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2025 (12) TMI 118
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....&R Infraprojects Limited. Aggrieved by the order dated 10.11.2023, this appeal has been filed. 2. Challenging the order dated 10.11.2023, Writ Petition was filed in the High Court of Delhi in the matter of 'Asish Mohapatra' Vs. 'P And R Infraprojects Limited & Anr.', [CM (M) 1880/2023], on which order High Court passed an order on 14.11.2023, staying the order dated 10.11.2023 till 20.11.2023 and permitting the petitioner to invoke the statutory remedy before the NCLAT. After the order dated 14.11.2023, the appeal was filed in this Tribunal on 15.11.2023, and the interim order was passed on 17.11.2023. The order dated 10.11.2023 was stayed which interim order is continuing from time to time. Appellant had also offered to deposit the amount claimed in Part IV of Section 7 application. 3. Brief facts of the case necessary to be noticed for deciding the appeal are: i. The respondent, P&R Infraprojects Limited (hereinafter referred to as the 'operational creditor') is company dealing with sale and purchase of steel plates etc. ii. The operational creditor placed a purchase order dated 07.02.2018 on the Steel Authority of India Limited (SAIL) for steel plates amo....
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....f the corporate debtor who was to retain the custody of the goods till such time the operational creditor sell the goods to its customers. x. The corporate debtor has leased a warehouse at in Sonipat, Haryana for storing the goods. The goods were released by the corporate debtor to buyers, customers of the operational creditor. xi. Operational creditor also raised invoices to the corporate debtor with object to transfer ownership of goods for the logistic purpose, and the corporate debtor raised the counter invoices on the operational creditor/its customers. The amount received by the corporate debtor from customers who were sold the goods was entered in the region maintained by the corporate debtor of the operational creditor and the amounts were also transferred to OXYZO to set off the liability of operational creditor to OXYZO. xii. Amount of Rs. 7,90,00,000/- was disbursed OXYZO to the SAIL. Rs. 4,00,00,000/- having already been given by operational creditor to OXYZO, interest was charged by OXYZO on operational creditor on Rs. 3.92 crore and interest invoices were issued by OXYZO to operational creditor from time to time. xiii. A request was....
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....ed that total amount due is Rs. 1,63,54,418/-. After receipt of the notice of demand under Section 8 of the IBC, the corporate debtor replied by notice of dispute dated 27.02.2020. Corporate debtor in its reply to demand notice denied any liability of corporate debtor of any operational debt. It was pleaded that demand notice is baseless and misleading and no amount is due. It was further pleaded that there exists a dispute within meaning of IBC. Reply notice also stated that operational creditor has issued demand notice suppressing the full facts. xxi. The corporate debtor has picked up material worth Rs. 13.98 crore for operational creditor from SAIL under instruction which are in custody of corporate debtor. Huge losses were suffered by corporate debtor. It was pleaded that finance was provided to operational creditor by subsidiary company OXYZO and corporate debtor was constrained to sell the material kept by operational creditor in safe custody, due to loss being suffered and material was sold in losses. It was pleaded that there was pre-existing dispute between the parties and there is no operational debt. xxii. Section 9 application was filed by the operati....
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....f corporate debtor for disbursement to the customers of operational creditor which were introduced by operational creditor itself. Goods were kept in warehouse hired by corporate debtor. The cost incurred for site hiring charges and logistic was to be borne by operational creditor, for which invoices were raised by corporate debtor to operational creditor. It is submitted that operational creditor had also issued invoices on corporate debtor. The only purpose for raising such invoices was that goods to be transferred and transported from one place to another and to avoid any miss statement in the way bills when the material is being sent from custody of corporate debtor to customers. Amount received from customers by corporate debtor was required to transfer to OXYZO in order to settle the accounts, in light of the Master Facility Agreement. It is submitted that in the demand notice as well as Section 9 application, the operational creditor had not disclosed the complete material facts regarding transaction between the parties and has concealed the relevant facts. The goods were received by the corporate debtor from SAIL on behalf of the operational creditor and kept in the custody....
