TaxTMI 
TaxTMI 
TaxTMI 
2023 (6) TMI 251
X X X X Extracts X X X X
X X X X Extracts X X X X
.... initiated against the corporate debtor M/s. Meghaaarika International Pvt. Ltd. 2. The Appellant, who was a director in the suspended board of the corporate debtor has stated and argued that a sale order bearing no. 6008159077 dated 6.1.2020 was issued by the operational creditor in favour of the corporate debtor, where after purchase order dated 8.1.2020 was placed by the corporate debtor on the operational creditor for supply of product called "Isobutanol". The Appellant has further stated that at the request of the corporate debtor, its bankers Bank of Baroda, CSF Branch, Parliament Street, New Delhi opened an irrevocable Letter of Credit (in short "LC") in favour of the operational creditor for a sum of Rs. 1.5 crores and it was also agreed between the two parties that the LC would be discounted by the South Indian Bank (in short "discounting bank") so that the operational creditor receives payment in its account in Citi Bank N.A. along with 'Discounted Yield'. The Appellant has further stated that a High Seas Sale Agreement (in short "HSS Agreement") was entered into between the corporate debtor and operational creditor on 15.1.2020, whereby the operational creditor agreed t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ments in accordance with the terms and conditions specified in the LC." He has further argued that the LC was as per negotiation for 90 days, even though the sale order dated 6.1.2020 mentioned that LC will be collectable within 60 days. 6. The Learned Counsel for Appellant has referred to the words contained in SWIFT MT700 to point out that as per Code 42C, the 'bill of exchange will depend on the contract and is negotiable'. He has further referred to the judgment of Hon'ble Supreme Court in the matter of Bawa Paulins Pvt. Ltd. vs. UPS Fright Services (India) Pvt. Ltd. & Anr. (Civil Appeal No. 8298 of 2022, MANU/SC/1471/2022) to empathically argue that the autonomy of an irrevocable letter of credit is entitled to full protection and as a rule, courts refrain from interfering with this autonomy. On this basis, he has argued that 90 days' limit, as negotiated and included in the LC document, cannot be overridden by any other document or terms contained therein. 7. The Learned Senior Counsel for Appellant has further argued that due to issues about improper quality of the material supplied, the corporate debtor brought them to the knowledge of the operational creditor and in resp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 6.1.2020 and the purchase order is issued on 8.1.2020, where after the High Seas Sale Agreement was signed between the two parties on 15.1.2020, which is after the LC was opened on 13.1.2020, and therefore, in accordance with the High Seas Sales Agreement wherein it is stipulated that the invoice value should be paid as per the date given in the invoice should be the 'date of default'. 10. The Learned Senior Counsel for Respondent has rebutted the argument of the Appellant that there was a pre-existing dispute regarding poor quality of the goods supplied. He has contended that the clause 5 in High Seas Sale Agreement very clearly stipulates that regarding 'quantity shortages and non-conformance/ quality' the buyer shall notify to the seller about non-conformity of quality or shortage within 30 days after receipt of the goods, but no such communication or message was sent by the corporate debtor to the operational creditor. He has further argued that the claim of the Appellant that section 21 notice under Arbitration and Conciliation Act, 1996 was sent by Blue Dart Courtier as per Airway Bill No. 14905191162 dated 15.2.2020 was sent by the corporate debtor to the operational cred....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and it includes the following regarding 'payment':- "8. Payment In the event the total invoice value, is not paid by the due date indicated on the invoice, seller reserves the right to change interest 18% per annum." 13. We thus note that the HSS Agreement, which was signed on 15.1.2020 after the creation of LC on 13.1.2020, says that the date of payment would be as given in the invoice. Further, the invoice (attached at pg. 102 of appeal paperbook, Vol.I) clearly states that the credit days are '060-LC collectable in 60 days'. It is thus clear that the HSS Agreement, which is the last final contract signed between the parties, clearly specifies that the payment against invoice is to be made by 'LC which is collectable within 60 days'. 14. We now peruse the judgment of Hon'ble Supreme Court in the matter of Bawa Paulins Pvt. Ltd. vs. UPS Fright Services (India) Pvt. Ltd. (supra), which is cited in support by the Learned Senior counsel for Appellant, wherein paragraph 35, it is observed as follows:- "35. In Hindustan Steel Workers Construction Ltd. V G.S. Atwal & Co. (Engineers) (P) Ltd. [ (1995) 6 SCC 76] this Court held that a letter of credit is independent of and unquali....
X X X X Extracts X X X X
X X X X Extracts X X X X
....act that the said AWB No. 14905191162 dated 15.2.2020 did not travel in the Blue Dart Express Limited network. The relevant portion of this letter is reproduced below:- "Date: June 20,2021 BASF India Limited, Plot No. 12, TTC Area, Thane Belapur Road, Turbhe, Navi Mumbai-400705. Maharashtra India K/a: Mr. Magirish Kasbekar/Nilesh Waghmode Re: AWB#14905191162, 14905191151 As requested by you, we, Blue Dart Express Limited hereby state that as per our records and to the best of our knowledge, following airway Bills (details of which were given by you vide your e-mail dated 16/04/2021 were not travelled in our network: 1. AWB 14905191162 Dt. 15.02.2020 Sender Meghaaarika International, Delhi Consignee. BASF India Ltd., Turbhe. 2. AWB. 14905191151 Dt. 05.03.2020 Sender Meghaaarika International, Delhi Consignee. BASF India Ltd., Turbhe. For Blue Dart Express Limited Sd/- Authorized Signatory Mumbai." 17. We thus, are of the clear opinion that while it is claimed by the Appellant that section 21 notice under the Arbitration and Conciliation Act, 1996 for invoking the arbitration clause under the HSS Agreement was sent through Blue Dart courier, the content....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion 21 of the Arbitration and Conciliation Act, 1996 was not proven to be served on the operational creditor. In such a situation, we are of the clear opinion that the corporate debtor cannot claim 'pre-existence of dispute' in the adjudication of the section 9 application. 20. The Learned Senior Counsel for Appellant has also raised the issue of discrepancy with regard to the submission of relevant documents to the discounting bank i.e. South Indian Bank Limited. In this connection, we note that the documents for discounting of LC were submitted by the corporate debtor to the discounting bank. We further find that the documents namely signed commercial invoices, lorry receipt of an IBA approved transporter evidencing dispatch of goods, packing list with details as per invoice, inland transit insurance policy, copy of High Seas Sale Agreement and bill of lading were to be submitted to the discounting bank for payment. 21. In the above connection, we note that South Indian Bank was approached by the corporate debtor Meghaaarika International Pvt. Ltd. vide letter dated 28.2.2020 enclosing documents for the LC purchase bill discounting facility granted by the South Indian Bank whe....