TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 309
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....on 9 application filed by the Appellant-Korea Trade Insurance Corporation. Aggrieved by the impugned order, the present appeal has been preferred by the Appellant. 2. Coming to the brief facts of the case, the Respondent-Amrit Polychem Pvt. Ltd. ("APL" in short) had placed three purchase orders on JT Corporation ("JTC" in short) for supply of certain goods. In terms of the Purchase Orders ("PO" in short) and related Proforma Invoices ("PI" in short), payments were due after 90 days from the Bill of Lading date of the goods under shipment. Appellant-Korea Trade Insurance Corporation ("KTIC" in short) is an insurance company for the supplier of goods-JT Corporation ("JTC" in short). These three PIs as placed at page 87-89 of Appeal Paper Book ("APB" in short) is as tabulated below for easy reference: Proforma Invoice (PI) PI Date Proforma Invoice No. PI Amt. (USD) Manufacturer Goods required to be Supplied First PI 02.01.2017 JT-17-01 - 02 - AMRIT 124,0 00 OCI Company Limited Toluene Diisocynate - 40MT Second PI 19.04.2017 JT - 17 - 04 - 19 - AMRIT 114,0 00 Kumho Mitsui, Korea Polymeric MDI M-200- 40MT Third PI 21.04.2017....
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.... the Corporate Debtor had been legally assigned by JTC to the Appellant. It was also vehemently contended that the Respondent had not disputed the assignment of the debt by JTC to the Appellant-KTIC and therefore by virtue of this assignment the Appellant had qualified to be treated as Operational Creditor in terms of Section 5(20) of IBC. In any case, it was contended that it is settled law in terms of the judgment of this Tribunal in Ranjit Kapoor vs Asset Reconstruction Co Ltd in CA(AT)(Ins) No. 410 of 2018 that the validity and genuineness of an assignment of debt does not lie within the scope and remit of the Adjudicating Authority since insolvency proceedings are summary proceedings and can only be decided in a civil suit. Furthermore, the validity of the LoA had already been established in another proceeding before another bench of the NCLT which decision of the NCLT not having been challenged, has already acquired finality. In such circumstances, the Corporate Debtor cannot question the validity of the LoA or the fact of the stepping into the shoes of JTC by the Appellant-KTIC as an Operational Creditor. It was therefore contended that the objection raised by the Corporate ....
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....g Authority since there was clear evidence of pre-existing dispute. Elaborating on the presence of pre-existing dispute, it was submitted that in their e-mail dated 26.09.2017 sent to the Appellant, they had clearly apprised the Appellant that the issue of loss suffered by them due to non-shipment of goods in the first PI with JTC was a live matter and that they had raised with JTC the need to set-off their claim of loss against other invoices. It was also added that since the LoA was dated 20.12.2017, the Appellant cannot feign ignorance about the e-mail the dated 26.09.2017 in which the issue of counter- claim and adjustment had been raised which therefore clearly signified ongoing dispute between JTC and the Respondent-Corporate Debtor. It was contended that the Appellant was bound by the counter-claim when exercising their rights as an assignee. Moreover, as the Corporate Debtor had already adjusted the payment claimed in the third PI against the loss suffered on account of non- supply of goods under the first PI, the Appellant did not gain any interest in the alleged outstanding payment and at best was vested only with the right to sue. Much emphasis was also laid on the fact ....
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....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 2[payment] of the operational debt in respect of which the default has occurred." 7. Coming to the sequential provision as laid down under Section 9 of the IBC, sub-section (1) thereof entitles the Operational Creditor to file an application for initiation of CIRP of the Corporate Debtor in the event he does not receive the outstanding payment or Notice of dispute as provided for under Section 8(2). Section 9(1) reads as follows: "Section 9: Application for initiation of corporate insolvency resolution process by operational creditor.- (1) After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment under sub-section (1) of section 8, if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under sub-section (2) of section 8, the operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process." Further, Secti....
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....ity can reject the Section 9 Application as long as it can be shown that there is a record of dispute. We are of the view that in this case, once Notice of dispute is raised before the filing of the Section 9 application, even though it fails to comply to the window of ten days period assigned for this purpose, it does not lose its sanctity or relevance in signifying the presence of pre-existing disputes. 9. Having noticed the relevant statutory provisions, we now delineate the short point for consideration which is whether there was any discernible preexisting dispute surrounding the debt claimed to be due and payable by the Appellant-Operational Creditor. 10. The law on this subject has been laid down crystal clear by the Hon'ble Supreme Court in Mobilox Innovations Private Limited Vs. Kirusa Software Pvt Ltd (2018) 1 SCC 353 where in para 33 of the said judgement, the following has been laid down: "...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 c....