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....e-existing dispute between the parties, since the goods which was received by invoices issued by operational creditor were sold at a loss, which fact was pleaded both in reply to demand notice as well as reply to Section 9 application. Reply to Section 9 application were made by corporate debtor, which have not been adverted to all relevant materials, including contemporaneous communication between the parties, ledger account invoices were part of the record which had not been adverted to. The finding of the adjudicating authority that defence of corporate debtor for pre-existing dispute is a moonshine defence is unsustainable. There was sufficient material on the record which clearly prove that there was a pre-existing dispute between the parties and the corporate debtor was not purchaser of goods from the operational creditor. Goods were purchased by the operational creditor from SAIL for which amount was disbursed by OXYZO on purchase financing granting by OXYZO, a subsidiary of the corporate debtor and goods were in custody of the corporate debtor as security for payment and goods were released to the customer of operational creditor as per directions of the operational credito....
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.... corporate debtor was fully liable to make payment of invoices which were drawn on the corporate debtor. It is submitted that in Section 9 application, the principal amount has been reduced to Rs. 1,09,73,880/- since certain debit notes were not noticed in the demand notice which under Section 9 which were duly given credit. It is submitted that purchase financing by OXYZO by Facility Agreement 29.03.2018 is separate transaction and has nothing to do with the transaction between operational creditor and corporate debtor. The corporate debtor itself in its reply has admitted that it has sold the goods laying in the custody of corporate debtor, thus, the goods which were invoiced to the corporate debtor were sold by corporate debtor, hence, corporate debtor was liable to make payment of goods and there being default in payment by corporate debtor, notice of demand was issued. Reply to demand notice was misleading. There was no dispute between the parties and although in the reply to demand notice corporate debtor mentioned that there are several charges leviable on operational creditor which are mentioned in the reply to demand notice in paragraph 7 but neither any details of the sai....
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....by OXYZO in April 2018. 10. In the reply to Section 9 application, the corporate debtor has in detail given the background facts and mode and manner of transaction. As per pleading in the reply to Section 9 application, it is useful to notice paragraphs 4 & 5 of the reply, which is as follows: "4. In effect, there are four parties involved in the transaction which was carried out. It is further submitted that the transaction was carried out in the following manner/steps: Firstly, OC had placed the Purchase Order on SAIL, however, owing to financial crunch, OC could not take the delivery of the goods. Hence, OC approached the Respondent requesting the Respondent to finance the purchase of the raw material from SAIL on OC's behalf. Respondent being a trading company proposed to the OC to provide the financing through its wholly owned subsidiary Oxyzo in the form of a 'Purchase Finance Facility', solely on OC's requests, representations and assurances to repay the financed amount.. The price of the goods being purchased was transferred by Oxyzo to SAIL under the 'Purchase Financing Facility' and the goods were transported to the warehouse o....
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....orth Rs. 4.50 Crores to the OC and the remaining 'goods" worth Rs. 3.42 Crores were kept in the custody of the Respondent. (c) OC had already received orders from one BBJ in respect of goods" worth Rs. 7.92 Crores. It was expected that BBJ would make part payment (upto 50% i.e. Rs. 3.96 Crores) to OC. (d) When the payments were not received in time by the OC from its customers, it was decided that OC would issue two bank guarantees one in favour of BBJ and the other one in favour of Oxyzo. The bank guarantees in favour of BBJ would enable it to make the payment of Rs. 7.46 Crores (Le. 50% of the total goods purchased). The bank guarantee in favour of Oxyzo would enable it make the additional payment of Rs. 7.00 Crores towards the purchase of the remaining "goods' from SAIL. Accordingly, Mr. Pavaljeet Singh made a request to the Respondent to lift more material from SAIL. (e) However, the OC was not able to get a bank guarantee issued in favour of Oxyzo. (f) On 17.04.2018, the OC requested Oxyzo to pay a further sum of Rs. 7.00 Crores to SAIL for the remaining goods under the Purchase Order No. PRIL/17- 18/SO/001. OC further represented th....
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....oices on the customers (suggested by the OC). The customers to whom the material was sold i.e. GC Steel India Pvt. Ltd., Rajesh Sales Corporation were suggested by the OC itself. The whatsapp chat between Mr. Arvind Guliani-Admin (OFB official), Mr. Lokesh Garg (OFB), Mr. Ankush Jain (OFB), Mr. Asish Mohapatra (OFB), Mr. Nitin Jain (OFB), Mr. Indermal (P&R), Mr. Paveljeet Singh (P&R), Mr. Pratyush Nalla (OFB), Ms. Ruchi Kalra (OXYZO) and Mr. Vikram Singh (OFB) clearly depicts the aforesaid position. Copy of the entire whatsapp chat amongst the group members representing the Petitioner and the Respondent is annexed herewith and marked as ANNEXURE R-10." 12. Adjudicating authority in paragraph 5 has noticed the case set up by the corporate debtor with respect to transaction between the parties. Paragraph 5 of the impugned order in detail captures all relevant pleading made by the corporate debtor and further in the analysis and findings in paragraph 14, the contention of the corporate debtor that instant case does not have any operational debt and the corporate debtor was merely acting as a facilitator in the Purchase Finance Facility which was entered between th....
