TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 243
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....und, it was submitted by the Ld. Counsel of the Appellant that the Operational Creditor was engaged in the business of providing transportation and trucking services to the Corporate Debtor since 2017. The Corporate Debtor had placed several work orders on the Appellant- Operational Creditor for transportation of their goods. The Appellant discharged their service obligations and had submitted invoices from 24.06.2019 to 24.02.2020 for payment by the Corporate Debtor. Further in terms of the contract of services, the Corporate Debtor had to make payment under each invoice within 14 days failing which 24% p.a. interest was leviable for delayed payment. It was submitted that the Appellant-Operational Creditor had raised 247 invoices for the period 24.06.2019 to 24.02.2020 for a total amount of Rs 3.57 Cr. against which only Rs 10.08 lakh had been paid by the Corporate Debtor on 30.12.2020. As the balance amount of Rs 3.47 Cr. continued to remain unpaid, inspite of several reminders to pay, the Operational Creditor sent a Section 8 Demand Notice to the Corporate Debtor dated 15.04.2021 claiming Rs 3.47 Cr. as the principal component of the operational debt alongwith Rs 1.24 Cr. toward....
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.... the Hon'ble Supreme Court in Mobilox Innovations Pvt. Ltd. Vs Kirusa Software Pvt. Ltd. (2018) 1 SCC 353 to contend that spurious defence and feeble disputes raised by the Corporate Debtor ought to be rejected unless it is shown that there was a plausible dispute which required investigation. The Adjudicating Authority had thus erred in holding that there was a pre-existing dispute between the parties. 4. Refuting the submissions made by the Appellant, it has been contended by the Ld. Counsel of the Respondent that during the period 25.02.2020 to 30.09.2021, from time to time, several payments had been made by the Corporate Debtor to the Appellant amounting Rs. 2.89 Cr. towards the 274 invoices which the Appellant has claimed to be outstanding and made the basis of their Section 9 application. The Appellant never denied the receipt of payment of Rs. 2.89 Cr. but falsely claimed that these amounts has been appropriated towards "previously pending invoices". No such list of older pending invoices had ever been made available at any stage prior to the appeal. Hence, the "older pending invoices" is only a smoke-screen to claim that payments were still outstanding. It was vehemently....
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....cords carefully. The crux of the matter in the present case is for us to determine whether the Adjudicating Authority was right in holding that there was a plausible dispute which had been raised by the Corporate Debtor which require further investigation. 6. A cursory look at the statutory provisions of the IBC reveals that Section 8(2) obligates a Corporate Debtor who has been delivered a Demand Notice under Section 8(1) by Operational Creditor to bring to the notice of the Operational Creditor the existence of a dispute. In the present case, it is an admitted fact that the service of the Demand Notice could not be effected on the registered office of the Corporate Debtor. While the Appellant has claimed that the demand notice was purportedly served by e-mail, however, the Respondent has denied the receipt of the Demand Notice. Be that as it may, there is no dispute that no reply was received from the Respondent to the Section 8 Demand Notice and the Appellant went ahead and filed the Section 9 application. 7. It is a well settled proposition that for a pre-existing dispute to be a justifiable ground to thwart an application under Section 9, the dispute raised must be truly....
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....terest payments from the Corporate Debtor. .... 5) Be that as it may, in the month of July, 2021 discussions were held between the Applicant and Corporate Debtor for amicable settlement of all their pending issues and that it was mutually agreed between the parties that the Corporate debtor will send their accounts statement for review to the Applicant and subsequently, after reviewing, the Applicant will send some person to Ranipet office of the Corporate Debtor with all the relevant supporting documents in respect of their said claim so as to close all the pending issues. It was further agreed that the Corporate Debtor will restart making on account payments to the Applicant. It is pertinent to mention herein that during the course of said discussion, the Applicant has informed the Corporate Debtor that their bank account has changed and requested the Corporate Debtor to effect on-account payments in the said new bank account bearing No 991316694 maintained with Kotak Mahindra Bank. As a matter of fact, the Corporate debtor vide its email dated 23/07/2021 put the said fact on record and further on 23/07/2021 itself, they made on account payments of Rs. 39,33,216....
