plainly frivolous or vexatious. A dispute does truly exist in fact between the parties, which may or may not ultimately succeed, and the Appellate Tribunal was wholly incorrect in characterizing the defense as vague, got-up and motivated to evade liability." 9. Further, the Hon'ble Supreme Court in "(2021) 10 SCC 483, Kay Bouvet Engineering Ltd. vs. Overseas Infrastructure Alliance (India) (P) Ltd." in para 21 has again reiterated the same principle in following words:- "21. .....All that the adjudicating authority is required 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 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 a mere bluster. It has been held that however, at this stage, th....
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....26 February, 2019 and 16 April, 2019 were sent by the Corporate Debtor to the Operational Creditor stating the short-supply of the supervisor category personnel and other related services on different occasions and the same was never denied by the Operational Creditor. It is also pertinent to mention that the Demand Notice under Section 8 of the Code was send in December 2019." 13. Now, we first need to notice the email issued by the Corporate Debtor which have been relied by the Adjudicating Authority for holding that there had been pre-existing dispute between the parties. The first email relied is email dated 14.12.2018 issued by the Corporate Debtor to the Operational Creditor. The contents of the email are as follows:- "Dear Sir, With reference to the subject we inform you that your officials are completing the set of supporting documents in 2 to 3 attempts. It is clearly stated in the NIT and Work orders about the manner in which every month the claim bill is to be submitted to us for further processing. Kindly advise them to get such set of documents tied together/spiral binding. We find that while executing the Contract No. HQ/BDC&DISP/SECURITY/2016-065 dtd 16-07-201....
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....itions mentioned in NIT HEC/TA Divn/Security/2016/01 dtd 05-06-2016 resulting into corresponding recoveries from your payment. Also, the enhancement made in those non-wage related factors, which are independent of increase made in rate of wages rate wef 01st April/ 1st October, are needed to be reviewed. All these recoveries will be visited on conclusion of the contracts. However, in order to save your employees deployed in our Corporation from facing hardships towards payment of their monthly wages, the aforesaid final amount is being released conditionally. Hope, you will appreciate the gesture. Regards, (Ramjee) DGM/TA" 15. Next email dated 15.02.2019 also communicated the similar content. 26.02.2019 email also communicated the short supply of Supervisor and the Security Personnel and number of days on which short supply was there. Last email dated 16.04.2019 was with regard to processing of bill of December, 2018. Last email dated 16.04.2019 is as follows:- "Sub: Processing of your claim bills pertaining to the month of December 2018 Plant Security Ref: Our Work Order No. HQ/BDC&DISP/ SECURITY/2016-065 dtd 16-07-2016 for providing "Round the Clock Security Arrangem....
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....r the contract which shall result in recovery from the payment and payments for the months mentioned therein has been released to mitigate the hardship of the employees which were released conditionally and all recoveries will be visited on conclusion of the contract. 18. The above material which was placed before the Adjudicating Authority sufficiently communicated to the Operational Creditor that dispute existed with regard to bills submitted by the Appellant for the payment of each month and recovery was to be effected from the payment of each month and further recovery has to be visited on conclusion of contract. To counter the aforesaid material which clearly indicates the existence of dispute communicated to the Operational Creditor much before the issuance of Demand Notice, learned counsel for the Appellant, Shri Ramji Srinivasan submits that even if the dispute was subsisting, it was reconciled in the meeting dated 07.06.2019 and further payment of Rs.1 Crore was released. 19. We, thus, also need to examine whether the dispute which was communicated by the Corporate Debtor came to an end and issues were resolved on the date when demand notice was issued. Reliance is place....
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....ts of Para No. 10 of the Reply Affidavit are specifically and vehemently denied as being false, spurious and vexatious. The above mentioned paragraphs of the Preliminary Objections have been relied upon by the Operational Creditor herein, the contents whereof although reiterated are not repeated herein for the sake of brevity. That the same exposes the mala fide of the Corporate Debtor." 23. The Minutes of Meeting dated 07.06.2022 on which reliance is placed by the Appellant are clearly generated by the Appellant themselves which does not bear any signature/concurrence of any of the officials of the Corporate Debtor and when in the Reply it was specifically mentioned that the facts in the minutes are self-designed by the Appellant and allegations were made that minutes are maliciously generated by the Appellant, we are of the view that said minutes could not be relied in support of the submission of the Appellant that all the issues between the parties were subsided and decided in the minutes dated 07.06.2021. When in the emails, as extracted above, it is clearly mentioned that the recovery shall be effected at the end of the contract, there has to be reconciliation between the pa....