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2023 (7) TMI 1484
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....e lacs six thousand one hundred and forty three only) as on 31.05.2022. The Operational Creditor seeks admission of this petition, initiation of Corporate Insolvency Resolution Process (CIRP), granting moratorium and appointment of Interim Resolution Professional as prescribed under the Code and Rules thereon. II. The averments made in the application are: (i) The petitioner, at the request of the respondent, has supplied goods, viz. C.R.F.H. Strips, C.R.F.H. Coils, Steel Strapping Seals, etc. in the year 2019. It was the practice between the petitioner/ Operational Creditor and respondent/ Corporate Debtor to make payments against the goods supplied by issuing Letter of Credit. (ii) The respondent/ Corporate Debtor has made last payment on 20.12.2021 amounting to Rs. 92,01,161/- against Invoice No. GST/21-22/ 0250, and GST/21-22/ 0251. The Corporate Debtor has undertaken to pay outstanding dues of Rs. 2,88,79,417/- plus mutually agreed interest by way of Affidavit dated 15.03.2022 (Annexure-1). The petitioner/ Operational Creditor had addressed several communications to clear outstanding dues, the latest being e-mail dated 22.03.2022 (Annexure-2). (iii) Ultimately, the....
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.... the Recovery Officer of the Bank, which was duly registered. Thus, the respondent/ Corporate Debtor group became the owner of the properties together with plant and machinery at: Plot No. 6 and 4C Survey No. 79, Jeedimetla Village. At that time, the Corporate Debtor engaged the services of Allu Nagesh, a former employee of Axis Bank to advise the Corporate Debtor in its financial matters. Said Allu Nagesh was a classmate of the Managing Director of the Corporate Debtor. He was appointed as independent Director of the Corporate Debtor. (iii) The respondent/ Corporate Debtor further submitted that the Corporate Debtor had carried on all necessary repairs and brought the said sick company into production during May 2018. (iv) It is submitted that suppliers of raw materials to the Corporate Debtor were the earlier suppliers of raw materials of M/s Midfield Industries Limited. During December 2021, it is observed by the management of the Corporate Debtor that the payments made against the payables is getting higher than the amounts receivable from the receivables from the said activity of steel strapping. At that time Letters of Credit opened by the steel str....
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..... Against the above invoices, the Corporate Debtor issued Letter of Credit and all payments were received by the Operational Creditor through discounting. However, during audit, it is noticed that in respect of the invoices mentioned at page 15-17 of the Counter, though payments were made actually, stocks were not received by the Corporate Debtor. On careful perusal it has become evident that the same were copies of the earlier invoices. (x) The respondent submitted that against the aforesaid invoices the Corporate Debtor has issued letters of credit and all the payments were received by the Operational Creditor through discounting. However, during the audit the respondent discovered that though payments were made actually, stocks were not received by the Corporate Debtor. Besides, the quantities purported to have been supplied were far in excess and beyond the carrying capacity of the vehicles. (xi) The respondent Corporate Debtor answers the claims made by the Operational Creditor in Form-5 as under: In reply to Para g, Part-V of Form-5 it is stated that the petitioner is engaged in business of supply of various goods to various debtors and also dealing in suppl....
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....contentions in this Additional Counter it is apt to note the chronology: 31.05.2022 Demand Notice (Annexure-3) was issued by the petitioner/ Operational Creditor along with computation sheet of Demand Account and invoices pending for payment. 15.06.2022 The respondent/ Corporate Debtor sent Reply to Demand Notice - Annexure-5, page 822 of the application. 30.06.2022 Respondent/ Corporate Debtor has filed F.I.R. No. 539 of 2022 dated 30.06.2022 with Jeedimetla Police Station under sections 420 and 496 of the IPC, (Page 25 of the Counter dated 26.10.2022). 29.08.2022 The present petition under section 9 of the I&B Code is filed. Oct./ Nov. Writ Petition under section 482 of the Code of Criminal 2022 Procedure being Writ Petition No. 42528 of 2022, is filed before the Hon'ble High Court of Telangana for quashing of FIR bearing No. 171 of 2023 dated 04.03.2023 registered with Jeedimetla Police Station, which is pending adjudication. 04.03.2023 Petitioner/ Operational Creditor has filed a cross-complaint registered as C.R. No. 171 of 2023 with SHO, Jeedimetla under sections 420, 403, 422 and 34 of the IPC against the respondent/ Corporate Debtor....
