TaxTMI 
TaxTMI 
TaxTMI 
2024 (5) TMI 626
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....y Code (IBC), 2016. Adjudicating Authority vide its order dated 10.08.2023 had rejected the prayer of Operational Creditor to initiate the CIRP against the Corporate Debtor/ Respondent. Hence this appeal. 2. The order passed by Adjudicating Authority is a short 2 page order and the same is reproduced below: "This application is filed under Section 9 of the IBC, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the corporate debtor. The case of the applicant is that it has given 100% advance of USD 200000 to the corporate debtor for purchase of goods, which it had failed to deliver and has refused to pay back the advance. Ongoing through the application, we find that the Invoice annexed at page No.9 in the terms of delivery and payment clearly states that the goods were to be lifted from "Ex-Plant Rajkot", India. We also find from the email dated 18.04.2023, sent by Mr. Nimesh Sanghrajka to Mr.Navin Alwani, the Director of the alleged Operational Creditor, that the goods are ready at his warehouse and the applicant can lift the goods at any time. In her oral submissions Ms. Zalak, Ld. Counsel states that the goods were supposed to be delivered a....
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....funds of the deposit and related issues. 7. The Appellant thereafter issued statutory demand notice under Section 8 of the IBC on 9th May 2023 ("the said notice"). The Respondent did not respond to the demand notice under Section 8 of the IBC. 8. Thereafter, the Appellant filed the Company Petition No. 182 of 2023 ("Company Petition") under Section 9 of the IBC against the Corporate Debtor for default by the Corporate Debtor in refunding the advance payment made by the Appellant of an amount of USD 200,000 (Two Hundred Thousand Dollars) in accordance with the said PO which was for the delivery of the said goods on 19th March 2020. 9. The Adjudicating Authority rejected the application for initiation of insolvency proceedings against the Corporate Debtor. The order of Adjudicating Authority was passed on the very first date of hearing after hearing the appellant (Operational Creditor). The respondent (Corporate Debtor) was not present in the hearing. Submission of the Appellant 10. The Appellant has assailed the impugned order of the Adjudicating Authority on the following grounds: (i) The Adjudicating Authority wrongly held that "Operational" Debt does not cover "advance" pa....
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....or services qualifies as an operational debt." 12. The appellant has submitted that it was not his duty to lift the goods from the warehouse and in this regard, he relies on email dated 14.03.2020 from Sarju (from KTEX) wherein the terms of delivery and other relevant details are shown to have been confirmed by the respondents. In particular, the mail highlighted the following: "a. The 'Delivery Schedule' clearly shows that the Respondent was to prepare the consignment by 19.03.2020 after which they would inform about dispatch. b. Column pertaining to "Transportation' shows that the Respondent was supposed to inform the Appellant about the charges for the transportation of the consignment from the Rajkot Plant to the Mumbai/Delhi Airport. Therefore, it is clear that the Respondents were aware that the consignment was to be sent to Mumbai/ Delhi Airport and not picked up from their plant by the Appellant as contended by the Respondent. c. The 'Price' is to be 'Ex Plant- Rajkot' which implies that the cost of goods will be ascertained as per the Seller's place of manufacture in Rajkot. d. KTEX had confirmed that they would arrange the English S....
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....rom the plant. 19. Lastly, the appellant has submitted that the Appeal is not barred by limitation due to the "excluded period" of Covid-19 as granted by Hon'ble Supreme Court from 15.03.2020 to 14.03.2021. 20. The appellant further submits that the reliance placed by the Respondent on this Appellate Tribunal Judgment is Sh. Mohan Lal Goel Vs. National Skill Development Corporation (2022) SCC online NCLAT 2020 has no applicability to the present matter in the light of Hon'ble Supreme Court's aforesaid Judgement. Submission of the Respondent 21. The Respondent has made 4 submissions before us. These in brief are: (i) Terms of purchase order prove that the appellant has breached the terms. (ii) Email communication shows goods were ready and stored at the warehouse. (iii) Adjudicating Authority has rightly relied upon the documents produced with the petition to conclude that no debt is proved. (iv) The appellant is trying to change its case by producing a different purchase order before this Appellate Tribunal. The detailed submission of the Respondent on these points are given in subsequent paras. 22. The respondent has stated that: i. In accordance with the Purchase ....
