TaxTMI 
TaxTMI 
2022 (12) TMI 727
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....tted the application filed under Section 9 of the IBC by the Operational Creditor, present Respondent No. 1. Aggrieved by this impugned order, the present appeal has been preferred by the Appellant. 2. The brief facts of the case necessary to be noticed for deciding the appeal are: - The present Appellant is the parent entity of Bhaskar Foods Private Limited, the present Respondent No. 2 which was into manufacture of certain products for which Steam Coal was required for use in their plants. Purchase orders were issued by Respondent No.2 to M/s Oriental Coal Corporation, Operational Creditor/Respondent No.1 for supply of 500 MT of Steam Coal. The material was delivered from time to time by the Operational Creditor /Respondent No.1 with corresponding invoices. The purchase orders contained certain terms and conditions including quality parameters. For reasons of not having received payment for the materials supplied, Respondent No.2 was served a demand notice by Operational Creditor/Respondent No.1 on 12.03.2018 for Rs.46,95,033/- including interest amount of Rs 28,63,389/-. The demand notice was followed by filing of a Section 9 application before the ....
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....ebit note amounting to Rs.17,59,286/-, only a total amount of Rs.10,72,359/- became payable. It has also been claimed that the Respondent No.2 made full and final payment of Rs.10,00,000/- on 12.01.2016 to Respondent No.1. It has been further submitted that the Adjudicating Authority had failed to appreciate that the Respondent No.2 had made regular payments throughout the period of dispute against consignments that met the quality standards set out in the purchase orders. 6. Harping on the coal quality test reports, the Learned Counsel for the Appellant has therefore contended that there was pre-existing dispute with respect to inferior quality of steam coal supplied by the Operational Creditor under Purchase Orders in question which had led to issue of debit note. It is also submitted that the Adjudicating Authority failed to appreciate that Respondent No.2 had justifiably raised the defence of pre-existing dispute but by ignoring the Coal Standards Laboratory Test Reports the defence has been erroneously viewed as "moonshine defence". It has also been submitted that the Adjudicating Authority should have appreciated that these disputed questions of facts between the parties c....
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....he reports are fake as it does not indicate the name of the lab where test was done nor indicates the date and time when the coal was tested and that the report was not filed or annexed with objections when filed before the Adjudicating Authority. The details of the invoice qua which the coal was tested is also absent. No proof has either been submitted by the Respondent No.2 to show that the alleged lab reports were communicated to Respondent No.1. No document has also been placed on record by Respondent No.2 raising quality issues of the coal supplied with Respondent No.1. It was asserted that the coal test reports are concocted and were manufactured later on and were submitted for the first time only as additional documents before the Adjudicating Authority and not when the demand notice was issued in March 2018. The Learned Counsel for the Respondent No.1 placed reliance on the judgment of Hon'ble Supreme Court in Mobilox supra to assert that dispute, if any, has to be in existence prior to the demand notice and should have been brought to the notice of the Operational Creditor which has not happened in the instant case. The Learned Counsel for the Respondent No. 1 has also men....
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.... period of limitation. 12. On the ground raised by the Appellant that the decision of this Tribunal in CA(AT)(Insl) No.1015 of 2020 in the matter of Oriental Coal Corporation Vs. Decore Exxoils Pvt. Ltd dated 26.10.2021 should have been held by the Adjudicating Authority as binding precedent, it has been contended that as the facts of the two cases relate to separate transactions and the entities involved are not identical, the two cannot be inter-twined and hence the ratio is not binding on the Adjudicating Authority. 13. It is further submitted that demand notice was sent on 12.03.2018 and the receipt of the same not been denied or challenged by Respondent No. 2. Respondent No.2 has also not denied that no reply was sent to the said demand notice. Section 9 application was filed by Respondent No.1 before the Adjudicating Authority in May 2018. However, during hearings, the Respondent No.2 chose to remain absent on three consecutive days i.e. 13.05.2018, 09.07.2018, 01.08.2018 and finally filed its objection only in October 2018. Moreover, the reasons for their absence on 3 consecutive dates of hearing before the Adjudicating Authority has also not been explained. Yet again,....
