TaxTMI 
TaxTMI 
2024 (8) TMI 406
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....shold value of Rs.1,00,00,000/- (Rupees One Crore only) as required u/s 4 of the Code for initiating the Corporate Insolvency Resolution Process ("CIRP") against the Respondent and that there are pre-existing disputes in relation to the debt amount of Rs.1,82,54,891/- (Rupees One Crore, Eighty Two Lakhs, Fifty Four Thousand, Eight Hundred and Ninety One only) plus interest of Rs.42,72,193/- (Rupees Forty Two Lakhs, Seventy Two Thousand, One Hundred and Ninety Three only). Brief Facts of the Case 2. Somewhere in January 2021, the Director of Respondent approached the Director of Appellant with a proposal/request to provide/supply Isopropyl Alcohol, Toluene, Methyl Methacrylate, Methyl Iso Butyl Ketone and Acetone chemicals, which the Appellant agreed to supply subject to raising purchase orders and timely payments. The Respondent raised various purchase orders for purchase of chemicals. Accordingly, the Appellant supplied total chemicals worth Rs.1,82,54,891/- (Rupees One Crore, Eighty Two Lakhs, Fifty Four Thousand, Eighty Hundred and Ninety One only) and raised seven invoices towards the same under which payment was to be made within 70 days. However, payment was not made de....
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.... The Appellant further contended that instead of paying the aforesaid balance outstanding amount, it issued a credit note dated 18.07.2020 for Rs.72,25,140/- (Rupees Seventy Two Lakhs, Twenty Five Thousand, One Hundred and Forty only) which was allegedly not accepted by the Respondent. And further alleged that in its claim of Rs.1,82,54,891/- (Rupees One Crore, Eighty Two Lakhs, Fifty Four Thousand, Eight Hundred and Ninety One only), the Appellant failed to consider payment of Rs. 20,71,000/- (Rupees Twenty Lakhs and Seventy One Thousand only) made by the Respondent and also an alleged debit note of Rs.72,25,140/- (Rupees Seventy Two Lakhs, Twenty Five Thousand and One Hundred Forty only). The Appellant, by its rejoinder dated 22.05.2023, denied the said allegations. 9. The Adjudicating Authority, by its Order dated 17.01.2024, rejected the said Company Petition by relying upon the emails of the Respondent regarding alleged set-off, the alleged payment of Rs.20,71,000/- (Rupees Twenty Lakhs and Seventy One Thousand only) and debit note of Rs.72,25,140/- (Rupees Seventy Two Lakhs, Twenty Five Thousand, One Hundred and Forty only) which were in respect of a separate transaction, ....
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.... Seventy Five Thousand only) plus GST of Rs.1,12,99,500/- (Rupees One Crore, Twelve Lakhs, Ninety Nine Thousand and Five Hundred only) for 450 MT but paid only Rs.2,00,67,075/- (Rupees Two Crores, Sixty Seven Thousand and Seventy Five only) for 143.850 MT only and the balance amount of Rs.4,27,07,925/- (Rupees Four Crores, Twenty Seven Lakhs, Seven Thousand, Nine Hundred and Twenty Five only) plus GST amount of Rs.1,12,99,500/- (Rupees One Crore, Twelve Lakhs, Ninety Nine Thousand and Five Hundred only) was never paid by the Appellant. 13. After waiting for some time, the Respondent approached the Appellant to lift the material and release the payment of Rs.4,27,07,925/- (Rupees Four Crores, Twenty Seven Lakhs, Seven Thousand, Nine Hundred and Twenty Five only) plus GST as the Respondent had procured the material from the market on his behalf on credit. 14. On 18.07.2020, the Appellant issued one credit note of Rs.72,25,140/- (Rupees Seventy Two Lakhs, Twenty Five Thousand, One Hundred and Forty only) instead of Rs.5,40,07,425/- (Rupees Five Crores, Forty Lakhs, Seven Thousand, Four Hundred and Twenty Five only) to the Respondent without any settlement or any intimation to th....