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....ides raising several grounds to show that there was a pre-existing dispute between the parties with respect to the operational debt. 9. We come to the first bone of contention between the two parties raised at para 8 of the pleadings in the reply of the Corporate Debtor to the Section 9 application. It is the case of the Appellant that the Corporate Debtor had defaulted in clearing their outstanding debt. Without denying the fact that payments amounting Rs 2.89 Cr. was made by the Corporate Debtor during the period 25.02.2020 and 30.09.2021, it was contended that these payments were made by the Corporate Debtor towards invoices for the period 25.03.2020 to 24.03.2021 and not towards the pending invoices of Rs 3.47 Cr. which formed the basis of the Section 9 petition. Since the two parties were maintaining running accounts, it was contended that the Appellant was entitled to appropriate the payments received from the Corporate Debtor towards any lawful debt which was due and payable. Accordingly, these payments were appropriated by the Appellant towards "older pending invoices". Further, when the Corporate Debtor did not specify to the Appellant as to which debt of theirs should ....
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.... between the two parties. We find that the Respondent, on the one hand, has contended that the payment of Rs 2.89 Cr. was made by them towards invoices which formed the basis of the Section 9 application while the Appellant, on the contrary, has adjusted these payments towards invoices of the period 25.03.2020 to 25.03.2021 which do not form part of the Section 9 invoices. It is the contention of the Respondent that the Operational Creditor had wrongly settled the payments made by them against invoices not identified by them. Further they had appropriated the payments against invoices raised between 25.03.2020 and 25.03.2021 which cannot be subject of action under Section 9 because of Section 10A bar. On the other hand, it is the case of the Appellant that the two parties were maintaining running accounts and hence the Appellant was entitled to appropriate the payment towards any lawful debt which was due and payable and therefore they had correctly appropriated by them towards older pending invoices. Thus, there is a manifest dispute between them over the invoices against which the payments made by the Corporate Debtor were appropriated. In view of the conflicting claims made by b....
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....he Respondent has placed on record a list of 135 invoices wherein there is a discrepancy in the amount shown in the invoices as placed by the Appellant before the Adjudicating Authority and the amounts reflected against the same invoices sent to the Respondent. Hence it is contended by the Corporate Debtor that this variation in the amounts for the same transactions is clear evidence of operational debt being a disputed amount. The list of invoices containing discrepancies as brought on record by the Respondent are as reproduced below:- Sr. Inv. No. Amount shown in invoice placed on record by the Appellant before the NCLT (in INR) Appeal Page No. Amount shown in invoice issued to the Respondent (in INR) Objections Page No. 1 12370 1,72,305 Vol. I: 112 1,88,809 53 2 12372 1,58,747 Vol. I: 115 1,64,747 54 3 12373 1,78,806 Vol. I: 118 1,93,806 55 4 12413 1,54,067 Vol. I: 198 1,74,738 56 5 12418 1,55,700 Vol. I: 212 1,68,658 57 6 12419 2,00,877 Vol. I: 216 2,36,947 58 7 12420 1,47,041 Vol. I: 218 1,68,817 59 8 12422 1,40,000 Vol. I:....
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....48 12537 1,51,416 Vol. II: 471 1,62,879 101 49 12538 1,70,459 Vol. II: 474 1,91,727 102 50 12539 1,48,200 Vol. II: 477 1,67,379 103 51 12542 1,42,200 Vol. II: 480 1,56,879 104 52 12543 1,49,700 Vol. II: 483 1,70,379 105 53 12544 1,49,700 Vol. II: 486 1,70,379 106 54 12545 1,84,113 Vol. II: 489 2,06,058 107 55 12546 1,42,200 Vol. II: 492 1,59,879 108 56 12547 1,69,879 Vol. II: 495 1,90,777 109 57 12548 1,39,301 Vol. II: 498 1,52,599 110 58 12549 1,52,700 Vol. II: 501 1,77,879 111 59 12550 1,65,278 Vol. II: 504 1,92,511 60 12551 1,60,178 Vol. II: 507 1,78,423 112 61 12552 1,53,925 Vol. III: 510 1,72,364 113 62 12556 1,47,113 Vol. III: 513 1,64,822 114 63 12557 1,52,700 Vol. III: 516 1,74,879 115 64 12558 1,37,700 Vol. III: 519 1,47,879 116 65 12561 1,70,040 Vol. III: 528 2,06,778 117 66 12563 51,000 Vol. III: 532 59,400 118 67 12564 46....
