TaxTMI 
TaxTMI 
2025 (10) TMI 276
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....imited. Aggrieved by the impugned order, this appeal has been filed. 2. Brief facts of the case necessary to be noticed for deciding the appeal are: i. The operational creditor Maxworth Infrastructure Private Limited was granted a license by Directorate of Town & Country Planning for construction and development of affordable housing society on a land in Sector 89, Gurgaon. Operational creditor launched a residential project "Aashray" and booked flats. ii. In the year 2018, a Term Sheet dated 13.08.2018 was executed between the operational creditor and the corporate debtor, where entire project along with the land and license was agreed to be purchased by the corporate debtor @ Rs. 1,100 per sq. ft. for the built up area, totalling an amount of Rs. 55,96,25,000/-. The sale consideration included various components as has been detailed in the Term Sheet. iii. One Murliwala Realcom Pvt Ltd, a subsidiary company of the corporate debtor entered into an another Buyers Agreement with corporate debtor for sale of its 20 flats in a project constituted at City Residencies, Sector 10A Gurgaon. The corporate debtor was to make payment in stages of total considera....
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....njunction and recovery for an amount of Rs. 12.76 crore. The Suit was filed on 02.05.2022. The corporate debtor filed detail written statement before the Civil Judge, Gurgaon objecting to the claim of 12.76 crore against the corporate debtor. xii. It was pleaded by the corporate debtor that no amount is due. During pendency of the aforesaid Suit, operational creditor issued a demand notice under Section 8 of the IBC dated 01.03.2024 claiming an operational debt of Rs. 12.76 crore. xiii. The demand notice was replied by issuing a notice dispute by the corporate debtor on 11.03.2024. The operational creditor, however, despite receiving notice of dispute filed an application under Section 9 on 11.04.2024, in which application, adjudicating authority by the impugned order 21.08.2024, admitted Section 9 application. xiv. This appeal was heard by this Tribunal on 26.09.2024 and after hearing both the parties following order was passed: "1. Learned Counsel for the Appellant submits that prior to giving Notice under Section 8 which was 01.03.2024, the Operational Creditor themselves have instituted Civil Suit being Civil Suit No. 2312/2022 before the Cou....
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....ng for the appellant challenging the impugned order submits that adjudicating authority committed error in relying on order of the Punjab and Haryana High Court passed in Anticipatory Bail application to come to the conclusion that debt of Rs. 12.76 crore is admitted in that proceeding by the corporate debtor. It is submitted that allegations in the FIR were with respect to 20 flats which were allotted by subsidiary company of the corporate debtor namely Murliwala Realcom Private Limited and FIR contained allegation that Murliwala Realcom Private Limited did not have marketable title for 20 flats, hence fraud and forgery was done with the corporate debtor. It is contended that there was no occasion for admission of any debt in Anticipatory Bail application. Punjab and Haryana High Court itself in the order relied by the adjudicating authority has noticed that there was dispute between the parties with regard to contract which are subject matter of the Civil Court. Punjab and Haryana High Court in the impugned order has clearly said that it is not expressing any opinion on merits. When order of the Punjab and Haryana High Court deciding the Anticipatory Bail application is clear rel....
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.... Haryana High Court the counsel appearing for the complainant has not denied that amount of Rs. 12.76 crore is still to be paid by the corporate debtor. Adjudicating Authority did not commit any error in relying on the statement made by counsel for the complainant before the Punjab and Haryana High Court. Proceeding of the Punjab and Haryana High Court are proceeding of Competent Court which has been rightly been relied by the adjudicating authority in the impugned order. The Suit which has been filed by operational creditor was Suit for injunction and was not substitute for recovery of the amount. Despite filing of the Suit by operation of creditor, operational creditor was fully entitled to initiate proceeding under Section 9. The defence which is stated to be raised by the corporate debtor is a moonshine defence which has no legs to stand. Adjudicating Authority has rightly admitted Section 9 application, there being debt and default on the part of the corporate debtor. Learned counsel for the respondent submitted that the debt claimed by operational creditor is an operational debt. The present is a sale and purchase of land between the parties which land has been used by the co....
