TaxTMI 
TaxTMI 
2023 (9) TMI 1260
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....ority has admitted the application under Section 9 of the IBC filed by Jayesh Steel Private Limited-Respondent No.1 and initiated Corporate Insolvency Resolution Process ("CIRP" in short) of the Corporate Debtor-M/s Insteel Engineers Private Limited. Aggrieved by this impugned order, the present appeal has been filed by the suspended Director of the Corporate Debtor. 2. Putting briefly the facts of the case, a business relationship had been entered into between the Corporate Debtor and the Operational Creditor-Respondent No.1 purportedly on the basis of an oral agreement. Pursuant to this arrangement, a purchase order had been issued by the Corporate Debtor on 08.05.2019 by which certain material was to be supplied by the Operational Creditor. Apropos of the purchase order, goods were supplied by the Operational Creditor and delivered to a company named M/s Anwesha Engineering and Projects Limited ("Anwesha" in short). As against invoices raised aggregating an amount of Rs. 2,07,09,859/-, the Operational Creditor received payment of only Rs. 70,61,000/-. Since the outstanding debt of Rs.1,37,14,859/- remained unpaid, the Operational Creditor issued a demand notice to the Corpora....
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....tor was kept apprised of the fact that Anwesha had been admitted into insolvency and the Operational Creditor could consider submitting their claims qua Anwesha to the Interim Resolution Professional. Submission was also made that when the Operational Creditor had already been acknowledging and receiving payments from Anwesha directly without any demur or objection, they could not claim any entitlement to place a demand on the Corporate Debtor to clear their outstanding dues once Anwesha got admitted into CIRP. This communication of 09.02.2021 signified pre-existing dispute having been raised prior to the issue of demand notice. It was asserted that Operational Creditor was using IBC as a recovery forum which militates against the objectives of the IBC. 6. Assailing the impugned order, it is contended that the Adjudicating Authority instead of looking into aspects of debt and default and pre-existing disputes, travelled beyond the summary jurisdiction of IBC in finding out whether the Corporate Debtor or Anwesha is the principal debtor which issue fell within the realm of a civil dispute. 7. The Learned Counsel for the Respondent refuting the submissions made by the Appellant....
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....vertence and proceed with making our analysis and findings. 11. The short point for our consideration is whether any operational debt qua the Corporate Debtor is due and payable and if there has been a default in the payment thereof and whether there is any pre-existing dispute between the parties. This examination would be in consonance with the test which has been laid down by the Hon'ble Supreme Court in Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd. (2018) 1 SCC 353 ('Mobilox' in short) which is as reproduced below:- "34. Therefore, the adjudicating authority, when examining an application under Section 9 of the Act will have to determine: (i) Whether there is an "operational debt" as defined exceeding Rs. 1 lakh? (See Section 4 of the Act) (ii) Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid? And (iii) Whether there is existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute? ....
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....the first time on 09.02.2021. The Corporate Debtor without the consent of the Operational Creditor could not transfer its obligation to Anwesha. Furthermore, mere transfer of amounts by Anwesha to the Operational Creditor cannot tantamount to novation of the contract. 14. Coming to the above-cited minutes of meeting of 05.11.2019 which finds place at page 61 of Appeal Paper Book ("APB" in short), we notice that it remains undisputed that the Operational Creditor was not a signatory to the proceedings of the meeting. To that extent, we have no hesitation in concluding that as on 05.11.2019, the arrangement between the Corporate Debtor and Anwesha with respect to modalities of payment does not reveal any specific consent from the Operational Creditor thereto. 15. However, what has also not escaped our attention is that soon after the meeting of 05.11.2019, there has been an exchange of correspondence on 09.11.2019 between Anwesha and the Operational Creditor, whereby the arrangement worked out on 05.11.2019 was duly communicated to the Operational Creditor, wherein Anwesha undertook to release all the payments directly. The said email is reproduced below: - "Akshay Mha....
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....ACCOUNT Dear Jayeshbhai, Please send the letter to Insteel about the payment to be released by Anwesha directly to Jayesh Steel, so that Insteel can do necessary set off in their book of accounts. Regards, Dipak Kumar Sarkar Anwesha Engineering & Projects Limited" 17. We also notice that the Operational Creditor had sent communication directly to Anwesha on 23.07.2019 even before the agreement of 05.09.2019 notifying them to clear outstanding payments as placed at page 57 of APB. This was followed by similar reminders sent subsequently on 18.11.2019, 22.11.2019, 26.11.2019, 29.11.2019 and 04.12.2019, which have been placed before this Tribunal by the Appellant on affidavit in rejoinder. Though these reminders were not before the Adjudicating Authority, we are taking cognizance of these reminder letters since these are in continuum to the communication of 23.07.2019 which was before the Adjudicating Authority. That none of these emails seeking payment from Anwesha are found to be endorsed to the Corporate Debtor validates that for purposes of payment, the Operational Creditor had by their conduct been adhering to an arrangement of deal....
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....d that a party to a contract cannot assign its obligations or liabilities without the consent of the other party. While we entirely agree to this proposition of law, we must add that this judgement also observed that whether or not an assignee can seek specific performance would depend upon the construction of contract in each case. The present facts of the case are distinguishable in that it arises out of IBC proceedings and is not a case of contingent contracts under Section 31 of the Indian Contract Act and hence this judgement does not come to the assistance of the Operational Creditor. 22. At this juncture, we wish to refer to the Mobilox judgement, wherein the Hon'ble Apex Court while interpreting Sections 8 and 9 of IBC has laid down the guiding principles on how to conclude the existence of disputes between the parties. It may be useful to notice the relevant part of the judgement as reproduced below: "51. It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor....
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....nce of revised arrangement between Anwesha Engineering & Projects Limited (earlier known as Anwesha Engineering & Projects Limited) ("Anwesha"), you and Insteel Engineers on the amounts claimed, which has been confirmed by you from time and again. As such, all allegations and claims made in the Demand Notice unless specifically admitted to, are wrong and frivolous, and hence denied by Insteel Engineers. It is apparent that you have conveniently chosen to be oblivious to the arrangements between the parties. We will draw your attention to some facts in context of your Notice, which will render your claims, submissions and allegations, baseless. 3. Towards the arrangements for a project involving Insteel Engineers, Anwesha and yourself, Anwesha issued a letter (reference no.AEPL/INSTEEL/FI-99/2019/001) dated November 5, 2019, expressly confirming that it shall be responsible for your payments and such payments shall be made directly to you, as per minutes of meeting dated November 5, 2019. Infact, the commercials in respect of your materials were discussed and agreed between Anwesha and you, without our any involvement from Insteel Engineers. Thereafter, In....
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....es not lie and needs to be withdrawn immediately. The process of law including provisions of the IBC cannot be misused to wrongfully pressurise a party to make any payment. Additionally, for reasons mentioned above, Jayesh Steel is not an operational creditor of Insteel Engineers under the IBC as it does not fall under the definition of "operational creditor". In view thereof, please note that the Demand Notice is denied and disputed in toto. The manner in which the entire issue related to Anwesha has been handled is a clear case of fraud, misappropriation of funds and hand-in-glove situation, considering that you have been Anwesha's direct supplier since long time. 9. We are disappointed to witness that despite the arrangement finalised with Anwesha, you have caused the issuance of the Demand Notice seeking to extort the Disputed Amount by wrongfully pressurizing Insteel Engineers. In view of the instances mentioned above, we hope that better sense and legal advice will prevail upon you and your clients, in so far as engaging in frivolous correspondence which is little shy of entering the realm of tautology or in initiating any proceedings against us....