TaxTMI 
TaxTMI 
2025 (3) TMI 128
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (hereinafter referred to as 'Impugned Order') passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench-V) in CP (IB) No. 573/MB/2023. By the impugned order, the Adjudicating Authority has admitted the Section 9 application filed Jaldhi Overseas Pvt Ltd-Operational Creditor thereby admitting the Corporate Debtor-RR Metalmakers India Ltd. into Corporate Insolvency Resolution Process. Aggrieved by the impugned order, the present appeal has been preferred by the suspended Director of the Corporate Debtor. 2. The brief facts of the case which are necessary to be noticed for deciding this appeal are as follows : The Corporate Debtor-RR Metalmakers India Ltd. which was previously known as Shree Surgovind Tradelink Ltd. had approached Jaldhi Overseas Pvt Ltd., Operational Creditor for chartering of vessel MV Aetolia for carrying cargo from Port Redi to China for delivery to BST (HK) Ltd.- ("BST" in short) under a Charter Party Agreement dated 15.03.2017. The parties had appointed Bulk Chart as their broker. The Operational Creditor performed its obligations under charter party and raised an invoice dated 18.04.2017 for USD 653,312 towards frei....
X X X X Extracts X X X X
X X X X Extracts X X X X
....BC. On 22.04.2024, the Adjudicating Authority passed the impugned order admitting the Section 9 petition initiating CIRP against the Corporate Debtor. Aggrieved by the impugned order, the present appeal has been preferred by the Appellant-Corporate Debtor. 3. Making his submissions, the Ld. Sr. Counsel for the Appellant, Shri Abhijeet Sinha stated that the Corporate Debtor had chartered the vessel through Samruddha for export of cargo to BST with the vessel agent being Globe Chart Ltd. ("Globe Chart" in short). It was contended that the Appellant-Corporate Debtor had not executed any charter party agreement with the Operational Creditor. As the entire transaction was negotiated by Samruddha with the Corporate Debtor, BST and Globe Chart, hence payments had been made by the Appellant to Samruddha/BST or to any entity under instructions of Samruddha. It was contended that the entire amount which was due towards freight had been paid by the Corporate Debtor and no operational debt was due and payable to the Respondent No. 1. Much emphasis was laid on the fact that the Operational Creditor did not send any correspondence to the Corporate Debtor between the date of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the Charter Party reflected the freight to be paid, demurrage charges as well as brokerage commission. It was pointed out that the Charter Party Agreement which is placed on record shows that the same was signed between the authorized signatory of the Corporate Debtor and Operational Creditor with Bulk Chart as the broker. It is the contention of the Operational Creditor that for the cargo shipped, the total invoice value of the Operational Creditor was USD 653,312 against Freight Invoice dated 18.04.2017. The Corporate Debtor had made part payment of USD 350,000 on 04.08.2017 and a balance of USD 303,312 was still outstanding and payable by the Corporate Debtor. This shows that the Corporate Debtor had been paying to the Operational Creditor directly to clear their dues. Furthermore, the Corporate Debtor had admitted their debt in their reply dated 09.03.2020 to the Section 8 Demand Notice served by the Operational Creditor. It was also pointed out that the Corporate Debtor had been taking inconsistent stands from time to time with respect to payments made in respect of the charter party. It was vehemently contended that the alleged involvement of Samruddha, BST, and Globe Char....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat Section 18 of the Limitation Act, 1963 applies to IBC proceedings. 7. On the letters and correspondences placed in the Additional Affidavit of the Appellant before this Tribunal to buttress their contention that the Operational Creditor had received freight payments from third party-BST, the Ld. Sr. Counsel for the Respondent strongly opposed these documents for having been placed for the first time at the appeal stage before this Tribunal when these had not been placed for consideration of the Adjudicating Authority. It was asserted that even the grounds stated by the Appellant to explain the reasons for not being able to place these documents before the Adjudicating Authority earlier were flimsy and frivolous. It was also added that the Operational Creditor had already registered an FIR disputing the authenticity of these documents placed by the Corporate Debtor. 8. We have duly considered the arguments advanced by the Learned Counsel for both the parties and perused the records carefully. 9. The short point for our consideration is whether there is any infirmity in the impugned order passed by the Adjudicating Authority in allowing the Section 9 application on the g....