TaxTMI 
TaxTMI 
2023 (7) TMI 1243
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.... 9 of the Code. 2. The Appellant- Suristh Tiwary holds 56.42% equity in the Corporate Debtor and he is one of the Suspended Director of the Corporate Debtor. Aggrieved by the Impugned Order he has filed the present appeal. 3. Heard the Counsel for Parties and perused the records made available including cited judgments. 4. Learned Counsel for the Appellant gave overall background of the case and alleged that the Impugned Order was passed wrongly as the evidence produced by the Corporate Debtor showing that claims by Operational Creditor were bogus on the basis of 12 fake invoices, were not considered suitably by the Adjudicating Authority. 5. Learned Counsel for the Appellant further alleged that the Respondent No. 1 has shown fake sale being declared using GSTR-1 return and for the same, notice was issued to the Respondent No. 1 by GST Department. 6. Learned Counsel for the Appellant stated that the Respondent No.1 filed an application under Section 9 of the Code for initiation of the Corporate Insolvency Resolution Process (in short 'CIRP') on account of alleged default of Rs. 1,56,31,219/- which was refuted by the Corporate Debtor. 7. Learned Counsel for the Ap....
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....the Appellant further stated that the opening credit balance as on 01.04.2018 in the Ledger Account of the Respondent No. 1 was Rs. 1,01,72,740.09/- and the Corporate Debtor has been gradually paying the same on various dates as per running account system of payment. 12. Learned Counsel for the Appellant stated that in background of such cordial relationship based on trust between the Appellant/ Corporate Debtor and Respondent No. 1, the Corporate Debtor was shocked to receive demand notice dated 19.09.2018 demanding Rs. 1,76,10,766/- based on various invoices mentioned in the demand notice. Learned Counsel for the Appellant further stated that the upon receipt of such demand notice, he sought details from the Respondent No. 1 about various invoices which were not received by the Corporate Debtor. Learned Counsel for the Appellant submitted that during the negotiation between the parties to settle the matter, the Corporate Debtor received another demand notice on 20.03.2019 for Rs. 1,61,10,767/-. 13. Learned Counsel for the Appellant submitted that admittedly the Corporate Debtor could not pay of Rs. 31,20,149.39 as on 31.03.2019 pertaining to- (a) Invoice No. 918 dated 23.03....
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....r the 12 invoices attached by the Respondent No. 1/ Operational Creditor with the Application as mentioned above, the Respondent No. 1 has neither supplied the above said invoices nor copies of any documents to the Corporate Debtor. 18. Learned Counsel for the Appellant submitted that the material supplied by the Operational Creditor used to be weighed at the nearest Dharam Kanta at the Work site of Corporate Debtor, and Dharam Kanta used to issue a Weight Scale Receipt (DharamKanta Slip). Learned Counsel for the Appellant further submitted that the Weight Scale Receipt of material supplied is important for determining the quantity of material supplied and therefore the amount payable is computed on the quantity of material supplied and the same used to be paid to the Respondent No. 1. 19. Learned Counsel for the Appellant stated that the Respondent No. 1 has taken the plea that the Corporate Debtor has used Input Tax Credit (in short "ITC") of GST on the invoices attached with the Application, which cannot be basis for admission of the application under Section 9 of the Code. 20. Learned Counsel for the Appellant submitted that during hearing before the Adjudicating Autho....
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....e Debtor again paid Rs. 5 Lakhs and undertook to settle the entire liability in due course, which the Corporate Debtor again failed to adhere to. Subsequent to all these events, the Respondent No. 1 was compelled to file an application under Section 9 of the Code and during the course of various hearing the Corporate Debtor mentioned before the Adjudicating Authority about intent of the Corporate Debtor to settle the matter by payment and accordingly the Corporate Debtor made two payments of Rs. 25 Lakhs each in June 2019 and 10.07.2019, respectively to the Respondent No. 1. 25. Learned Counsel for the Respondent No. 1 submitted that it is admitted fact that the Corporate Debtor elaborated his intention to settle the amount before the Adjudicating Authority and alleged defence now being taken is only moonshine defence to avoid his liability. Learned Counsel for the Respondent No. 1 further submitted that the Corporate Debtor never raised any dispute of whatsoever nature prior to issuance of demand notices regarding outstanding payments. 26. Learned Counsel for the Respondent No. 1 stated that the outstanding amount was duly admitted by the Corporate Debtor which can be establ....
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....ate Debtor. 31. Learned Counsel for the Respondent No. 1 submitted that he had supplied various "lots of material" to the Corporate Debtor during the course of their business relationship and accordingly issued invoices for the said "lots of material" supplied to the Corporate Debtor and after adjusting all the amount received from the Corporate Debtor in the running account maintained by the Respondent No. 1 claimed outstanding amount is dues from the Corporate Debtor which the Appellant had failed to settle. 32. Learned Counsel for the Respondent No. 1 mentioned that on the basis of order placed by the Corporate Debtor, the Respondent No. 1 used to supply the goods to the place of the Corporate Debtor against which the corresponding Invoices were issued and sent to the Corporate Debtor. Learned Counsel for the Respondent No. 1 further submitted that the Respondent No. 1 was never required to submit Dharam Kanta Receipt as it is an obligation on the part of the Buyer i.e., Appellant herein to get the products weighted at its end, if so desires, and to report and communicate discrepancy, if any, to the Respondent No. 1. However, since there was no occasion of such discrepancy....