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....owing observations: "...After hearing the learned counsel for the parties and considering the above background of the ease, this Court is of the opinion that dispute between the two rival construction companies relates to the agreement(s) entered into by them in June, 2018 and September, 2018 and both have laid their respective claims against each other for breach of contract and recovery of money. Though, the allegations in the FIR relate to deal regarding 20 flats agreed to be. transferred by the accused company, but admittedly, only a sum of Rs. 3:20 crores was paid by the complainant in September, 2018 against a total sale consideration of Rs. 10.36 crores, who is still ready and willing to Complete the contract, and is also ready to make the balance payment to the accused company. Admittedly, after execution of this contract m the year 2018 till the registration of the case, no steps were taken by the complainant seeking implementation of the said contract and the said deal is incomplete as far as transfer of title is concerned. The accused company has also expressed its intention to amicably conclude the deal, as according to it, the complainant is yet to make the ba....
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....he concerned bank. Thus, this Court has no hesitation in holding that the custodial interrogation of the petitioners is not necessary. Consequently, without meaning any expression of opinion on the merits of the, case, the petition is allowed, and order dated 03.09.2021 is made absolute." 11. The adjudicating authority in the impugned order has relied on Punjab and Haryana High Court and has held that debt of Rs. 12.76 crore was admitted in the proceeding before the Punjab and Haryana High Court. It is useful to notice paragraph 17 of the impugned judgement, which is as follows: "17. It further transpires from the order of the Hon'ble Punjab & Haryana High Court that the debt to the tune of INR 12.76 Cr. with respect to transaction in question i.e., 'Affordable Group Housing Project' was admitted in the proceedings before the Hon'ble Punjab and Haryana High Court. The Hon'ble Punjab and Haryana High Court has clearly stated time and again that there is another agreement relating to 'Affordable Group Housing Project' in Sector 89 Gurugram which is at stage for payment of balance of Rs. 12.76 Cr. and the same has not been fructified ye....
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....t of the demand notice bring into notice of the operational creditor existence of a dispute. Section 8(2) is as follows: "8. Insolvency resolution by operational creditor.- (2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational creditor- (a) existence of a dispute, 1[if any, or] record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute; (b) the [payment] of unpaid operational debt- (i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or (ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by the corporate debtor. Explanation.-For the purposes of this section, a "demand notice" means a notice served by an operational creditor to the corporate debtor demanding [payment] of the operational debt in respect of which the default has occurred." 14. Section 9(5) contemplate passing o....
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....not been repaid), deliver a demand notice of such unpaid operational debt or deliver the copy of an invoice demanding payment of such amount to the corporate debtor in the form set out in Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Form 3 or 4, as the case may be [Section 8(1)]. Within a period of 10 days of the receipt of such demand notice or copy of invoice, the corporate debtor must bring to the notice of the operational creditor the existence of a dispute and/or the record of the pendency of a suit or arbitration proceeding filed before the receipt of such notice or invoice in relation to such dispute [Section 8(2)(a)]. What is important is that the existence of the dispute and/or the suit or arbitration proceeding must be pre-existing i.e. it must exist before the receipt of the demand notice or invoice, as the case may be. In case the unpaid operational debt has been repaid, the corporate debtor shall within a period of the self-same 10 days send an 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 the o....
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....it the application within 14 days of the receipt of the application, after which the corporate insolvency resolution process gets triggered. On the other hand, the adjudicating authority shall, within 14 days of the receipt of an application by the operational creditor, reject such application if the application is incomplete and has not been completed within the period of 7 days granted by the proviso [Section 9(5)(ii)(a)]. It may also reject the application where there has been repayment of the operational debt [Section 9(5)(ii)(b)], or the creditor has not delivered the invoice or notice for payment to the corporate debtor [Section 9(5)(ii)(c)]. It may also reject the application if the notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility [Section 9(5)(ii)(d)]. Section 9(5)(ii)(d) refers to the notice of an existing dispute that has so been received, as it must be read with Section 8(2)(a). Also, if any disciplinary proceeding is pending against any proposed resolution professional, the application may be rejected [Section 9(5)(ii)(e)]. 34. Therefore, the adjudicating authority, when examining an appl....
