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2025 (5) TMI 163
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....is Appeal by a Suspended Director of the Corporate Debtor- 'B.S. Ispat Pvt. Ltd.' has been filed challenging the order dated 26.03.2025 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Court-I admitting Section 9 application filed by 'Armaco Infralinks Pvt. Ltd.'. 2. Brief facts and sequence of the events giving rise to this Appeal are:- 2.1. The Corporate Debtor- 'B.S. Ispat Pvt. Ltd.' is engaged in the business of mining and sale of coal and currently has license to mine coal from the coal fields at Marki Mangli III Mine under which ROM coal is supplied. The Respondent No.1- 'Armaco Infralinks Pvt. Ltd.' approached the Corporate Debtor to supply coal. On 19.03.2021, 'Armaco Infralinks Pvt. Ltd.' deposited advance of Rs. 1 crore with respect to supply of coal. The Respondent No.1 continued to buy coal from the Corporate Debtor of large quantities between April 2021 to September 2022. On 15.09.2022, 'Armaco Infralinks Pvt. Ltd.' issued a delivery order 3,00,000 MT coal at the stipulated price. On 16.09.2022 i.e. next date, a modified delivery order was issued by 'Armaco Infralinks Pvt. Ltd.' to the Corporate Debtor requiring supply of 60,000....
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....e Debtor disputed the outstanding amount claimed by the Operational Creditor of Rs.35,58,16,538/- and did not authenticate the information. E-mail was sent by the Corporate Debtor on the same day to the NeSL. On 04.09.2024 itself 'Armaco Infralinks Pvt. Ltd.' sent a demand notice in Form 3 under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 claiming operational debt of Rs.35,58,16,538/- giving the details of transaction. Date of default was mentioned as 15.08.2024. The Corporate Debtor on 11.09.2024 replied to the demand notice disputing the liability to pay amount of Rs.35,58,16,538/-. Corproate Debtor by e-mail dated 11.09.2024 has also issued debit note of Rs.18,89,86,562.40/- and it was claimed that credit lying with Corporate Debtor is only Rs.16,68,29,955.66/-. It was stated that the Corporate Debtor is ready and willing to supply coal valued at Rs.16,68,29,955.66/-. By reply to demand notice, notice was given in terms of Section 8(2)(a) of the IBC that there is an existence of a dispute which has been duly authenticated at the National e-Governance Services Limited (NeSL). Reply to demand notice in detail captures the sequence of....
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.... since the last two months and considering the rainy season mining operations will resume only after 20.09.2024 approximately. It is submitted that the Corporate Debtor having never refused to supply there is no occasion to treat any operational debt due on the Corporate Debtor. There was pre-existing dispute between the parties which is apparent from the e-mail dated 08.08.2024 sent by 'Armaco Infralinks Pvt. Ltd.' to Corporate Debtor and reply sent on 13.08.2024. It is submitted that the decision of the buyer to not take delivery is a clear dispute which needs to be adjudicated and no CIRP can be initiated on such a disputed claim. Counsel for the Appellant submits that the Corporate Debtor being ready and willing in delivering the goods, he is entitled to compensation and loss occasioned by the neglect and refusal of the Respondent No.1 to take delivery of the same. It is submitted that the demand notice dated 04.09.2024 was replied by the Corporate Debtor on 11.09.2024 within 10 days disputing the claim and which reply to demand notice is a notice of dispute within the meaning of Section 9(5)(ii)(d). It is submitted that the Adjudicating Authority has not adverted to the releva....
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.... supply the coal against the advance amount paid by 'Armaco Infralinks Pvt. Ltd.', 'Armaco Infralinks Pvt. Ltd.' has every right to ask for refund by e-mail dated 08.08.2024. It is submitted that the letter dated 20.02.2025 relied by the Counsel for the Appellant during submission written by Bank of Maharashtra has no relevance it having written in response to the letter of Corporate Debtor dated 18.02.2025 i.e. after reserving of the order on 17.02.2025. Counsel for the Respondent has also referred to letter dated 25.02.2025 issued by Government of Maharashtra, Office of District Collector (Mining Section) addressed to 'Armaco Infralinks Pvt. Ltd.' where it was stated that B.S.Ispat Limited is not eligible to dispatch coal until all outstanding dues are paid in full. 6. Counsel for the IRP submitted that in pursuance of the order dated 26.03.2025, publication was made by the IRP on 27.03.2025 and IRP has received various claims and has received claims from various Operational Creditors. 7. Shri Gopal Jain, Learned Senior Counsel for the Intervenor submitted that the Corporate Debtor is liable for operational debt of other parties also from whom advance payment was taken for ....
