TaxTMI 
TaxTMI 
2023 (10) TMI 237
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....uptcy Code, 2016 ("IBC" in short) by the Appellant arises out of the Order dated 08.04.2022 (hereinafter referred to as "Impugned Order") passed by the Adjudicating Authority (National Company Law Tribunal, Kolkata Bench) in CP (IB) No.100/KB/2019. By the impugned order, the Adjudicating Authority has admitted the application under Section 9 of the IBC filed by Lomat International NV-present Respondent No.1 and initiated Corporate Insolvency Resolution Process ("CIRP" in short) of the Corporate Debtor - M/s Wearit Global Limited. Aggrieved by this impugned order, the present appeal has been filed by SPBP Holding Pvt. Ltd., shareholder of the Corporate Debtor. 2. The brief facts of the case which are necessary for deciding this appeal are as outlined below: - * The Operational Creditor - Lomat International NV supplied and delivered raw material to the Corporate Debtor for which invoices were raised from time to time. * The Operational Creditor claimed that payment against 4 invoices had fallen due of which the fourth invoice dated 02.11.2017 fell due for payment on 01.03.2018. * The Operational Creditor issued Section 8 demand notice on 21.09.2018. ....
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....ate concern and Credendo, a credit insurance company and Indo-Rama amongst others. This cyclical business arrangement with multiple parties had crystallized on 22.08.2017. Because of multiple parties being involved and interlinked adhoc payments, there was a need for reconciliation of accounts both in terms of quantity of goods and value thereof. However, the Operational Creditor mischievously cherry picked four isolated invoices to claim outstanding payments. It is the also the contention of the Appellant that the Operational Creditor, being a foreign corporate entity, was interested more in the recovery of dues from the Corporate Debtor rather than seeking resolution of the Corporate Debtor thereby violating the objectives of the IBC. 7. It has also been contended that Civil Suit which had been filed arose out of communications dated 15.06.2018 and 21.06.2018. Since these communications were all prior to the issue of demand notice and constituted the basis of the Civil Suit, it validates that disputes were pre-existing. Moreover, the Operational Creditor having filed a counter-claim in the Civil Suit, also shows that there was a dispute between the parties. The Adjudicating Au....
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.... IBC by requesting for arbitration in their email of 15.06.2018. Furthermore, even the Civil Suit TS No.1265 of 2015 which had been filed by the Corporate Debtor was so done with a mala-fide intention and was clearly an after-thought as it was filed after receipt of statutory demand notice. 11. IA No. 4295 of 2022 has been filed by Vijay Cotton and Fibre Company LLP (hereinafter referred to as "Applicant") seeking to be impleaded as intervenor and for issue of directions to the Resolution Professional ('RP' in short) to collate the claim of the applicant as financial creditor. It has been submitted that the applicant filed its proof of claim as financial creditor with the RP on 17.05.2022. However, the RP transgressed his powers and held the claim to be an operational debt and not a financial debt. The IA has been opposed by the Appellant on the ground that the claim of the applicant as a financial creditor having already been rejected by the RP, this application may not be allowed. 12. I.A. No. 4930 of 2022 has been filed by the Interim Resolution Professional in which it has been submitted that due to stay on the constitution of the Committee of Creditors ("CoC" in short) a....
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....cing of yarn which in turn would be imported/purchased by the Operational Creditor thereby completing the business cycle. It was also stated that the Operational Creditor, as part of this arrangement was to also supply MEG to Indo Rama, which would convert the same into an intermediate product - Fibre - and sell to the Corporate Debtor for manufacturing yarn. 17. However, this business cycle was disrupted by the Operational Creditor by not buying yarn from the Corporate Debtor. It was pointed out that as against export of MEG material worth Rs.413 crore by the Operational Creditor during 2012-18, the import of yarn from the Corporate Debtor was only for Rs.130 crore. This disturbed the financial flow as envisaged in the buy-back arrangement and had become a bone of contention between the parties before the issue of demand notice. 18. The Learned Senior Counsel for the Respondent No.1 refuted the above contention of the Corporate Debtor and denied the existence of any cyclical business arrangement. In support of their contention, it was contended that the Appellant in their email of 15.06.2018 as placed at pages 35-39 of the Additional Affidavit (hereinafter referred to as "AA....
