TaxTMI 
TaxTMI 
2023 (12) TMI 687
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....g order dated 22.02.2023 passed by National Company Law Tribunal, Jaipur Bench admitting Section 9 Application filed by Saudi Basic Industries Corporation ("Operational Creditor", who is Respondent No.1 herein). 2. Brief facts of the case necessary to be noticed for deciding the Appeal are: (i) Operational Creditor and the Corporate Debtor entered into a Sale Order Agreement for purchase of goods. Goods were delivered and invoice dated 06.06.2017 was issued by Operational Creditor for an amount of USD 403,920, which was to be paid within 90 days, i.e., by 04.09.2017. Only part payment of USD 276,580 was made by the Corporate Debtor, leaving a balance of USD 127,340. (ii) Different emails were sent by the Operational Creditor requesting the Appellant - Director of the Corporate Debtor to make the payments upto date. The Appellant on behalf of Corporate Debtor sent email on 15.09.2017, replying to the email stating that they were expecting extension of their bank limit and they will pay dues under all the outstanding invoices. The Appellant on behalf of the Corporate Debtor acknowledged the dues vide emails dated 21.09.2017 and 30.09.2017. By letter dated 26.03.2....
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....Agrawal, learned Counsel appearing on behalf of Operational Creditor (Respondent No.1 herein). 4. Shri Virender Ganda, learned Senior Counsel challenging the impugned order submits that the Operational Creditor having received the amount from the Insurer, i.e., Tawuniya, which fact was suppressed in Section 9 Application, there is no debt due on the Corporate Debtor for which Section 9 Application could have been proceeded with. The Operational Creditor having concealed the aforesaid fact, the Application deserved to be dismissed. It is submitted that the Appellant having withhold the material information that it has received the claimed amount from Insurer, Application under Section 9 deserved to be dismissed. It is submitted that Operational Creditor has come up in Section 9 Application with unclean hand and has failed to produce all the documents executed by it, which were relevant to the litigation, which constitute a fraud on both, the Court and the Corporate Debtor. The Application filed by Operational Creditor ought not to have been entertained and deserved to be rejected under Section 65 of the Code. The Code cannot be used for recovery proceedings. It is submitted that ....
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....on 9 Application about the receiving of insurance claim from Tawuniya, it is submitted that Operational Creditor vide email dated 20.09.2017 as well as by email dated 26.09.2017 had requested the Corporate Debtor to make payment, otherwise, the Operational Creditor shall lodge their claim with Insurance Company. Thus, filing of the claim before the Insurance Company was very much communicated to the Corporate Debtor. It is further submitted that Insurance Agreement between the Corporate Debtor and the Insurance Company has nothing to do with the Corporate Debtor and payment of insurance claim by the Insurance Company to the Operational Creditor does not absolve the Corporate Debtor from its liability to pay its dues. It is submitted that the Operational Creditor is under obligation to initiate legal proceedings against the Appellant to recover the outstanding debt. The amount received by Operational Creditor from the Insurance Company has to be remitted back. It is submitted that there is no question of any concealment or playing fraud to Court or on the Appellant. There was no subrogation made by the Operational Creditor in favour of the Insurer and the Operational Creditor was fu....
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.... the entire due invoices. Please support us. Thanks Milan Aggarwal" 9. The Operational Creditor has also relied on its email dated 20.09.2017, where it has requested the Corporate Debtor to arrange for payment, otherwise, the Operational Creditor will file the claim with Insurance Company. The email dated 20.09.2017 is as follows: "Dear Sir, Please find below the due payment details. Request please arrange to make payments due for the month of July and August asap, otherwise SABIC will file the claims with insurance Company. Payment Due Date Amount in USD 22.07.2017 66,330.00 22.07.2017 67,320.00 18.08.2017 31,432.50 08.09.2017 403,920.00 21.08.2017 181,670.00 08.09.2017 25?444.00 80.09.2017 82,812.50 10.09.2017 208,656.00 08.10.2017 186,620.00 Total 1,392,205.00 Best Regards" 10. By email dated 30.09.2017, the Appellant again communicated that 100% dues shall be paid. The said email is as follows: "Dear Sir We have already paid one invoice and we will be able to give you swift copy on 3rd or 4th. Our bank limits enhancement has been del....