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.... the Appellant that police complaint do not evidence any dispute between the parties. It is to be noted that all the aforesaid complaints are much before initiation of proceedings u/s 9 by the Appellant. The Adjudicating Authority has not committed any error in relying of the facts and materials on record to come to the conclusion that there was pre-existing dispute between the parties. 9. We are of the view that IBC proceedings are not for the purposes of adjudicating such dispute between the parties and are not the recovery proceedings to recover the unpaid amount by the official creditor whose claim is disputed by the 'Corporate Debtor'. We, thus, do not find any error in the order of the Adjudicating Authority, the appeal is dismissed." (vii) The respondent submitted that the proceedings under the I&B Code shall not be instituted for recovery of amounts and a profit making and solvent company shall not be subjected to CIRP as was decided by the NCLT and the Hon'ble Supreme Court in various cases. V. Operational Creditor has filed WRITTEN SUBMISSIONS dated 28.04.2023 submitting that: (i) The petitioner/ Operational Creditor is in the business of supply....
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....or submits that when such payments are made the same visible on the account of the Corporate Debtor on GST Portal by way of GSRT2 by 15th day of the month, viz. five days. In the event of any dispute the Corporate Debtor ought to have filed rejection of GSRT 3B to be statutorily filed by 20th day, viz. 9-10 days from GSTR 1 or 5 days of GSRT 2. The Corporate Debtor chose not to do so. From the above it is apparent that having received Demand Notice in Form-4 the respondent/ Corporate Debtor had cooked up a story of non-receipt of supplies post 21.12.2021. (viii) As regards the contention raised by the Corporate Debtor that quantity of goods was far in excess of capacity of vehicles (page 15 of the Counter), the Operational Creditor submitted that as per e-way bill and invoices, the quantity was within the carrying capacity of vehicles or slightly higher than the capacity, which is normal in transport industry. (ix) It is submitted that the Corporate Debtor has submitted in para 6 (page 23) of its Counter that a criminal case is pending at the applicant and its Director. It is submitted by the petitioner said criminal case was filed on 30.06.2022, only after receipt of Demand ....
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....ohan Reddy, who were responsible for the day to day management of the company had colluded with various suppliers including the petitioner herein and fabricated a number of invoices for purchase of goods and made payments even though complete goods were not delivered to the respondent/ company. (iv) Respondent/ Corporate Debtor has given details of each Invoice raised by the petitioner/ Operational Creditor. It is contended that Invoices Nos.78, 92 and 124 dated 09.07.2021, 26.07.2022 and 28.08.2021 (Annexures R1, R2 and R3 of this Written Submission) have been paid fully. Whereas, Invoices No. 114, 115 and 116 are duplicates of Invoices No. 181, 182 NS 183 as demonstrated in Table-1, page 6 of this Written Submission. The same can be found at page 40 of the petition. As regards Invoices shown in Table-2 (Page 6 of this Written Submission), the same were adjusted against payment to be made by the petitioner to the respondent as shown in the tabula statement at pages 6 and 7 of this Written Submission. (v) As regards Invoices No. 196 dated 20.10.2021, 197 dated 20.10.2021, 201 dated 21.10.2021, the respondent submitted that there is no evidence of any goods being delivered to ....
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....omic Offence Wing, Cyberabad is stated to have been produced at Annexure-I of the IA. However, copy of such petition is not found attached to the IA. Even marking of enclosures as Annexures 'I', 'II' and so on, as was claimed in the pleadings of the IA, is not in place. We are therefore, constrained to go by page numbers. (iii) It is submitted that during the pendency of Writ Petition, ACP, Economic Offence Wing, Cyberabad had filed Additional Counter stating that during the course of investigation they have identified fraud by the Operational Creditor. A copy of the Additional Counter filed by ACP, Economic Offence Wing, Cyberabad in W.P. No. 42528 of 2022 pending on the file of Hon'ble High Court of Telangana is at pages 25-36. (iv) The writ petitioner has filed Additional Reply dated 30.03.2023 in W.P. No. 42528 of 2022 before the Hon'ble High Court of Telangana, to the Additional Counter Affidavit filed by ACP, Economic Offence Wing, Cyberabad. A copy of the said Additional Reply is at pages 37-47. (v) The Corporate Debtor has filed Affidavit in W.P. No. 42528 of 2022 before the Hon'ble High Court of Telangana narrating the facts and fraud committed by the Operational ....
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....ge for procurement of raw material by way of Affidavit dated 15.03.2022 (Page 28 of the application), and the fact that he had admitted that an amount of Rs. 2,88,79,417/- as due and payable to the Operational Creditor in lieu of the supplies made by the Operational Creditor to the Corporate Debtor, besides interest towards delayed payment and penal charges. (iii) Following are the contentions raised by the respondent/ Corporate Debtor and reply thereto by the petitioner/ Operational Creditor: Contentions raised by the respondent/ Corporate Debtor. Defence by the petitioner/ Operational Creditor The respondent/ Corporate Debtor has filed FIR against the petitioner and criminal case is pending against the applicant/ Directors. Said Directors are absconding. Police is searching for them. (Para 5 of the Counter). It is true that FIR is lodged on 30.06.2022, after issuance of Demand Notice dated 31.05.2022. The Directors were granted anticipatory bail by the Hon'ble High Court of Telangana and they are not absconding. Besides, a petition is filed for quashing the above FIR before the Hon'ble High Court of Telangana, which is pending decision. The petitioner relied on ....