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.... have concocted frivolous allegations solely in order to deny payment of the legitimate dues of EUR 8,423.70 and USD 2,933,869.00 owed by you to Lomat and dues of USD 4,159,309.00 owed to Chimtex. We specifically deny of having any agreed arrangement with you as regards the 'Cyclical Business Agreement'. Though from time to time we have been purchasing yarns from you as and. when we have a requirement, however there was never any commitment from us for purchasing yarns from you or any commitment for purchase of any minimum quantity of yarns from you. Further sale of raw materials and purchasing of yarns from you are two different nature of transactions and cannot be clubbed together and moreso you cannot use this as an excuse for non payment of our dues on account of supply of raw materials you. Further we vehemently deny your allegations that you have requested for execution of written agreement for alleged 'Cyclical Business Arrangement', in this regard we state that there was never any understanding as regards the alleged 'Cyclical Business Agreement' and therefore there was never any discussion as regards execution of any writt....
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....147-152 of AA however show that these emails had no nexus with any cyclical business arrangement but relate primarily to payment schedules including the provision of supply of additional raw material under the LC with the credit period of 120 days. The only arrangement which was discussed in all these emails was about payment plans and recycling LC with no whisper about the cyclical arrangement. 22. Given this backdrop, we are reasonably convinced that both parties were never at ad idem on the existence of any cyclical business arrangement. Hence, we are of the considered opinion that cyclical business arrangement cannot be construed to form the basis of any pre-existing dispute either in terms of the email dated 15.06.2018 or the preceding clutch of emails which have been referred to at para 16 above. 23. We may now look into the tenability of the contention of the Operational Creditor that the Appellant had defaulted in making payment for the goods supplied against the invoices raised. We notice that in their emails of 21.06.2018 and 09.07.2018 which has been reproduced at para 19 above, the Operational Creditor has taken a consistent stand that the Corporate Debtor has fai....
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....oup.com> Cc: Noël Van Driessche <[email protected]>; Karin Deesen <[email protected]>; Jeroen Van Diesen [email protected]>; [email protected]; [email protected] Subject: RE: pour file 25866 weart it global vs Lomat Dear Mr. Kumar, dear Mr. Agarwal, Thank you for the below message. First of all, Mr. Kumar, we would like to take the opportunity to thank you again for inviting us for a constructive meeting in your offices and for your hospitality. The recycling proposal you made during our meeting (attached) was discussed at the level of our executive committee. They are willing to participate in a recycling scheme between you and Lomat. However, they also believe that some of the terms of your proposal can be improved. Firstly, we propose that the new deliveries under the recycling scheme are payable on 120 days Instead of 180 days. Also, while we appreciate the uncertainties you are currently facing with the implementation of the GST, we believe that an extra effort can be made as soon as this turmoil is expected to be over and therefore would like to see higher monthly payments by the end of 2017. Th....
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.... introduction of GST had sapped their financial strength which had affected their financial flow. 27. The existence of debt due and payable by the Corporate Debtor has also not been controverted by the Corporate Debtor. No material has been placed on record by the Corporate Debtor to show that they had categorically rejected the outstanding dues claimed by the Operational Creditor prior to issue of demand notice. From a plain reading of the emails of the Corporate Debtor at pages 147-152 of AA, there arises no doubt in our minds that the Corporate Debtor had acknowledged that there was debt due and payable to the Operational Creditor. Not only was the outstanding amount acknowledged but an assurance had also been given by Corporate Debtor to clear the said amount. That the Corporate Debtor had on their own volition proposed a solution in several of their email suggesting recycling LC and repayment schedule to the Operational Creditor to resolve their outstanding liabilities also clearly establishes admission of debt which was due and payable. 28. The Corporate Debtor having also failed to furnish any proof or record to show how they had discharged the liability of admitted du....
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....tor, it is stoutly contended by the Operational Creditor that it was done as an after-thought with the mala-fide intention to escape the clutches of IBC. In any case, the civil suit having been filed after receipt of statutory demand notice, we are inclined to discount this to be a credible ground to establish pre-existing dispute. 31. At this juncture we may glance through the relevant portions of the impugned order to see how the matter has been dealt by the Adjudicating Authority which is to the following effect: "9. The Corporate Debtor has taken plea of pre-existing dispute as there is:- a. Request for Arbitration by the Corporate Debtor; and b. Filing of a Civil Suit by the Corporate Debtor against the Operational Creditor. 10. From the documents before us we do not find there was any 'Cyclical Business Agreement' between the parties. We also do not find any arbitration agreement between the parties to refer the alleged dispute to arbitration. 11. Merely a request for arbitration sent by a person to another and specifically not agreed to by the other person cannot constitute an Arbitration Agreement. 12. Though ....