TaxTMI 
TaxTMI 
2023 (1) TMI 746
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....n under Section 9 of IBC and allowed the initiation of Corporate Insolvency Resolution Process ('CIRP' in short) of the Corporate Debtor. Aggrieved by this impugned order, the present appeal has been preferred. 2. The brief facts of the case which are necessary to be noticed for deciding the appeal are as follows: - Khushbu Dye Chem Private Limited - Operational Creditor/Respondent No. 1 has been in the business of trading, supplying, importing and exporting of chemicals while Bhange Organic Private Limited - Corporate Debtor has been in the business of manufacturing and production of Ethyl Acetate. An Agreement (hereinafter referred to as the 'agreement') was entered into between the Operational Creditor and the Corporate Debtor on 24.06.2019 by which the Operational Creditor was to provide raw materials to the Corporate Debtor including imported Ethanol. For the imported Ethanol, the Operational Creditor was to pay directly to the third parties including custom duty. In return, the Corporate Debtor was to supply Ethyl Acetate as the finished product to the Operational Creditor. The Operational Creditor claims to have incurred a total expenditure of Rs.11,17,19,527/- for pr....
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....utstanding dues. The Learned Counsel further claimed that the Corporate Debtor had not only fulfilled the obligations laid down in the agreement but in fact supplied additional quantity of Ethyl Acetate to the tune of 3619 kgs. Furthermore, it has been contended that the Operational Creditor supplied raw materials at a higher rate and purchased the final product from the Corporate Debtor at a lower rate and this manipulation led to sale-purchase difference and resultant dispute. It has also been further pointed out that the Operational Creditor did not make payment towards labour charges for the supply of Ethyl Acetate and that labour charges plus GST @ 18% was due from the Operational Creditor towards conversion. It was also stated that the Operational Creditor had been repeatedly evading requests for reconciliation of accounts. 4. With regard to the MoU of 03.01.2020, it was submitted that the same was signed by the Corporate Debtor under duress and coercion of the Operational Creditor since the Corporate Debtor for commercial reasons had to maintain ties with long term partners for which it was dependent on the Operational Creditor. Furthermore, as there were no outstanding due....
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....the inability of the Corporate Debtor to further supply Ethyl Acetate and their acceptance to pay Rs. 1,34,96,652/- within a period of 18 months in lieu of that. Thus the entire outstanding amount of Rs. 1,34,96,652/- qualifies as a debt under the IBC. In spite of having admitted their liability and willingness to repay, the Corporate Debtor failed to honour the terms and conditions of MoU. All the cheques issued by Corporate Debtor pursuant to the MoU had bounced when the Operational Creditor sought to encash them on 06.07.2021. It is also asserted that prior to stopping the payment of the cheques, the Corporate Debtor had not raised any dispute and that cheque payment was stopped with dishonest and malafide intentions. Thus there being an outstanding debt and there being a default in payment by the Corporate Debtor and there being no pre-existing dispute, there was no material irregularity on the part of the Adjudicating Authority in admitting the Section 9 application. 8. We have duly considered the detailed arguments and submissions advanced by the Learned Counsel for both the parties and perused the records carefully. 9. The short point before our consideration is whether th....
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....aving received any further payments from the Corporate Debtor had proceeded to file Section 9 application and at this stage the Adjudicating Authority is only required to look into the substance of the pleadings to find out whether a real dispute is discernible from the stated facts. From the Impugned order, we however find that the Adjudicating Authority noted that ample opportunity was given to the Corporate Debtor to file its reply, the matter having been listed from time to time on board. However, in spite of these opportunities, the Corporate Debtor did not make any appearance before the Adjudicating Authority nor filed any submissions and hence the matter was set ex-parte by the Adjudicating Authority on 08.02. 2022 and after hearing the matter on 21.03.2022 reserved the matter for orders. The Learned Counsel for the Appellant submitted that the impugned order dated 25.04.2022 was passed in violation of the principles of natural justice since the Corporate Debtor was denied an opportunity for hearing. It was stated that notice for hearing on 08.02.2022 was received by the Appellant on 09.02.2022. The Corporate Debtor had to thus miss hearing due to non-receipt of notice on ti....
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.... utility. It is clear that such notice must bring to the notice of the operational creditor the "existence" of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is 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 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." ****** ***** ***** "56. Going by the aforesaid test of "existence of a 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 patent....
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....and Eight Hundred Eight only) which is inclusive of the GST amount of Rs.33,58,816/-(Rupees Thirty-Three Lakh Fifty-Eight Thousand Eight Hundred and Sixteen Only). M/s Khushbu Dye Chem Pvt Ltd by its letter dated 15th June 2021 disputed and denied the aforesaid bills and put to strict proof thereof." 15. Since the above demand notice speaks of a letter issued by the Operational Creditor on 15.06.2021, we have gone through the said letter as placed at page 63-70 of the APB. On perusing the said letter, we find that the Operational Creditor in the said communication addressed to the Corporate Debtor has highlighted the issue of 6 false, baseless and fabricated invoices purportedly raised by them and uploaded on the GST portal. The Operational Creditor in the said letter has further asked the Corporate Debtor to withdraw the said invoices. The authenticity of this letter not having been questioned by Respondent No 1 and the very fact that it finds mention in the demand notice, it is clearly indicative that there was a pre-existing dispute before the issue of the demand notice. It is also pertinent to note that four of these invoices are dated 31.03.2020 and the other two are dated 01....
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.... released. Also you have not released any advance payment to us from your bank account. We have telephonically & by mail requested to you many times for to submit your ledger account statement to us for settle the account, but you have not responded till date. Again, you are requested please submit/give us our business ledger account statement for to settle the account accordingly. Step 2. In your letter, you have specified that our submitted business service bills are faulty fabricated & bogus. In this regard, we would like to inform you that, the bills are not faulty fabricated & bogus. We have charged the same bills with applicable taxes and duties to you as per the law. The bills are for conversion charges & other business support reimbursement charges as applicable. For reconciliation the same bills you may depute your authorised person/representative at our site with our ledger account statement for to settle the account. We hope that, you will clear all above information for maintaining our good faith relations. Your kind co-operation in this regard is highly appreciated. Thanking you, Yours Faithfully, (Sanjay B. Bhange) Director Bhange Organic Chemicals Pvt....