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.... coal was received till 01.06.2024. E-mail dated 08.08.2024 is as follows: "Dear Sir, We have requested you on several occasions including our recent meeting on 17.07.2024, that you should resume the supply of coal to our company, as no coal has been supplied to us since 01.06.2024. It has come to our notice now that the mines are inoperative. We are facing significant losses because of this, as we have borrowed money from banks and private individuals to remit advance monies to you, and we are currently paying interest on those loans only due to your failure to supply coal. Also, in your email dated 03.07.2024, you confirmed the balance of Rs. 35, 58, 16, 538.06/- and Rs. 1,00,00,000/-(Security Deposit) of Armaco lnfralinks as on 30.06.2024 in your books, with the ledgers sent to us. Given this situation, we request you to refund our monies within 7 days as confirmed by you. Thanking you. Regards, Gaurav Doshi Director" 12. Reply to the e-mail dated 08.08.2024 was sent by the Corporate Debtor to 'Armaco Infralinks Pvt. Ltd.' on 13.08.2024 which e-mail is as follows:- "Dear Sir, We acknowledge your ....
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....39.96 Cr. Regards, PAWAN ROKADE B S ISPAT LTD Village Salory-Yensa, Post Chinora, Tahsil- Warora, District- Chandrapur MS- 442914" 17. The next e-mail which was sent by 'Armaco Infralinks Pvt. Ltd.' to Corporate Debtor was on 08.08.2024 where referring to e-mail dated 03.07.2024, the balance amount Rs.35,58,16,538.06/- was asked to be refunded within seven days. E-mail dated 08.08.2024 demanding the balance amount was replied by Corporate Debtor on 13.08.2024 which e- mail is as follows:- "Dear Sir, We acknowledge your mail and are making sincere efforts to curtail the outstandings at the earliest. You have been associated with us for a long time and we always valued your Company on priority. But as you are kind enough, the mining operations are stand stopped due to heavy rains and mine is water logged since the last two months and considering the rainy season mining operations will resume only after 20th September approx. On the start of Coal production, we will intimate you immediately and will start dispatch. Till then it is requested to please bear with us. THANKS & REGARDS, PAWAN RO....
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....ked Mr. Pawan Rokade to send the above referred email on the email id [email protected]. We also state that neither Armaco Infralinks Private Limited nor Armaco Logistics Private Limited has ever communicated with B.S. Ispat Limited that any contractual communications would be exchanged through the email id [email protected] We also state that Armaco Logistics Private Limited is now trying to misuse the above referred email to unlawfully enrich itself for the defective service rendered by it as an attempt to circumvent the agreed contractual terms and by taking the support of the above referred email which was obtained deceitfully and by using coercive techniques. You shall take note of this email and any misuse of the already withdrawn and recalled email dated 03.07.2024 sent by Pawan Rokade from the email id [email protected] at 17:04 (05:04 PM) [email protected] along with all the attachments thereto, will invite strict legal consequences. Thanks & Regards, Sagar Kasangottuwar VP (Finance & Accounts) B.S. Ispat Limited" 19. The above communication sent by the Corporate Debtor clearly stated that e-mail dated 03.07.2024 w....
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.... information and raised a dispute which is captured by the NeSL record itself. NeSL record is filed as Annexure A8 by the Appellant which record contains following:- "NATIONAL E-GOVERNANCE SERVICES LIMITED Record of Financial Information - Form C Submission Details Unique Debt Identifier AAUCA0687N_AACCB 266 SH Submission ID 1 Submitted by Armaco lnfrafinks Private Umlted Submitted Date & Time 04/09/202413:13:45 Submission Type Default Information as on 04/09/2024 Authentication Status Party Name Relationship UserId Status Date and Time of Authentication B.S.ISPAT LTD. Debtor 2701316 Disputed 04/09/2024 17:04:59 Reason for Dispute: Pre-existing Dispute. Remarks- No default has been committed by B S Ispat Limited. Pre-existing dispute exist prior to the issuance of Demand Notice dated 04.09.2024. Submitter Information Name Armaco Infralinks Private Limited UIN (PAN) AAUCA0687N Relationship Creditor Comm. Ad....
