TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 761
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....t functioning at the Mumbai Port and provides its services, was appointed as the Marine Manager, Consultant and Agent by the CD on 31.03.2017 to manage its two vessels, namely, Instanbul and Istanbul 2 (TBN Neverland and Sea Yah) (referred to collectively as 'Vessels'). 3. The Appellant has allegedly provided crew manning and management services to the CD in the financial year 2018-19 and raised cumulative invoice amounting to Rs. 2,36,24,281/- out of which it received an amount of Rs. 1,64,15,810/-. Thus, a sum of Rs. 72,08,471/- remained unpaid in respect of financial year 2018-19. 4. It is also the case of the Appellant that it provided the same services to the CD in the financial year 2019-20 and raised invoices of Rs. 1,38,20,997/- from 02.04.2019 to 14.03.2020 but no amount was paid. 5. The Appellant also provided the same services to the CD in the year 2021-22 and raised invoices of Rs. 15,57,600/- from 01.04.2021 to 31.03.2022 but the said amount was also not paid, therefore, the Appellant has alleged that there is a default of Rs. 72,08,471 for the financial year 2018-19 Rs. 1,38,20,997/- for the financial year 2019-20 and Rs. 15,57,600 for the financial year 2021....
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.....2023, the I.A No. 1510 of 2023 was allowed subject to 1,50,000/- as cost and time was granted to Respondent to file reply which was ultimately filed on 27.03.2023. 13. In the reply filed by the Respondent, it was alleged that there is a pre-existing dispute between the parties. The Appellant was appointed as a marine manager, consultant and agent for assisting and managing the purchase, inspection and import of two vessels. It referred to clause 9 of the appointment letter dated 31.03.2017 in which it was provided that "certification and documentation of passenger ferry with statute/administration, and Govt of India Officers, State Govt. Offices, related to any permission for the ferry namely Navy, Coast Guard, Food and Drug, Pollution Board, Excise, Customs, police, BMC etc. etc. through Capt. Naresh Kalra or KNK Ship Management or appointed Sub-Agent by NK in India" 14. It is also alleged that the Respondent had paid an ad-hoc amount of Rs. 15,00,000/- to the Appellant which was to be adjusted against the future invoices. It is further alleged that the Respondent paid Rs. 1,64,15,870/- pertaining to 22 invoices raised between 2017-18 by the Appellant. It is further alleged....
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....f the vessels on its behalf. He has also referred to the statement of Shri Kamlesh Patel and Shri Shreekanth Ramakrishnan, reproduced in the customs order, which shows that Sunrich had filled the bill of entry, wherein the classification of the vessels was done. It is further submitted that Respondent has already filed appeal against the order of customs which is pending before the Customs, Excise and Service Tax Appellate Tribunal, therefore, the liability of the Appellant has not been crystalized. 16. The Tribunal on the basis of the pleadings before it framed two questions i.e. whether the demand notice issued by the OC in Form - 3 is valid and whether there was any discernible pre-existing dispute surrounding the debt. 17. In respect of notice, the Tribunal has observed that if the demand notice is issued in form 3 then copy of invoice is not mandatory but if the claim is based on the invoices then the demand notice has to be served in form 4, in this regard, reliance has been placed by the Tribunal in the case of Neeraj Jain Vs. Cloudwalker Streaming Technologies Pvt. Ltd., CA (AT) (Ins) No. 1354 of 2019. 18. In so far as the issue of pre-existing dispute is concerned....
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....gorically engaged another company M/s Sunrich as its clearing and forwarding agents for documentation at customs/ port for importation of the vessels in question. The same is also evident from the seizure memo dated 25.11.2020. It is also submitted that the customs dispute is not an inter se dispute between the Appellant and Respondent rather it is a dispute between the Respondent and the Commissioner of Custom Mumbai over the classification of the vessels. It is submitted that no dispute with the Appellant has ever been raised by the Respondent in the form of notice, suit, arbitration etc. and even no liability has been crystallized by the Custom because of an appeal against custom order is pending. It is submitted that for considering that there is pre-existing dispute, it should be existing prior to the receipt of the demand notice as has been held in the case of Mobilox Innvations Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd., (2018) 1 SCC 353 that the dispute or suit or arbitration proceedings must be pre-existing before the receipt of the demand notice as the case may be. It is further submitted that this Court in the case of G.T. Polymers Vs. Keshava Medi Devices Pvt. Ltd., 2020 S....
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....n paid by the Respondent. 24. Since, the amount was not paid, therefore, the Appellant decided to pursue the remedy under the Code and served notice in form 3 prescribed in Rules. Both forms are provided in Rule 5 of the Rules. Rule 5(1)(a) prescribes a demand notice in form 3 and Rule 5(1)(b), a copy of the invoice attached in form 4. Form 3 and 4 are printed performa of the notice. Form 3 is the form of demand notice / invoice demanding payment under the insolvency and bankruptcy code, 2016 whereas Form 4 is the form of notice with which invoice demanding payment is to be attached. Form 3 may be sent as a demand notice or invoice demanding payment whereas Form 4 notice with which invoice demanding payment is to be attached. There is no dispute that the Appellant has sent notice with invoices. The demand notice with invoices fulfils the requirements to prove the existence of operational debt and the amount of default. If the notice sent in form 3, OC has to give particulars of unpaid operational debt whereas in the notice sent on form 4, the OC has to only attach the invoices on which its claim is based without giving any further particulars. Both Forms 3 and 4 are reproduced a....
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....gainst the order of confirming the demand raised by the customs department is still pending and the liability of the Appellant has not been crystalized. 31. Thus, in view of the aforesaid facts and circumstances, we are of the opinion that the order passed by the Tribunal is patently erroneous and hence, the appeal is allowed and the impugned order is set aside. The parties shall bear their own costs. I.As, if any, pending, are hereby closed. ============= Document 1 FORM 3 (See clause (a) of sub-rule (1) of rule 5) FORM OF DEMAND NOTICE / INVOICE DEMANDING PAYMENT UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 (Under rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016) [Date] To. [Name and address of the registered office of the corporate debtor] From. [Name and address of the registered office of the operational creditor] Subject: Demand notice/invoice demanding payment in respect of unpaid operational debt due from [corporate debtor] under the Code. Madam/Sir, 1. This letter is a demand notice/invoice demanding payment of an unpaid operational debt due from [name of corporate debtor]. 2. Please f....
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.... to the operational creditor Address of person signing Instructions 1. Please serve a copy of this form on the corporate debtor, ten days in advance of filing an application under section 9 of the Code. 2 Please append a copy of such served notice to the application made by the operational creditor to the Adjudicating Authority. Form 4 (See clause (b) of sub-rule(1) of rule 5) FORM OF NOTICE WITH WHICH INVOICE DEMANDING PAYMENT IS TO BE ATTACHED (Under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016) [Date] To. [Name and address of registered office of the corporate debtor] From, [Name and address of the operational creditor] Subject: Notice attached to invoice demanding payment Madam/Sir, [Name of operational creditor], hereby provides notice for repayment of the unpaid amount of INR [insert amount] that is in default as reflected in the invoice attached to this notice. In the event you do not repay the debt due to us within ten days of receipt of this notice, we may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process under section 9 of the Cod....