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....ny paragraph wise reply for the reasons and facts stated hereafter; and also as much as the same is entirely based on the false claims and contentions; and further addressed to us with malafide intentions for the reasons best known to you. However, we hereby vehemently deny your claims on the following grounds which are prejudice to one another; a. At the outset, we are not liable to make any payments to you under the Third Sale Invoice (as defined hereunder) since the Third Sale Invoice is issued to us by JT Corporation; and Third Goods Orders thereunder are provided to us by JT Corporation under the Third Sale Invoice as per the terms agreed upon between JT Corporation and us; and not by you. b. .... c. You had for the first time vide your email [21/09/2017] asked us to provide you with certain information on the Third Sale Transaction. Upon your request, we replied to you by notifying you about the existing dispute between JT Corporation and us in respect of the Third Sale Transaction (as defined hereunder) and we are seeking to resolve the said issue/settle the said matter vide our email dated [26/09/2017] We state that despite the existing disp....
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....ate Debtor had flatly denied that they were liable to make any payments under the third PI and held the claims raised to be as false. It was also clearly mentioned in the said letter that they had already notified the Appellant on 26.09.2017 about the existing dispute between the Corporate Debtor and JTC with regard to third PI. There is also a clear mention that dishonoring of first PI by JTC has led to the present dispute in the payment of the third PI. The letter also mentions that prior to the signing of the LoA between JTC and the Appellant, there was no consultation with the Corporate Debtor nor their consent obtained thereto. It was also alleged that the LoA was not a valid document as it was executed without insurance documents and was deficient of stamp duties under applicable law besides having been executed as an afterthought. We are therefore convinced that the tone and tenor of the reply to the Demand Notice unabashedly manifests existence of dispute. Even though this Notice of Dispute was sent beyond the prescribed ten days period from the date of issue of Demand Notice, it does not negate the existence of dispute. 13. It is, however, the case of the Appellant that....
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.... With reference to your below, we would like to inform you that we are in business relationship with JT Corporation since 2015 and we had done volume business with them till date and our all payment made to them are on time as per due date. We had booked 40 Mts of TOLUENE DIISOCYANATE 80/20 at USD 3100/MT Totaling to USD 124000.00 vide their Offer No. JT-17-01-02-AMRIT Dt. 02/01/2017 to be shipped on or before 31/01/2017 as per contract copy of the same is attach for your ready reference. After that when we asked for shipping schedule to their Agent Induschem on 19/01/2017 they informed that OCI has gone shutdown and shipment will take place around 10/02/2017. This are all are not true reason for delay in shipment by that price of raw material increased lot and they purposely not honor their commitment due to which we have incurred huge loss as we have to buy from local market at Higher price to fulfil our commitment given to our customers. At present market price of material is around USD 4800.00 i.e. increased by USD 1700/-PMT Totaling for 40 Mts difference will be USD 68000.00, We are in market from last 38 years & we never fail in our commitments to our customers as well as ou....
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....nter-claim and related dispute had been raised on 26.09.2017 preceded the LoA. It is of no less significance to note that the email of 26.09.2017 was not issued at the initiative of the Corporate Debtor but was sent in response to the clarifications sought from the Corporate Debtor by the Appellant on 21.09.2017 with respect to the status of outstanding payments of first PI. Since their doubts had been clarified by the Corporate Debtor in a detailed email reply, the Appellant cannot claim that they were unaware of the existence of counter-claim dispute agitated by the Corporate Debtor before the LoA. Thus, we have no reasons not to agree with the Respondent that the Appellant had been kept abreast by them of their ongoing dispute with JTC in respect of the first PI. 18. Since the JTC had purportedly delayed the supply of goods in respect of the first PI, concerns had been raised by the Corporate Debtor from time to time about the price differential in case the goods had to be sourced from the local market. These concerns were expressed through several e-mails which have been placed in the Reply affidavit of the Corporate Debtor to the Section 9 application filed before the Adjud....