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....ts was Rs.28,63,389/-. We find that the Adjudicating Authority has also taken note that the invoice raised by Respondent No.1 stipulated interest @ 2% per month if invoices were not paid up by the due period. This factum has not been controverted by Respondent No. 2 in their submissions or pleadings. It has therefore been correctly held by the Adjudicating Authority that the amount of interest for delayed payment has become a part of contractual debt as per invoice and hence an operational debt. 17. We also note that Respondent No.2 has admitted the debt of Rs. 28,31,644/- in their email dated 05.08.2015 as placed at page 90 of reply affidavit of Respondent No. 1. This email has not been disputed by Respondent No.2 either before the Adjudicating Authority or before this Tribunal. The Adjudicating Authority in the impugned order has therefore committed no error in holding that an amount of Rs.28,31,644/- as debt stands acknowledged by the Corporate Debtor in their email dated 05.08.2015. That no payments have been received from Respondent No.2 pursuant to demand notice issued on 12.03.2018 is also not disputed. On the issue whether the debt is time-barred, the Adjudicating Author....
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.... a cheque issued by the corporate debtor. Explanation. - For the purposes of this section, a "demand notice" means a notice served by an operational creditor to the corporate debtor demanding payment of the operational debt in respect of which the default has occurred." 20. A plain reading of the above provision reveals that sub-section (2) of Section 8 obligates the Corporate Debtor who has been delivered a Demand Notice under Section 8(1) by Operational Creditor to bring to the notice of the Operational Creditor the "existence of a dispute, if any, or record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute". There is a statutory purpose for requiring a Corporate Debtor for bringing into notice of the Operational Creditor about the existence of a dispute in its reply to Section 8(1) notice. The purpose is that if there is a dispute in existence, the same be immediately communicated to the Operational Creditor so that he charts out his next actionable step. If no mention of existence of dispute is made by the Corporate Debtor, the Operational Creditor can go ahead and file an applicatio....
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.... pre-existing dispute raised during the stage of notice or whether there was any dispute on the date of filing the application under Section 9 of the IBC in light of the guiding principles laid down by the Hon'ble Supreme Court in Mobilox. It is relevant to refer to paras 33, 51 and 56 of the said Judgment which is extracted as hereunder: "33............What is important is that the existence of the dispute and/or the suit or arbitration proceeding must be pre-existing i.e. it must exist before the receipt of the demand notice or invoice, as the case maybe. In case the unpaid operational debt has been repaid, the corporate debtor shall within a period of the self-same 10 days sent and attested copy of the record of the electronic transfer of the unpaid amount from the bank account of the corporate debtor or send an attested copy of the record that an operational creditor has encashed a cheque or otherwise received payment from the corporate debt [Section 8(2) (b)]. It is only if, after the expiry of the period of the said 10 days, the operational creditor does not either receive payment from the corporate debtor or notice of dispute, that the operational creditor may trigg....
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....sible 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, the Court is not required to be satisfied as to whether the defence is likely to succeed or not. The Court also cannot go into the merits of the dispute except to the extent indicated hereinabove. It has been held that so long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has no other option but to reject the application." 24. It is a well settled proposition that for a pre-existing dispute to be a ground to thwart an application under Section 9, the dispute raised must be truly existing at the time of filing a reply to notice of demand as contemplated by Section 8(2) or at the time of filing the Section 9 application. In the present case, we notice that no reply was framed in response to the demand notice at all. In such circumstances the Adjudicating Authority is only required to look into the substan....
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....has clearly not happened in the instant case. This lends credulity to the stand taken by the Learned Counsel for Respondent No.1 that had genuine disputes been in existence, the Respondent No.2 would have articulated these disputes by responding to the demand notice and not remained silent. We are inclined to agree with the Respondent No.1 that the coal test reports appear to be an after-thought which is validated by the fact that these reports were submitted as additional documents before the Adjudicating Authority by Respondent No.2 only after the Section 9 application had been filed by Respondent No.1. 27. The absence of proof of delivery of the debit note to operational creditor is yet another pertinent point raised by Respondent No.1 and lends credibility to the contention that debit note dated 16.11.2015 was never issued to Respondent No.1 on that date. The explanation of the Appellant that since the Respondent No. 2 had sold its business hence postal receipts of debit notice delivery are not available is not a cogent or persuasive explanation. We also note that Respondent No.2 has not indicated in the objections filed before the Adjudicating Authority as to how and by whi....