TaxTMI 
TaxTMI 
2025 (8) TMI 809
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....(b) the CIRP is not maintainable under Secc.10A of IBC. FACTS 2.1 The material facts which led up to the institution of this appeal are as below: (a) The appellant is engaged in the business of supplying and erecting and testing and commissioning of electrical equipments, transformers, gensets control penal, laying of cables, etc. (b) Be that as it may, certain Rahul Cables Pvt. Ltd. had obtained certain Government contract involving laying of 220 Kv copper cables and 132 Kv cables and work associated therewith in Navi Mumbai, Pune and Andhra Pradesh. It (Rahul Cable) had awarded sub-contract to the respondent/corporate debtor herein. According to the corporate debtor, it engaged the appellant for performing its contracted work. (c) According to the respondent/corporate debtor, on 18.09.2019, 23.12.2019 and 15.01.2020, it had placed three separate work orders with the appellant. Except for the nature of work to be done thereunder, the terms of the three work orders are identical. The appellant contends that no work order of the kind which the respondent pleads has never been issued to him. In other words, its contention is that the contract between ....
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....ence, the 70% of the invoice was not paid. So far as the balance 10% is concerned, the appellant is entitled to be paid only after a period of 12 months from the date of testing and commissioning. Therefore, till such time the appellant establishes its right to be paid as per the terms of payment, the respondent is entitled to withhold it. And, the appellant has not produced any material to show that it has done the work as contemplated in the work order nor produced any of the documents that it is required to produce as contemplated in clause 5 read with 3 of the work Order. On the other hand, the respondent has raised a dispute that the work has not been done even prior to the institution of CIRP under sec.9 of IBC. In essence neither is there a debt as contemplated in the IBC nor the claim of the appellant is dispute-free. The appellant has grossly suppressed the material facts and consequently the very institution of petition under Sec.9 IBC is not maintainable. c) Admitting that it has made a part payment of Rs.76,00,975/- the respondent would explain that it merely represents the 20% of the invoice value as required to be paid. And the GST of Rs.4,22,277/- is also pa....
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....perils of IBC. The issue of existence of a pre-existing dispute is a hurriedly invented exit route but it is unsupportable on facts. 4. The response of the respondent's counsel was candid and along predictable lines. He argued: a) The contract which the respondent had entered into with the appellant involves both supply of goods and services associated with erection, commissioning and testing of electrical cables. It was entered into as part of the contract which M/s Rahul Cables was awarded by the Government. To deny these work orders itself is denied. Indeed, in the copies of the work Orders produced by the appellant in its paper-book (all photocopies), the signature of the appellant's representative is seen. b) The terms of the work Orders are unambiguous. The appellant is required to supply goods and services, erect and commission and them and they have to be tested, and certificates of the due commissioning and testing must be obtained from the agent of the contractor, and produce the same for claiming the value of the invoices raised for the purpose. It is here the appellant chose to turn the other way. c) So far as the right to claim the amount ....
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.... respondent is required to pay as per Clause 5 of the work Order. (This tribunal has verified it and it works out to 20.27%). This implies that the respondent had paid substantial part of the 20% of the invoice amount in June, 2020, and the balance after the institution of petition under Sec.9 IBC. What could be gathered here is that the respondent had admitted that the appellant had performed its contractual obligation, whether wholly or partly, for the respondent would not have paid anything if the appellant had failed to perform its part of the contract at all. 7.2 Secondly, it was argued that the respondent has not challenged the correctness of the invoice value, for it has confirmed it on 01.04.2020, and that it is not disputed. It however, requires to be noted that the respondent contends that payment of the balance amount could be withheld till the appellant produces the certificate of erection, commissioning and testing as stipulated in clause 5 of the work Order. In other words, according to the respondent, mere assertion of the completion of the work by the appellant and raising of invoices will not automatically entitle the latter to claim the invoice-amount, unless t....
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....creditor initiates a CIRP, the burden is on the creditor to satisfy the conscience of the Adjudicating Authority that there exists a debt which the respondent has not disputed at any time prior to the institution of the CIRP, and that the debt is not paid when it fell due for payment despite a demand to pay. It does not even require a debtor to contest the issue, for the statutory burden is on the creditor to establish that its case qualifies for initiating the CIRP against the debtor. 11. If the facts of the present case are spread on this plane, it raises a serious doubt as to whether the time for payment of the entire invoice amount has arisen. The nature of enquiry contemplated by the IBC is summary in character, where the criteria prescribed for invoking it should be kept either beyond debate, or at least must be capable of being ascertained without great degree of forensic scrutiny. Contextually, the law as declared by the Hon'ble Supreme Court in the early days of the IBC in Mobilox Innovations Pvt. Ltd., Vs Kirusa Software Pvt. Ltd. [(2018) 1 SCC 353] is of considerable value. It says: "51 all that the adjudicating authority is to see at this stage is whether th....
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....t is dubbed as a monster mechanism ready to swallow their affairs. While the scheme of the Code is creditor centric, IBC is not unconscious of its impact on the commercial solvency of a going company and its existential stability, the fundamental right to do business and right to property of the shareholders, besides the reputation of the corporate managers. And, since the working of the IBC divests the right of the Board of the Corporate Debtor to manage its affairs, it is made imperative that the existence of jurisdictional facts - of debt and default must align perfectly with their statutory definition and are kept beyond any controversy. In Indus Biotech Pvt. Ltd., Vs Kotak India Venture (Offshore) Fund [(2021)6 SCC 436], the Hon'ble Supreme court has held, "21.... If in every case where there is debt, if default is also assumed and the process becomes automatic, a company which is ably running its administration and discharging its debts in planned manner may also be pushed to corporate insolvency resolution process and get entangled in a proceeding with no point of return...." It underscores why care should not be spared in initiating a CIRP. The appellant's case ....