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....Debtor is to the following effect: "Dear Sir, ACKNOWLEDGEMENT OF OUTSTANDING PAYABLE AMOUNT (Balance Confirmation) We note as of the date of this letter, our outstanding amount owing to SABIC Asia Pacific Ltd. ("SAPPL") for purchase of SABIC petrochemicals currently stands at USD 516780 & To SABIC KSA for purchase of SABIC petrochemicals currently stands at USD 289980 which totals to USD 806760. We acknowledge the amount of USD 806760 outstanding and owing to SABIC as at the date of this letter, and that we agree not to raise any disputes to SABIC lawful claim for the amount. We are pleased to inform that our request for working capital enhancement has finally been approved by our group of bankers, and awaiting for the disbursement. We also expect to get GST refund soon, and hope to clears all your dues by April 2018." 14. Even on 02.05.2018, assurance was given by the Appellant in following words: "Dear sir, We shall pay as soon our enhanced limits are cleared. Let's hope it happens asap/ within may. Milan Aggarwal Prayag Polytech Pvt. Ltd. C-587, phase ....
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.... of claim USD 289,980.00 Amount Covered USD 289,980.00 Indemnity percentage 100% Amount payable USD 289,980.00 Recoveries after date of loss USD 162,640.00 Liability payable USD 127,340.00 In exchange for payment in full and final settlement of your Claim, a direct of SAUDI BASIC INDUSTRIES CORPORATION is required to sign and return this Claim Offer ("Offer") to Tawuniya. Once payment has been made, you will no longer have any claim against Tawuniya, or its assignee, and you discharge Tawuniya, and its assignee, from all further obligations in respect of the claim. Please note that we are currently not exercising our rights of formal assignment of debt and by accepting this settlement offer you agree to maintain full rights in respect of the receivables subject to this claim and to formally assign this debt to Tawuniya when requested. Failure to agree to a formal assignment of debt upon our request will be a breach of policy condition and in such case; you agree to return the liability payable amount back to Tawuniya within 7 days of Tawuniya making a formal demand for return of this claim liability payable amount. ....
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....nded to get an advantage. Jagannath was working as a clerk with Chunilal Sowcar. He purchased the property in the court auction on behalf of Chunilal Sowcar. He had, on his own volition, executed the registered release deed (Ex. B-15) in favour of Chunilal Sowcar regarding the property in dispute. He knew that the appellants had paid the total decretal amount to his master Chunilal Sowcar. Without disclosing all these facts, he filed the suit for the partition of the property on the ground that he had purchased the property on his own behalf and not on behalf of Chunilal Sowcar. Non-production and even non-mentioning of the release deed at the trial is tantamount to playing fraud on the court. We do not agree with the observations of the High Court that the appellants-defendants could have easily produced the certified registered copy of Ex. B-15 and non-suited the plaintiff. A litigant, who approaches the court, is bound to produce all the documents executed by him which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the court as well as on the opposite party." 21. The pre....
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....nd the amount has been received by the Insured, proceedings for recovery of the amount due, can be initiated by the Insured, and the party who owes the amount cannot be absolved on the ground that claim has been received from the Insurer. The learned Counsel for the Respondent has relied on the judgment of the Hon'ble Supreme Court in Economic Transport Organisation v. Oriental Insurance Company Limited - (2010) 4 SCC 114. The above was a case where assured took a policy of insurance from National Insurance Co. Ltd., covering transit risks. The good vehicle carrying the consignment met with an accident and consignment was damaged. The Insurer settled the claim for an amount of Rs.4,47,436/- whereas the value of the consignment was Rs.7,70,948/-. On receiving the payment from the Insurance Company, a letter of subrogation-cum-special power of attorney was executed in favour of Insurance Company. Thereafter, a complaint was filed by both Insurance Company and Assured, which was allowed and direction was issued for payment of Rs.4,47,436/- along with interest. The Appellant, who was directed to make the payment, challenged the order before the State Consumer Disputes Redressal Commiss....
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....ed, in terms of the principles of subrogation." 25. Ultimately, in paragraph 58, the Hon'ble Supreme Court dismissed the appeal by laying down following: "58. The loss of consignment by the assured and settlement of claim by the insurer by paying Rs 4,47,436 is established by evidence. Having regard to the presumption regarding negligence under Section 9 of the Carriers Act, it was not necessary for the complainants to prove further that the loss/damage was due to the negligence of the appellant or its driver. The presumption regarding negligence was not rebutted. Therefore, the District Forum was justified in allowing the complaint brought by the assured (the first respondent) represented by the insurer and the insurer for recovery of Rs 4,47,436. The said order was affirmed by the State Commission and the National Commission. We find no reason to interfere with the same. The appeal is, therefore, dismissed." 26. The next judgment relied by Shri Amit Agrawal is judgment of the Bombay High Court in winding up petition, i.e., Rojee-tasha Stampings Pvt. Ltd. v. POSCO-India Pune Processing Centre Pvt. Ltd. and Anr. - (2019) (1) Maharashtra Law Journal Page 857. The abov....