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reexisting i.e. it must exist before the receipt of the demand notice or invoice, as the case maybe. In case the unpaid operational debt has been repaid, the corporate debtor shall within a period of the self-same 10 days sent and attested copy of the record of the electronic transfer of the unpaid amount from the bank account of the corporate debtor or send an attested copy of the record that an operational creditor has encashed a cheque or otherwise received payment from the corporate debt [Section 8(2) (b)]. It is only if, after the expiry of the period of the said 10 days, the operational creditor does not either receive payment from the corporate debtor or notice of dispute, that the operational creditor may trigger the insolvency process by filing an application before the adjudicating authority under Sections 9(1) and 9(2)......... ****** ***** ***** 51. It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the informat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Operational Creditor on the instructions of Samruddha and the freight was released by BST to Globe Chart which in turn paid to the Operational Creditor. However, the Operational Creditor did not disclose before the Adjudicating Authoritythe arrangement that existed between them with Samruddha, BST and Globe Chart. Even when payment of USD 350,000 was made by the Corporate Debtor to the Operational Creditor, this was done not by the Corporate Debtor on its own but because of directions from Samruddha. It is further the case of the Appellant-Corporate Debtor that against the freight invoice dated 18.04.2017 for USD 653,312 raised by the Operational Creditor, they have placed on record the proof of payment of the entire amount before the Adjudicating Authority. Hence, there was nothing which was due and payable by them to the Operational Creditor. Only when the Operational Creditor was faced with some issues relating to payment in respect of transaction with Samruddha, that they foisted their claim on the Corporate Debtor by sending a Section 8 Demand Notice. The Adjudicating Authority erroneously did not consider the proofs of payment filed before it. Instead, it wrongly viewed th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... table depicted above, we find that the Corporate Debtor in the Credit Note of 25.05.2017 has pointed out that the amount of USD 44,568.05 was credited into the account of the Operational Creditor for having received the payment from BST. This credit note is placed at page 225 of APB. As regards payment of USD 1,36,298.41 of 24.06.2019, when we look at the page 230 of APB, we find that the debit note indicates that it was issued by Samruddha to the Corporate Debtor for payment of said amount to the Operational Creditor by them. It is contended by the Operational Creditor that when Charter Party Agreement was between Operational Creditor and Corporate Debtor, it is the Corporate Debtor who had the obligation for payment of freight, demurrage and detention. In the absence of any communication from the Corporate Debtor to Operational Creditor informing them about assignment of freight payment to BST, no such assignment can be accepted. To the contrary, it is the contention of the Corporate Debtor that the Operational Creditor had supressed critical information about their business relationship with Samruddha besides the involvement of other parties like BST and Globe Chart in the tran....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hould know your accountability. In limited company, we require your invoices/ debit note in time otherwise we cannot make any provisions. Such type of debit note / Invoices with supporting proof is required for internal audit. Now we come to the conclusion first to prepare proper your demand paper as per RBI guidelines & C.A. guidelines. We have to remit foreign exchange as per Indian guidelines. After receiving all papers as per guidelines. We will arrange meeting & talk on point to be discuss & try to resolve the issue. For RR METALMAKERS INDIA LTD. (Emphasis placed) 19. In response, the Operational Creditor sent an e-mail to the Corporate Debtor in which letter the admission of debt liability towards freight and demurrage by the Corporate Debtor was emphasised and time was given to the Corporate Debtor to make payment by 27.03.2020. This letter was replied to by the Corporate Debtor on 19.03.2020 informing that their office was closed due to Covid-19 and that the issue of payment would be taken up on re-opening of office. The Operational Creditor thereafter sent a legal notice on 11.10.2022 to the Corporate Debtor which was replied to on 17.10.2022 by the Co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s our computer hard disk and documents are with the departments therefore we cannot reply for your letter. We request you please give us the details if you are having the documents of this transactions it will help us to recollect our memory. We have contact Samruddha Resources Ltd but still no response received by them. The department planning to visit on 25th November 2022 at mines to check the stock position thereafter our next process will start and we will received our data. As per the discussion with department, we have given you the clear picture which we are facing. Samruddha Resources Ltd have executed so many documents in the export business and some of the documents have executed which is not as per law and against which we are facing the difficulties. The vessel owner blindly follow Samruddha Resources Ltd instruction and not practically executed the documents as per the compliances. So the difficulties are very big for us to settle so give us some documents which is available with you so we can verify the fact. As on today, your outstanding which you have mentioned is not in our record so we have to talk with Samruddha Resources Ltd & take th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es and denies the alleged claims and contentions contained in the Demand Notice. Without prejudice to the contention of the company that it is not liable to pay any amount to you, the alleged claim under the Demand Notice is hopelessly time barred. 