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....ge Pvt Ltd [Company Appeal (AT)(Ins.) No. 99 of 2020 as was referred by the Operational Creditor it their Written Submissions dated 28.04.2023. X. In the light of the contest as aforementioned, the points that emerge for our consideration are: 1. Whether the documentary evidence furnished with the application shows that the operational debt of a sum over rupees one crore due and payable by the respondent exits? If so, whether the respondent defaulted in payment of the same? 2. Whether there is existence of dispute between the parties or record of pendency of suit or arbitration proceedings filed before the receipt of the Demand Notice of the unpaid operational debt in relation such dispute? XI. We have heard Shri Shaik Ghouse, learned PCS, Shri Mahadev Tirunagari, and Shri Venka Reddy Bathina, Advocates for the petitioner; and Shri Vivek Reddy, Senior Counsel along with Ms. Manasa, learned advocate for the respondent. Perused the record, the written submissions and the case law XII. At the outset, it may be stated that the present company petition being one under section 9 of IB Code, in order to succeed in this petition, the Petitioner shall establish th....
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....plied by issuing Letter of Credit and on few occasions made cash payment. XV. Ld. PCS further contends that in respect of the amount of Rs. 3,38,47,540/- payable under the invoices raised during the period between 09.07.2021 and 01.12.2021, on 20.12.2021 the respondent paid Rs. 92,01,161/- against Invoice No. GST/21-22/ 0250, and also acknowledged the debt vide letter dated 31.03.2022, and has undertaken to pay outstanding dues of Rs. 2,88,79,417/- together with the mutually agreed interest by way of Affidavit dated 15.03.2022. The said affidavit has been filed as Annexure-1. The communications by the petitioner requesting the respondent to clear outstanding dues are filed as Annexure-2. Ld. PCS, also referred to the statement of invoices pending payment which were filed under Annexure-9, and the bank statement which is Annexure-10 and contended that the said amount has not been paid despite acknowledgement of debt by way of Affidavit dated 15.03.2022. XVI. Ld. PCS, further submits that, since the attempts as above for payment of the balance amount did not fructify, on 31.05.2022 the petitioner has issued Demand Notice in Form-4 in terms of Rule 5 of Insolvency and Bankruptcy....
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....ement was prompted to direct its accounting team to take a look at the receivables of the unit in the said month, and huge outstanding of about Rs. 16,86,80,746/- was shown as receivables, which includes a sum of Rs. 11,97,86,978/- from RINL, Visakhapatnam. Ld. Sr. Counsel further submitted that during audit, it was noticed that in respect of the invoices mentioned at page 15-17 of the Counter, though payments were made stocks were not received by the respondent and the quantities purported to have been supplied by the petitioner were far in excess, besides beyond the carrying capacity of the vehicles. Therefore, an F.I.R. in crime No. 539 of 2022 dated 30.06.2022 has been lodged against Mr. Allu Nagesh and others with Jeedimetla Police Station and the police investigation is on. It is further submitted that the authorised person, Piyush Mehta of the petitioner is absconding. In support of this submission Ld. Sr. Counsel relied on the F.I.R. No. 539 of 2022 dated 30.06.2022 with Jeedimetla Police Station, Case Diary Part-11, Remand Report, and the Remand Case Diary. XX. Strongly refuting the above submission of the Ld. Sr. Counsel, Ld. PCS has submitted that the FIR has been lod....
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...., if - (a) the application made under sub-section (2) is incomplete; (b) there has been 4 [payment] of the unpaid operational debt; (c) the creditor has not delivered the invoice or notice for payment to the corporate debtor; (d) notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility; or (e) any disciplinary proceeding is pending against any proposed resolution professional: XXIII. Indisputably, in respect of the invoices under which payment has been claimed by the petitioner/operational creditor, the receipt of which has been acknowledged by the respondent, GST has been paid by the petitioner on all these invoices. That apart, part payment in respect of some of these invoices has even been made by the respondent through pre-arrangement of LCs, post claim of audit of the records by the respondent. The Petitioner also enclosed e way bills in respect the goods supplied under the said invoices. The contention of the Petitioner that the respondent had claimed credit input pursuant to filing GST R1 by the Petitioner/operational creditor, is not disputed by the respondent. ....