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....e company was not aware of the respondent's insurer making payment to the respondent. Moreover, taking into consideration the material on record the learned Company Judge has observed that the pvr 8/20 appl134-18grp.doc company has in fact made a false statement in the said affidavit that the company came to know only in July/August 2015 of the respondent having received the payment from the insurance company. This for the reason that this was being urged on the basis of an E-mail dated 14 June 2012 (page 96 of the paper book) from Ksure to the company which was very much in existence and available with the company when the company Court passed an order dated 25 June 2014. The learned Single Judge accordingly ordered that the company be wound up. The company being aggrieved by the impugned order is before the Court in the present appeals. 6. Learned Counsel for the appellant/company in assailing the impugned order has made the following submissions:- (i) There should have been a disclosure by the respondent of the receipt of the amounts from the insurer-Ksure. This to ascertain whether the insurer was assigned the rights in respect of the debt of the company t....
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....bonafide and honest. In any case, the receipt of the amount from the company would not vitiate the cause of action which had accrued to the respondent." 27. The Hon'ble Bombay High Court after hearing the parties held that third party cannot take shelter and disown its liability of a debt payable to the Company on the basis that insurance transaction has taken place between Respondent and its Insurer. In paragraphs 12, 14 and 16, following was laid down: "12. Be that as it may, it would be imperative to consider whether such a plea that the debt of the company payable to the respondent ceased to exist on the respondent's insurer making payment to the respondent, can at all be accepted. Admittedly, the company is a unknown entity to the contract of insurance between the respondent and its insurer Ksure. Being a third party the company pvr 14/20 appl134-18grp.doc cannot take shelter and disown its liability of a debt payable to the respondent on the basis of an insurance transaction which has taken place between the respondent and its insurer. In our opinion, such a plea introduced in the affidavit of Mr.Rohit R. Ganage is an argument of desperation. Being a third par....
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....100 were burnt and charred and 13 bales were loose and short in weight. When the plaintiff applied for open delivery, the railway authorities at Podhanur got the damage surveyed, and issued a certificate of damage and shortage. The plaintiff claimed damages. The railways however denied the claim as the cause of the fire was stated to be unknown and thus no negligence or misconduct could be claimed against the railways. The plaintiff had accordingly instituted a suit for damages. It is in the said suit the defendants-railways contended that the plaintiff was not entitled to institute the suit as it had insured the goods with the Indian Globe Insurance Co. and had received the total loss from the said Company, and therefore, the railways was not liable for damages. In the majority judgment, the Court refused to accept the said contention and made the following observation:- "21. The defence of the Railway Administration was that the mill realised from the insurance company the damages and "as such the plaintiff (meaning thereby the respondent mill) has no right to claim any sum in this action". If the specific plea of assignment had been taken in the written statement the re....
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....nt was noticed in paragraph 6(i) of the judgment, which was answered in paragraphs 8 and 9, which are to the following effect: "8. Reference in this context may also be had to the judgment of the Gujarat High Court in PVD Plast Mould Industries Ltd. v. ING BHF Bank Aktiengesellschaft, (2008) 144 Comp Cas 495 (Guj) where the court has held as follows:- 6.....The petitioner cannot say that once the Insurance Company has paid the money to the principal creditor, then the appellant company is not answerable to anybody. The appellant company is still liable and applying the principle of subrogation, the Insurance Company can always recover the money from the appellant and in any case, if the money is received by the creditor company then, to the extent of the receipts, the creditor company would refund the money to the Insurance Company. That would be a matter between the Insurance Company and the creditor company. The debtor is not entitled to take any benefits out of the said transaction." 9. Hence, even for a moment if I assume that the petitioner were to recover some money, the petitioner would be obliged to return the money to the insurance company. Hence....
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....d the claimed amount from insurance Company. The Corporate Debtor is still liable to pay its debt and the Operational Creditor is under obligation to return the money to the Insurance Company as per the Terms and Conditions of the Insurance Contract, which we have already noticed, where the Insurance Company offered to accept the claim with the conditions underlying therein. 32. In view of the foregoing conclusion, we are of the view that Section 9 Application is fully maintainable and the fact that Insurance Company has made payment to the Operational Creditor of its claim, cannot be a ground to reject Section 9 Application. The Corporate Debtor is still liable to discharge its liability of debt. 33. Now coming to the submission of the Appellant that there was preexisting dispute between the parties. Suffice it to say that the goods were received in 2017 and for two years there has been several correspondences between the parties as noted above and not even iota of any suggestion was given in any of the reply submitted by the Corporate Debtor that there is any deficiency in the goods. When the Demand Notice was issued on 03.04.2019 by the Operational Creditor, it was thereaf....