3. In this regard, we have written letter to you and your Advocate on 19/11/2022. Admittedly, the alleged claim pertains to the transaction executed in Year: 2017/18 and the Vessel: MV Aetolia was chartered by Samruddha Resources Ltd ("Samruddha"), for the export of cargo to BST (HK) LTD ("BST") and the Vessel Agent was Globe Chart Ltd ("Globe Chart"). 4. After receiving your mail regarding the alleged claim, we have collected some data from our bank as well as Globe Chart. We understand that you have received the payment in respect of the alleged claim from Globe Chart for US$145388 on 03/08/2017. 5. In relation to the same Samruddha have confirmed that Bothra Shipping Services Pvt. Ltd ("Bothra") have paid US$107604.01 & US$28694.40 to you. Apart from the above we have remitted US$3,50,000 ondated: 03/08/2017 to you and you have given us credit for US$ 21625.31, dated:18/04/2017 against their bills. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ompany has responded to the Demand Notice in the past also and there is pre-existing dispute between the parties. Admittedly, from the correspondence exchanged between the parties, it is evident that there is pre-existing dispute between the parties and the Demand Notice is devoid of merits." ( Emphasis placed ) 23. Once plausibility of a pre-existing dispute is noticed, what has to be looked into is whether the dispute needs further adjudication by a competent court. The Adjudicating Authority is not to enter into final adjudication with regard to existence of dispute between the parties regarding the operational debt in terms of the statutory construct of the IBC. In the present case too, the freight charges having not been admitted by the Corporate Debtor, it is not a case wherein debt and default has been unequivocally established which is essential for entertaining a Section 9 application. 24. This brings us to the issue of demurrages. It is the contention of the Corporate Debtor that the Operational Creditor was not able to show service of debit note upon the Corporate Debtor of USD 242,772.19 dated 27.12.2017 towards demurrage. On the timing of the Debit Note,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ss Commission earned and that the Operational Creditor had also raised a Debit Note on 27.12.2017 for USD 242,772.19 towards demurrage dues. It was also noted by the Adjudicating Authority that the laytime calculations in support of their demurrage dues were confirmed by the broker of the Corporate Debtor vide email dated 11.10.2017. The Adjudicating Authority has further concluded after noticing the communication from the Corporate Debtor dated 09.03.2020 that the Corporate Debtor has admitted that there exist demurrage charges to be paid to the Operational Creditor, however, the same only needed to be confirmed after arranging a meeting with the Operational Creditor. 27. When we carefully look at the communication dated 09.03.2020 sent by the Corporate Debtor to the Operational Creditor, we find that the Corporate Debtor did not confirm the claim of Demurrage charges of USD 242,772.19. This is amply borne out from a plain reading of the communication of 09.03.2020 wherein it has been submitted as follows: "We and Broker have not confirmed the demurrage. In this regard, please arrange meeting & settle the issue...." 28. From the above statement it is clear that the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was facilitated by Globe Chart. However, the Demand Notice does not contain a single reference to the same and this shows your dishonesty and falsity. 9. You are aware that Samruddha had arrangement with BST and Globe Chart and you. You received the business from them and business of export is running business. Apart from the above, your payment was always paid by Globe Chart and BST. We also understand that you have running account with Samruddha. You are also aware that the material exported from India was as per Samruddha's instructions. Further, BST was releasing freight to Globe Chart and in turn Globe Chart was paying you. The entire transaction was negotiated by you with Samruddha and BST and we were not in concerned with the same. 10. The Demand Notice is premeditated with a view to now foist the purported claim on the company. The company is not going into the specifics and details of your dubious claims under the Demand Notice as the same is time barred. We reserve our rights to place the aforesaid facts and documents in support thereof before the Hon'ble NCLT in the event of you proceeding against the company. 11. We once again dispute....