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....ued debit notes to the Appellant for the storage charges paid by the Respondent to store the unlifted materials of the Appellant and for the interest paid by the Respondent. 18. The Appellant issued legal notice dated 05.09.2022 for dishonouring of cheques allegedly issued towards settlement of the account. There was no settlement executed between the parties and the Respondent never issued cheques on the dates mentioned in the respective cheques. It is pertinent to mention that the cheques mentioned in the said legal notice were issued by the Respondent in the year 2020, which were stopped because the payment was made through RTGS in 2020. Appellant fraudulently changed the dates of the cheques and presented them in the bank for clearing but the Respondent immediately stopped the payment of the cheques as they were tempered by the Appellant. The Appellant had committed the offence of cheating and forgery. The Respondent also filed police complaint against the Appellant for committing cheating and forgery. 19. In fact, the Appellant also filed a police complaint against the Respondent company in Mumbai for not paying the alleged pending amount and the directors of the Respond....
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.... the filing of the application and the issuance of the demand notice. The debt amount claimed by the Appellant is adjusted against an outstanding payment due from the Appellant to the Respondent for a separate transaction involving the supply of 450 MT of IPA. The Appellant failed to pay for the remaining 306.150 MT of IPA and issued a credit note without settlement, which was not accepted by the Respondent. The alleged due amount claimed by the Appellant is less than the threshold limit of Rs. 1,00,00,000/- (Rupees One Crore only) as per Section 4 of the Code when considering the payments made by the Respondent and the debit notes issued. The cheques mentioned by the Appellant were related to previous transactions and were stopped due to payments made through RTGS. Further, the Appellant's claim includes interest, which is not part of 'operational debt' as defined under Section 5(21) of the Code. Most importantly, there are pre-existing disputes evidenced by numerous communications and police complaints filed by both parties. 26. The present Appeal filed under Section 61 of Code seeks an order to quash/set aside the Order dated 17th January 2024 of the Adjudicating Authorit....
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....barred in view of Section 65 of the I&B Code." (Quoted verbatim) Similarly, in case of Company Appeal (AT) (Insolvency) No. 883 of 2019 in SBF Pharma Versus Gujarat Liqui Pharmacaps Pvt. Ltd., this Appellate Tribunal rejected the Petition for the realization of only interest amount, on the ground that the Petition is filed for other than for the Resolution of Insolvency or liquidation. This Appellate Tribunal observed that: "7. In the present case, we find that the Respondent- 'Corporate Debtor' is not insolvent and viable and feasible to pay the claim amount. Only for recovery of the interest, the Appellant is pursuing the Insolvency Resolution Process which, according to us, is malicious intent for any purpose other than for the resolution of insolvency, or liquidation." (Quoted verbatim) The respondent further contends that, the claim of interest alone on loan, does not clarify as an 'Operational Debt' under the 'I & B Code'. It is settled that the charging of interest, ought to be an actionable claim, enforceable under law, provided it was properly agreed upon between the parties. In this case, Learned Counsel for the Appellant submi....
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....d be treated to be an application pursued by the Applicant with malicious intent (to realise only Interest) for any purpose other than for the Resolution of Insolvency, or Liquidation of the 'Corporate Debtor' and which is barred in view of Section 65 of the I & B Code." (emphasis supplied) In the instant case also, the unilateral stipulation of interest by the Appellant without any agreement or understanding between the parties further weakens the Appellant's claim. 30. Furthermore, according to Section 5(21) of the IBC, 'operational debt' is defined as "a claim for the provision of goods or services, including employment, or a debt for the repayment of dues arising under any law for the time being in force and payable to the Central Government, any State Government, or a local authority." Section 5(8) of the Code defines 'financial debt' as "a debt along with interest, if any, which is disbursed against the consideration for the time value of money." If we compare both the said definitions, we find that 'interest' is specifically mentioned in the definition of financial debt but no such mention is available in the definition of operation debt. Thus, we ....
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....ord, we are satisfied that the Corporate Debtor had raised a pre-existing dispute with respect to the amount claimed by the Operational Creditor. 35. Further, both the parties were having a dispute with respect to some cheques issued by the Respondent. Appellant had issued a legal notice dated 05.09.2022 for dishonouring of cheques. The Respondent claims that these cheques were issued in the year 2020 and they were stopped for payment as necessary payment was made through RTGS in the same year. The Respondent has claimed that the Appellant has fraudulently changed the dates of cheques and presented them in the bank for clearing but the Respondent immediately stopped the payment of the cheques and also filed a police complaint against Appellant for committing cheating and forgery. This is another dispute which has been going on between the parties. Without going into the details of the criminal case, apart from this material also there is sufficient other material on record that suggests there was a pre-existing dispute. 36. The Appellant had contended that the Adjudicating Authority had failed to consider that there was no provision under the Code for set-off /adjustment /cou....