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....has given details of Term Sheet dated 13.08.2028, total consideration of Rs. 55.96 crore. The amount of Rs. 12,76,25,432/- was claimed as debt outstanding amount. The demand notice was replied by the corporate debtor by letter dated 11.03.2024. In paragraph 6 of the reply to the demand notice with reference to demand notice following was stated in paragraphs 6 and 7: "6. However, .in response to the present Demand Notice dated 01.03.2024, it is stated that all the allegations are wholly false and are denied as follows: (i) Your Client is not entitled to any operational debt. It is further stated that the relationship between Your Client and Our Client does not give rise to any operational debt. (ii) It is specifically denied that the date of default as claimed by you is 24.07.2021. It is submitted that the date of default mentioned by you in the Demand Notice dated 01.03.2024 is contradictory to the date of default mentioned in the Second Legal Notice; wherein the date of default is 20.05.2019. (iii) It is pertinent to note that Your Client has also filed Civil Suit No. 2312/2022 for permanent injunction before Civil Judge (Junior Division), Guru....
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....nd its partners, and as such we reserve the right to pursue any and all remedies available under law." 19. When we look into the allegations, paragraphs 6 & 7 of the reply to the demand notice, it is clear that the reply to the demand notice is clearly a notice of dispute. In reply to demand notice, corporate debtor has also referred to two earlier notices issued by operational creditor dated 09.07.2021 and 28.10.2021. A detailed response was sent by corporate debtor on 07.11.2021. In both the aforesaid notices issued by operational creditor it was same claim of Rs. 12,76,26,444/- which was replied by the corporate debtor on 07.11.2021. It was pleaded by the corporate debtor that no money is due and payable by corporate debtor to operational creditor. It is useful to notice paragraphs 2 to 5, which is as follows: "2. At the outset, it is stated that all the allegations made in the Demand Notice dated 28.10.2018 are wholly false and are denied. That there is no operational debt which exists. Further, there is a pre- existing dispute between the parties with respect to false dues claimed under this notice for the real estate project situated at Sector 89, Gurugram, as all....
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....from alienating/selling/creating a third party interest in the said property bearing no. 3046 situated at Murabba no. 7, qila no. 3//2 (6-12), 7/2/2 (6-11),13/2, (5-16) 14/1,(7-4), 17/2/2(3-4),18/1(7-8) at sector-89, Gurugram as the defendant has not acquired complete interest in the said property and is not competent to create any such interest in view of facts mentioned in the complaint. b) To restrain the defendant from raising any construction on the project named The Meridian, MRG, Sec-89, Gurugram on the property bearing no. 3046 situated at Murabba no. 7, qila no. 3//2 (6-12), 7/2/2 (6-11), 13/2, (5-16) 14/1,(7-4), (17/2) / 2 * (3 - 4), 18/1 * (7 - 8) and 22/2/2, 8/1/2/10, 8/2/4, 13/1, 2/2 at sector-89, Gurugram as the defendant have got only partial interest in the same due to non-payment of balance sale consideration and term plan of Rupees Twelve Crore Seventy six lakhs only to the plaintiff. c) That in the alternate it is respectfully prayed that if defendants during pendency of the suit succeeds in achieving their above-said illegal object of any kind, in that event appropriate decree/ order may kindly be passed in the matter, in favour be of the plain....
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....atory injunction is not maintainable and barred U/s 4.1(h) of The Specific Relief Act, 1963..." 24. The defendant has also pleaded that although the plaintiff has admitted the admission of Rs. 43,19,99,558/- but there are other payments made by corporate debtor, which pleadings have been made in paragraph 9 to the following effect: "9. That the Plaintiff has not come to this Hon'ble Court with clean hands and the Plaintiff is guilty of suppression of true and material facts from the Hon'ble Court and therefore the plaintiff even cannot be heard on merits. The plaintiff Itself has admitted and acknowledged the receipt of substantial amount of payment of Rs. 43,19/99,558/- from the Defendant, but the Plaintiff willfully and knowingly concealed and did not include various heads of expenses to extract money from the Defendant. The Plaintiff did not disclose the amount of Stamp Duty of Rs. 2,10,91,768 Approx. (rate of 5% on the above said amount Rs. 42,18,35,374/-) in the certificate of computation of outstanding dues by Chartered Accountant of the Plaintiff. There are such others expense heads which are disputed between the Parties or the Plaintiff' has not disc....