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....2, 13.05.2022, 02.06.2022, 05.07.2022, 20.07.2022, 30.08.2022, 18.10.2022 & 16.01.2023. 37. During hearing before this Appellate Tribunal on 16.01.2023, it was brought to the notice of this Appellate Tribunal that the settlement did not arrive between the parties despite the orders passed by this Appellate Tribunal, and the following order was passed pm 16.01.2023 :- "In terms of the order dated 18.10.2022, the Ld. Counsel for the Appellant has filed the short Affidavit with regard to negotiation of settlement between the parties have failed and there is not hope for settlement through out side the court, which is taken on record. Let this matter go out of my list. The Registry is directed to place the matter before the Hon'ble Chairperson for listing the matter before appropriate Bench in which Hon'ble Mr. Justice Anant Bijay Singh, Member (Judicial) not a member. Interim order to continue." (Emphasis Supplied) 38. Subsequently the case was again listed for hearing on 23.01.2023, 13.02.2023, 31.03.2023, 17.04.2023, 02.05.2023, 26.05.2023 and 13.07.2023. The case was finally heard fully on 13.07.2023 and judgment was reserved. 39. From t....
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....ces issued by the Respondent No. 1 in successive order i.e. running payment made by the Corporate Debtor was required to be adjusted by the Respondent No. 1 for the previous pending bills. According to the parties, the payments were being made from time to time, however due to financial crises faced by the Corporate Debtor there have been delays/ defaults in payment to the Respondent No. 1. 44. We also take into consideration desire of the Corporate Debtor settle the matter before the Adjudicating Authority during the hearing of Section 9 Application and accordingly two tranches of payments of Rs. 25 Lakhs each were made by the Corporate Debtor to the Respondent No. 1 and the same were indicated in the order sheets of the Adjudicating Authority dated 10.07.2019 & 21.08.2019 :- 45. It is noted from the averments that there has been no pre-existing dispute between the parties and the Corporate Debtor did not raise any dispute before the demand notice was issued. Even during pleading before this Appellate Tribunal, no pre-existing dispute on any ground has been brought out by the Corporate Debtor. 46. It is the case of the Corporate Debtor that 12 invoices which have been cla....
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....aterial, here in case, by the Respondent No. 1. 50. We take into consideration that the various invoices which have been relied upon by the Respondent No. 1 had been attached with the application filed before the Adjudicating Authority under Section 7 of the Code. On this account, it may also be pertinent to note that these invoices have stated to been reported in the GST returns and necessary ITC have also been claimed. It is the case of the Corporate Debtor that CGST Department had enquired into alleged fake purchases by the Corporate Debtor based on the alleged fake documents/ invoices issued by alleged non-existent Respondent No. 1. We note from the averments of the Respondent No. 1 that no case has been framed against him by GST Authority and his GST Certificate is intact. On the point of CGST enquiries into the affairs of the Corporate Debtor and / or the Respondent No. 1, it is for the concerned authorities to look into and take necessary action, if any, in accordance with law and the concerned parties have to defend at appropriate forum. For us, in present appeal it will suffice to decide the matter under the Code based on the facts and the documents and not on the basis....
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....le NCLAT. Dear Sir, Vide order dated 07.03.2022 in the aforesaid matter, Hon'ble NCLAT was pleased to direct the Appellant to deposit a sum of Rs.1,06,31,219/- by way of demand draft drawn in the favour of The Pay and Accounts Officer, Ministry of Corporate Affairs, New Delhi'. Therefore, in pursuance of aforesaid order, the aforesaid sum is being deposited herewith by way of the two demand drafts (i) bearing no. 273520 for Rs. 50,00,000/-(ii) bearing no. 278521 for Rs. 56,31,219/- both issued by Canara Bank, Large Corporate Branch, Noida, 201301. Date: 21.03.2022 Attached: Yours faithfully Ðле Adarsh K. Tiwari Advocate for the Appellant 1. The Order dated 07.03.2022 in Company Appeal (AT) (INS) No. 2. 3. 228/2022. Demand draft bearing no. 278520 for Rs. 50,00,000/- Demand draft bearing no. 278521. for Rs. 56,31,219/- DELKI (both issued by Canara Bank, Large Corporate Branch, Noida, 201301) Diary fro. 84422 21.3622 278590 F 50,00, 0010 228521 21.3. 1.3.6. Rs.56, 31,219, Fer Office: Chamber: Mob. e-mail: Ali Market, 18, Todarmal Road, Bengali Market, Ne....