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....engal Cold Rollers Pvt Ltd., VVR Industries, Suprabaha Protective Products Ltd., etc., are involved in this fraud by colluding with some of our employees working for our factory. There are several instances where we found that no goods were delivered under the invoices and we will furnish complete details as and when needed at an appropriate time. Therefore, the amount which was claimed by you in your notice is not legitimate, hence the charges mentioned by you does not arise and are not valid. The invoices whatever enclosed along with this notice are fraud and raised without supply of material by colluding with our employees." and the same is not spurious, frivolous or vexatious but real. XXVIII. Ld. Senior counsel further contends that police investigation vide FIR in crime No. 539 of 2022 dated 30/06/2022 which has been lodged against the employees of the petitioner and also against the employees of the respondent revealed collusion and fraud committed by these persons in submitting fake invoices without supplying any material. In support of this plea, the ld. Senior Counsel relied on the Case Diary-Part II, Remand Report and the Remand Case Diary, etc. Placing heavy re....
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....nitiation of audit by the respondent as contended in the reply dated 15.06.2022, the respondent made part payments as aforementioned without demur, so much so, the argument that under in genuine invoices and without effecting the supply the operational creditor had made the claim shall invariably fail. XXXII Nextly, the ld. PCS contended that invoices under which the supplies were made were accompanied by e-way bills and GST payment receipts to the department, as is evident from the invoices e-way bills and tax invoices which are enclosed to the demand notice and filed along with the petition and in respect of the tax invoices the petitioner filed returns in GST - R1 and the Corporate Debtor has benefited by availing input credit for the GST payments made by the operational creditor. XXXIII The ld. PCS further contends that as per the GST Act, R-1 returns are necessarily to be filed within 10 to 11 days of each subsequent month of sale. Therefore, in respect of the supplies made during the calendar month of January, GST - R1 should be filed by 10th or 11th day of February month. Learned PCS further contended that the returns submitted in respect of the subject supplies by the....
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....o Judgement of this Tribunal in "Neeraj Jain Vs. Cloudwalker Streaming Techno-logies Private Limited" (Company Appeal (AT) Ins. No. 1354 of 2019) decided on 24th February, 2020 in paragraph 50 following observations have been made by this Tribunal: "...Even otherwise, mere failure to reply to the demand notice does not extinguish the rights of the Operational Creditor to show the existence of a preexisting dispute..." We thus set aside the Impugned Order and remit the matter back to the Adjudicating Authority to consider the Application afresh. .. ..." XXXVI Therefore, we are not inclined to entertain the submission of the ld. PCS that Corporate Debtor herein is prevented from raising the plea of existence of a pre-existing dispute in its reply/ counter. XXXVII However, merely because the Corporate Debtor is allowed to raise the plea of existence of pre-existing dispute in the reply/Counter the pre-existing dispute so raised, shall be the one that should existed prior to receipt of demand notice. XXXVIII In this regard reliance can be placed on the ruling of the Hon'ble Supreme Court of India in Mobilox, wherein it is held that: "Pre-existing Dispute: The Hon'ble Supre....
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....which was brought by the Operational Creditor with regard to its debt and default and the Adjudicating Authority being satisfied that there is debt which remained unpaid, no error has been committed by the Adjudicating Authority in admitting Section 9 Application." Therefore, from discussions afore-mentioned, it is clear that, de hors the FIR dated 30.06.2022 and the police investigation reports, the only other material available to trace the plea of "pre-existing dispute" is the reply notice dated 15.06.2022 to the demand notice. In our discussion in the preceding paragraphs we have clearly held that the plea of pre-existing dispute which the Respondent is trying to callout from reply notice dated 15.06.2022 is a feeble contention, in as much as having taken the stand in the said reply notice that audit of the subject invoices has been ordered by December 2021 regarding the subject invoices, the Respondent admittedly made part payments in respect of some of the invoices, without any demur which are now being termed as fake, post December 2021. XLIII Therefore, viewed from all angles, we are of the firm view that the plea of pre-existing dispute is spurious, hypothetical, ill....
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....ench hereby prohibits the institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgment, decree or order in any court of law, Tribunal, arbitration panel or other authority; transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein; any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under Securitization and Reconstruction of Financial Assets and Enforcement of Security interest Act, 2002 (54 of 2002); the recovery of any property by an owner or lessor where such property is occupied by or in possession of the corporate Debtor; (C) That the supply of essential goods or services to the Corporate Debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period. (D) Notwithstanding anything contained in any other law for the time being in force, a license, permit, registration, quota, concession, clearances or a similar grant or right given by the Central Government, State Government, local auth....