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....)(ii)(d). Section 9(5)(ii)(d) is as follows: "9. Application for initiation of corporate insolvency resolution process by operational creditor.- (5) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-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;" 27. In the present case, both notice of dispute has been received by the operational creditor and in the reply to the demand notice, it was brought into the notice of the operational creditor about the pendency of suit as contemplated by Section 8(2)(a) thus as per legislative scheme under Sections 8 & 9 where a Civil Suit is pending between the parties in which the same amount is claim by the operational creditor as amount in default for which demand notice has been issued, there was clearly a pre-existing dispute between the parties. 28. Learned counsel for the appellant in support of his submissions have relied on the judgement ....
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....ar as also the lab reports produced, no doubt, from the second respondent's labs, we cannot also find that the case of the corporate debtor is wholly unsupported by evidence. As to the acceptability of these materials and the weight to be attached to them, needless to say, we have not pronounced on the same." 29. Hon'ble Supreme Court in the above case has held that it is enough that a dispute exists. The observation which has been given in 'Mobilox Innovations Pvt. Ltd.' (supra) that adjudicating authority has to look into as to whether there is a plausible contention which must be preceded and the defence is not patently feeble unsupported by any evidence. Present is a case where defence raised by the corporate debtor cannot be said to be a feeble defence or unsupported by evidence. The above judgement of the Hon'ble Supreme Court clearly supports the submission of the appellant in the present case. 30. Learned counsel for the respondent in support of his submission has relied on large number of judgement of this Tribunal to contend that present was a case where adjudicating authority could not have dismissed the Section 9 application as on the ground of pre-existing di....
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....dicating Authority to reject the Application under Section 9. A further communication from the Authority has been placed on record by the Appellant at Page - 89. Although the subsequent letter shows that the conciliation proceedings had yet to start. We will go a little ahead so that even if the conciliation proceeding was to start, if the Respondent did not raise dispute regarding the supply of goods or quality of services, still it would be open for the Adjudicating Authority to look into the question whether or not dispute as covered under the IBC, is attracted." 32. This Tribunal took the view that the mere fact that appellant had moved the authority under MSME Act it cannot be said that there is a pre-existing dispute. It was held that the issue raised by the operational creditor before MSME that it has due to recover itself does not mean that there is a pre- existing dispute. There can be no dispute to the above proposition that merely filing or approaching the MSME Authority does not tantamount to accept that there is a pre-existing dispute. In the present case, pre-existing dispute exist since the claim was raised by the operational creditor by filing a Civil Suit in whi....
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....District Judge, Rohini Court vide judgment and order dated September 8, 2016 decreeing the suit for recovery of Rs. 16,44,500 along with interest at 12 per cent. per annum. The operational creditor filed execution petition, which was transferred to the Court of District and Sessions Judge, South District for execution of the decree being case No. 424 of 2019." 36. On the basis of the aforesaid fact, in the above case the objection was raised that since the execution of decree is pending, Section 9 application could not be filed. The said argument was rejected and this Tribunal laid down following in paragraph 16: "16. In the above case, it is held that the provisions of the Code namely under section 238 shall have an overriding effect. Hence the application under section 9 filed by the operational creditor cannot be defeated on the ground that any application for execution was pending, more so, when in spite of decree passed on September 8, 2016 no payment was made by the corporate debtor." 37. The proposition has been laid down by this Tribunal in the above case that mere pendency of the execution petition is no ground to defeat the Section 9 proceeding. Section 9 p....
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.... are of considered opinion that there is a dispute with regard to debt in question, and thus it is not a fit case to admit." 39. This Tribunal, however, has observed that it is always open for the corporate debtor to point out existence of the dispute and it also referred to the judgement of the Hon'ble Supreme Court in 'Mobilox Innovations Pvt. Ltd.' (supra). In the above case the corporate debtor has disputed the claim stating that it has counter claim against the appellant. In the said background, this Tribunal held that claim means a right to payment even if it is disputed. This Tribunal further held that there was no record to suggest pre-existence of dispute. In paragraph 10 to 12, following was held: "10. From the aforesaid findings, it is clear that the claim means a right to payment even if it is disputed. Therefore, merely because the "corporate debtor" has disputed the claim by showing that there is certain counter claim, it cannot be held that there is pre- existence of dispute. 11. In the present case, as we have observed that there is no record to suggest pre-existence of dispute with regard to the services rendered by the appellant, we hold that ....