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....ch is being presented for the first time before this Appellate Tribunal. The Appellant raised no such request at the time of hearing before the Adjudicating Authority to amend or replace the aforesaid purchase order, consequently leading to the Application being dismissed on the first hearing itself. 27. Analysis and Findings We have gone through the detailed submission of Appellant and Respondent and the material on record. There are two issues which need to be decided. (i) Whether the appellant is an Operational Creditor as per IBC? (ii) Whether there has been a breach of terms and conditions of the contract leading to pre-existing dispute? 28. We take up the issue relating to Operational Creditor first. Here the Appellant has relied on Judgment of Hon'ble Supreme Court in Consolidated Construction Consortium Ltd. (supra). 29. In the case referred above M/s Consolidated Construction Consortium Ltd. (supra) (The Appellant therein) had placed an order for supply of light fittings to M/s Hitro Energy Solutions Private Ltd. (the Respondent therein). The appellant had got the contract from Chennai Metro Rail Corporation (CMRL) and for completing the said work he has placed an ....
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....voice (for having supplied goods or services) is not a sine qua non, since a demand notice can also be issued on the basis of other documents which prove the existence of the debt. This is made even more clear by Regulation 7(2)(b)(i) and (ii) of the CIRP Regulations 2016 which provides an operational creditor, seeking to claim an operational debt in a CIRP, an option between relying on a contract for the supply of goods and services with the corporate debtor or an invoice demanding payment for the goods and services supplied to the corporate debtor. While the latter indicates that the operational creditor should have supplied goods or services to the corporate debtor, the former is broad enough to include all forms of contracts for the supply of goods and services between the operational creditor and corporate debtor, including ones where the operational creditor may have been the receiver of goods or services from the corporate debtor. Finally, the judgment of this Court in Pioneer Urban (supra), in comparing allottees in real estate projects to operational creditors, has noted that the latter do not receive any time value for their money as consideration but only provide it in e....
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....rma invoice dated 12.03.2020 and emails to established that the respondent has failed to deliver the goods on time and on being issued demand notice has not refunded the amount of advance to the appellant. They have submitted a different copy of purchase order in their appeal which was not submitted before the Adjudicating Authority. A copy of the same is placed below : 33. The purchase order which was placed before the Adjudicating Authority was only a bank statement showing the bank details of both appellant and respondent. It has no details of place and mode of delivery. The revised proforma invoice dated 12.03.2020 gives the terms of delivery and payment as "Ex-Plant Rajkot, India". 34. The third document which has been introduced directly in the appeal before us is a purchase order dated 16.03.2020 where terms of delivery has been mentioned as "Ex-Works Rajkot". The price also is quoted "Ex-Works Rajkot". 35. The appellant had pleaded before the Adjudicating Authority that the goods were to be delivered at Hong Kong based on the so-called purchase order, which only had bank details. The revised proforma invoice dated 12.03.2020 relied on by appellant mentioned place for sup....
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....e existence of a dispute and/or the record of the pendency of a suit or arbitration proceeding filed before the receipt of such notice or invoice in relation to such dispute [Section 8(2)(a)]. What is important is that the existence of the dispute and/or the suit or arbitration proceeding must be pre-existing i.e. it must exist before the receipt of the demand notice or invoice, as the case may be.... ( Emphasis supplied ) 40. It further noted in paragraph 38 of 'Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd.' (supra) it was held that when a notice is received by a corporate debtor under Section 8(2) of the IBC, it is enough that a dispute is pending and it is not necessary that a suit/arbitration also be pending: "38..........We have also seen that one of the objects of the Code qua operational debts is to ensure that the amount of such debts, which is usually smaller than that of financial debts, does not enable operational creditors to put the corporate debtor into the insolvency resolution process prematurely or initiate the process for extraneous considerations. It is for this reason that it is enough that a dispute exists between the parties." 41. The final ob....