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....2670 1,59,811 Vol. IV: 873 1,65,311 158 107 12698 1,40,000 Vol. IV: 929 1,49,379 159 108 12699 1,44,200 Vol. IV: 932 1,58,200 160 109 12700 1,66,700 Vol. IV: 939 1,81,700 161 110 12706 1,44,200 Vol. IV: 969 1,54,200 162 111 12719 59,400 Vol. IV: 998 61,101 163 112 12720 59,400 Vol. IV: 1002 62,400 164 113 12724 1,52,235 Vol. V: 1023 1,55,943 165 114 12725 59,400 Vol. V: 1026 62,400 166 115 12727 59,400 Vol. V: 1033 62,400 167 116 12729 59,400 Vol. V: 1041 68,400 168 117 12731 1,57,300 Vol. V: 1048 2,02,486 169 118 12733 1,57,715 Vol. V: 1057 1,69,998 170 119 12734 1,57,530 Vol. V: 1065 1,73,530 171 120 12735 1,57,256, Vol. V: 1070 1,73,613 172 121 12741 59,400 Vol. V: 1080 68,400 173 122 12743 1,69,567 Vol. V: 1088 1,75,108 174 123 12744 1,80,055 Vol. V: 1094 1,88,487 175 124 12756 1,44,200 Vol. V: 1117 1,54,200 176 125 12757 1,44,200 Vol. ....
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....ncy in the 135 invoices submitted by the Appellant to the Corporate Debtor and the invoices placed in their Section 9 application and the issue of reconciliation of accounts for the reasons noted by us at paras 16 and 17 above, we cannot fail to notice that the Appellant and Respondent had clear differences between themselves on the crystallised amount of operational debt. The Adjudicating Authority has rightly adverted attention to the issue of validity and accuracy of the invoices which has led to a situation of non-crystallization of the claim amount leading to the spectre of disputed debt. 19. The Hon'ble Supreme Court in its judgment in Mobilox Innovations Pvt. Ltd. Vs Kirusa Software Pvt. Ltd. (2018) 1 SCC 353 has held that it is enough that a dispute exists. The Adjudicating Authority has to only look into the factual matrix as to whether there is a plausibility of dispute and that the defence of pre-existing dispute raised by the Corporate Debtor is not a feeble defence or unsupported by evidence without entering into adjudication of the dispute. The relevant extracts of the above judgment are as reproduced below: "33... What is important is that the existe....
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....aised a plausible contention requiring further investigation which is not a patently feeble legal argument or an assertion of facts unsupported by evidence. The defense is not spurious, mere bluster, plainly frivolous or vexatious. A dispute does truly exist in fact between the parties, which may or may not ultimately succeed, and the Appellate Tribunal was wholly incorrect in characterizing the defense as vague, got-up and motivated to evade liability." 20. If we apply the test laid down in Mobilox judgement by the Hon'ble Apex Court to the facts of the present case it is clear that the defence raised by the Corporate Debtor in their reply filed in Section 9 application is not illusory or moonshine. The present is not a case where there is undisputed debt for which insolvency can be asked for initiation by the Appellant. The Adjudicating Authority has, therefore, correctly applied the ratio of the Mobilox judgment in dismissing the Section 9 application and holding at Para 4 XIV of the impugned order: "XIV. Therefore, considering the totality of circumstances, including the disputed nature of the debt, the Corporate Debtor's solvency, the payments made by the Corpo....