TaxTMI 
TaxTMI 
2024 (11) TMI 1288
X X X X Extracts X X X X
X X X X Extracts X X X X
....ection 9 application of the Operational Creditor by holding it as not maintainable due to pre-existing disputes. Aggrieved by the impugned order, the present Appellant has been preferred by the Operational Creditor-Appellant. 2. Coming to the brief facts of the case, the Corporate Debtor- M/s Hi-Tech Sweet Water Technologies Pvt. Ltd. had entered into a contract with the Government of Bihar to install pump-sets at various locations within the State. Towards executing the contract, the Corporate Debtor placed purchase orders of pump-sets on the Operational Creditor-M/s Kashyap Infraprojects Private Limited. The Operational Creditor had supplied the pump-sets and raised invoices on the Corporate Debtor. The invoices/bills raised on the Corporate Debtor having remained unpaid, the Operational Creditor allegedly reminded the Corporate Debtor on several occasions for payment. Since no payments were received, the Operational Creditor sent statutory demand notice under Section 8 of the IBC on 01.09.2020 to the Corporate Debtor. Since further payments were still not received by the Operational Creditor, Section 9 application was filed before the Adjudicating Authority on 30.09.2020 which ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oods by the Appellant and the consequential adverse impact on the goodwill and reputation of the Corporate Debtor. Besides raising the ground of pre-existing dispute, it was asserted the Corporate Debtor had denied that payments were due and that no amount was payable till the task of complete and effective installation of the pump-sets was completed. It was further stated that the Government of Bihar had given the Corporate Debtor a contract for design, construction, supply, testing and commissioning of 211 mini piped water supply schemes and provisioning of solar power pumps in various districts of Bihar and for this purpose, they had entered into a business relationship with the Operational Creditor for supply and installation of pump-sets. However, the Operational Creditor supplied the said pump-sets after protracted delay besides supplying defective pump-sets of sub-standard quality. It was contended that these defects were communicated from time to time via WhatsApp messages and emails to the Appellant and that these WhatsApp messages appear at pages 49-110 in their Reply- affidavit before this Tribunal which fact had also been brought to the attention of Adjudicating Authori....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Debtor, to deliver a Demand Notice in respect of the outstanding Operational Debt. Section 8(2) lays down that the Corporate Debtor within a period of 10 days of the receipt of the Demand Notice would have to bring to the notice of the Operational Creditor, the existence of dispute, if any. From a plain reading of the above provision, it is clear that the existence of dispute and its communication to the Operational Creditor is therefore statutorily provided for in Section 8. In the present case, it is an undisputed fact that the demand notice was issued by the Operational Creditor on 01.09.2020 and notice of dispute was raised by the Corporate Debtor on 18.09.2020, marginally beyond the prescribed period of ten days. 9. Now coming to Section 9 of IBC, sub-section (1) thereof provides that if the Operational Creditor does not receive payment from the Corporate Debtor or notice of the dispute under Sub-section (2) of Section 8, he may file an Application under Section 9(1) of the Code. It remains an undisputed fact that the Operational Creditor did not receive any payment from the Corporate Debtor and chose to file an application under Section 9 of IBC. However, Section 9(5)(ii) e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or the "existence" of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the "dispute" is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application." ****** ***** ***** 56. Going by the aforesaid test of "existence of a dispute", it is clear that without going into the merits of the dispute, the appellant has raised a plausible contention requiring further investigation which is not a patently feeble legal argument or an assertion of facts unsupported by evidence. The defense i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s a pre-existing dispute on the basis of an email dated 07.01.2020 which had been sent by Corporate Debtor to the Operational Creditor. At this juncture, it may be worthwhile perusing the two emails 07.01.2020 sent by the Corporate Debtor to the Appellant which are as extracted hereunder: "Dear Hirenbhai, .... The major problem with Antras system is that its performance days and hours are very less as compared to system installed by other companies as told by commissioner, engineer in chief, executive engineer and other officers of division. When we go for billing they directly tell us to replace the system giving the above mentioned reason. Headquarter has released a guideline for all contractors that motor should run for 8 hours. As far we have observed lubi system performance hours and days are better than antras system. On days and condition when antras system do not give water, lubi system does. None of the lubi system has required any maintenance till date Antras system do not perform at all when issue of shadow is there but lubi system does Here are few sites are mentioning where antras system is placed and we are facing problem ......" Second email "D....
X X X X Extracts X X X X
X X X X Extracts X X X X
....parties clearly manifest existence of dispute which antedates Section 8 demand notice. The Adjudicating Authority also concluded that it was beyond the remit of Adjudicating Authority to enquire into such disputes and that the dispute needed to be investigated by a proper form and on this ground did not entertain the Section 9 application. 17. The counter-defence taken by the Ld Counsel of the Appellant was that this was in the nature of a dispute created by the Corporate Debtor and not a genuine dispute. In support of their contention, it was pointed out that the supply of goods was duly certified by a third-party inspection report which have been placed on record. 18. We have looked into the third-party inspection reports which have been placed at Annexure A-12 at pages 158 -196 of Appeal Paper Book ('APB' in short). On taking a close look, we notice that the third-party inspection reports were not carried out at the time of installation of the pump-sets but at the stage when the pump-sets were dispatched in boxed condition. The remark contained in these inspection report only mentions that "inspected quantity is passed/clear for dispatch". Therefore, it becomes clear that thes....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is as extracted hereunder: "Subject: Minutes of Meeting with Mr. Hiren Bhavsar Kashyap Infra and Mr. Vljay Shah HI Tech Sweet Water Minutes of Meeting at Bardoli between Mr. Hiren Bhavsar (Kashyap Infra- Director), Mr. Krunal (Kashyap Infra -Engineer), Mr. Mehul (Duke Pump) and Mr. Vijay Shah ( Hi Tech Sweet Water), Mr. Bhadresh Kapdi (Hi Tech Sweet Water), Mr. Piyush Nemani (Vi mal agro) regarding Solar Based Water Distribution System of Bihar Districts - Dated 26.01.2021- 5.20 PM Points agreed by Mr. Hiren Bhavsar (Kashyap Infra) as bellow; 1) All Pumps and Control Panel replace in lot of 10 as per earlier Installed in Various Districts of Bihar. 2) Mr. Hiren Bhavsar agree to Replace all sites handover in Proper Working condition as per Tender Conditions they should satisfied Government authority of Concern District. 3) Mr. Vijay Shah agree to give Payment after government official Concern District release payment of Proper working Solar Pumping Systems 25% of District payment release. 4) Mr. Hiren Bhavsar agree to replace all installed I unused Pump and Control give in proper Working Condition and Hi Tech will release every lot payment receipt from Govt. Depart....