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....ate Debtor sent its reply to demand notice on 11.09.2024. Demand notice was denied and the claim was disputed. In paragraphs 2, 3 and 4 of reply to the demand notice, following was pleaded:- "Through Email and RPAD" To, Date: 11.09.2024 (1) Mr. Pranav Avhad and Ms. Darshna Naval, 164, 16th Floor, Atlanta Building, Nariman Point, Mumbai 21 AND (2) Armaco lnfralinks Private Limited (hereinafter "AIPL", for brevity), Opposite Akashwani Raghatate Layout A164, Chandrapur 442401 Maharashtra, India Subject: Reply to Demand Notice in Form 3 dated 04.09.2024 ("Demand Notice") issued by Mr. Pranav Avhad to B.S Ispat Limited under the Insolvency and Bankruptcy Code, 2016 and the rules framed thereunder. Madam, We are in receipt of the abovementioned Demand Notice from you through an email on 04.09.2024. In reply thereto, we have to state as under: 1. At the outset, the contents of the Demand Notice under reply are denied, and nothing stated therein should be deemed to be admitted by virtue of not having been specifically denied herein. 2. The Demand Notice issued by you is not only legally untenable but ....
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....portedly certified and confirmed that "no record of dispute raised in relation to the relevant operational debt has been filed by any person at any information utility", as is evident from the Clause 5 of the Demand Notice at numbered page 14. In order to corroborate your above position you have annexed an UN-AUTHENTICATED 'Record of Financial Information - Form C' generated from NeSL Information Utility as Annexure 11 to the Demand Notice, which was submitted by AIPL only 57 minutes and 15 seconds prior to issuance of the Demand Notice through an email. At this juncture it is relevant to state the relevant timelines in respect of the submission of the 'Debt Information' by you and the email through which the Demand Notice has been served on the BSIL. Date Time Action 04.09.2024 13:13:45 (01:13:45 PM) AIPL submits 'Debt Information' at NeSL-Information Utility. (As reflected in Annexure A) 04.09.2024 01: 15:46 01:15:46 PM Email is received by BSIL from NeSL lnformation Utility to verify and authenticate the details submitted by the submitter- AIPL.(Annexure B) 04.09.2024 02:12 PM The Demand Notice is served on BSI....
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....section (2), by an order- (ii) reject the application and communicate such decision to the operational creditor and the corporate debtor, if - (d) notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility;" 25. Section 9(5)(ii)(d) provides that Adjudicating Authority shall reject the application if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. 26. When we look into the reply to the demand notice, the said reply is clearly a notice of dispute sent by the Corporate Debtor to 'Armaco Infralinks Pvt. Ltd.'. Detailed facts as stated in the reply to the demand notice clearly make the said notice as notice of dispute. The Corporate Debtor has also filed a reply to Section 9 application and in the reply, the Corporate Debtor has also pleaded that the claim is already disputed in the record of the Information Utility. It was further pleaded that the Corporate Debtor is ready and willing and capable of carrying supply of coal of Rs.16,68,29,955.66/-. In paragraph 8 of the reply, following has been pleaded:- "8. Further....
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....e-existing dispute exist prior to the issuance of Demand Notice dated 04.09.2024. 29. However, even after noticing the said disputed status in the NeSL record, Adjudicating Authority has not adverted to Section 9(5)(ii)(d) and has proceeded to observe that defence of pre-existing dispute raised by the Corporate Debtor is merely a moonshine defence to cover up its failure to supply the goods against the advance which observation has been made in paragraph 37 of the order. Paragraph 37 of the impugned order is as follows:- "37. It is pertinent to note here that this Tribunal, in a company petition no. 872 of 2023 filed by Vinayak Trading Company against the same Corporate Debtor on the ground of failure on metric tons of coal from its mines within a period of 2 years, has recorded in its Order dated 16.2.2024 passed therein that "The Applicant claims to have not received the remaining supply of 1,42,000 metric tonne of coal. It is the case of the applicant that the coal was to be supplied from Marki Mangli III, Majra and Chinora coal mines, however, the nominated authority for ministry of coal terminated the agreement for Majra and Chinora coal mines and only Marki Mangli....
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....ivate Limited" following was laid down:- "38. It is, thus, clear that so far as an operational creditor is concerned, a demand notice of an unpaid operational debt or copy of an invoice demanding payment of the amount involved must be delivered in the prescribed form. The corporate debtor is then given a period of 10 days from the receipt of the demand notice or copy of the invoice to bring to the notice of the operational creditor the existence of a dispute, if any. We have also seen the notes on clauses annexed to the Insolvency and Bankruptcy Bill of 2015, in which "the existence of a dispute" alone is mentioned. Even otherwise, the word "and" occurring in Section 8(2)(a) must be read as "or" keeping in mind the legislative intent and the fact that an anomalous situation would arise if it is not read as "or". If read as "and", disputes would only stave off the bankruptcy process if they are already pending in a suit or arbitration proceedings and not otherwise. This would lead to great hardship; in that a dispute may arise a few days before triggering of the insolvency process, in which case, though a dispute may exist, there is no time to approach either an Arbitral Tr....