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.... 4. PNR thus will get the bills from SAIL on target Thursday (Apr 12th) so that Paveljeet can try to get BJJ to give the whole 7.46 cr (50% of 7.92 and 7, both lots) on 16th April. 5. After getting the INR 7.46 cr from BBJ, PNR will transfer the same to OFB. Thus, OFB will be left with say 3.3-3.4 crores worth of material. For the balance 3-3.4 cr material, the above BG should suffice. 7. Once OFB gets this deal completed, property papers of the farm land will be handed over by OFB to PNR. The larger next steps are the following - 1. PNR has applied for a 65 crores BG limit for its current projects. 2 . PNR has close to 8-10 projects in hand, >20,000 T of steel. 3. PNR will give OFB a BG of INR 10 crores to start with and explore project financing with Oxyzo/ OFB. Thanks and regards, Asish Mohapatra Co-founder & CEO, +91-99870-98793 OFB Tech Pvt. Ltd. Corporate Office: Unit-101, Vipul Agora Mall, MG Road | Gurgaon, Haryana" 14. The above email was acknowledged by operational creditor and operational creditor wrote following: "On Fri, Apr 13, 2018 at 1:18 PM, P&R In....
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....h lot from Sail, BBJ will release the difference amount of 5.30 or to us immediately. We will give 5.30 cr to ofb and ofb will release the material. Please support us in this matter. Warm regards Paveljeet Singh" 17. The corporate debtor was to lift the material from SAIL and keep in their custody. The amount was to be given to corporate debtor for releasing the material in its custody. On 18.04.2018 again, corporate debtor wrote to the operational creditor, which is as follows: "Asish Mohapatra <[email protected]> Wed, Apr 18, 2018 at 11:52 PM Reply-To: [email protected] To: "Pril." <[email protected]> Cc: P&R Infraprojects Ltd <[email protected]>, [email protected], Nitin Jain <[email protected]>, Gurte) Singh <gurtej.singh@ofbusiness. In>, Dhaval Radia <[email protected]>, Nalla Pratyush <[email protected]>, Arvind Guliani <[email protected]>, Finance <[email protected]>, ΟΧΥΖΟ <[email protected]>, Steel Ops <[email protected]>, Fulfilment <[email protected]> ....
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....rly proved the nature of transaction between the parties which clearly proved that corporate debtor, was facilitating the sale of the goods which was purchased from the SAIL by the operational creditor. SAIL has released the goods on disbursement made by OXYZO, a subsidiary of the corporate debtor. As noted above OXYZO's payment were to be made by operational creditor and the corporate debtor after receiving the payment from customers had released the payment to OXYZO which is reflected in the ledger of the corporate debtor, which is on the record. The operational creditor itself has admitted the release of the amount of Rs. 4.4 crore to the OXYZO by the corporate debtor. Thus, the very case set up by the corporate debtor in its demand notice that the invoices which were raised on the corporate debtor were required to be paid to the operational creditor are unacceptable. The corporate debtor in its reply has stated that after receipt of the invoices which were received from the operational creditor in the name of the corporate debtor, the corporate debtor was to facilitate the transport of the goods directly to the customers, and all invoices raised by the operational creditor ....
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....corporate debtor has brought on the record the invoice raised by the operational creditor in the name of corporate debtor along with the table depicting counter invoices, which were annexed as Annexure R-15. The invoices which are basis of demand notice i.e., invoices 232 to 268 & 273 and the amount of the said invoices dated 29.08.2018 and 30.08.2018 have been tabulated in and brought on the record, whereas the sale which was made by the corporate debtor to GC Steels and Rajesh Sales Corporation and to the operational creditor are also on record, which is of different dates from 08.09.2018 to 20.09.2018. Thus, the comparative table of invoices which was issued by operational creditor to corporate debtor and the counter invoices which was issued by corporate debtor to third parties including operational creditors are at page 989 & 988 of the Volume V of the paper book which was part of the record of the NCLT. When we look into the page 989, it is clear that total value of the invoices which was drawn on the corporate debtor were Rs. 6,90,20,447/- and the total sale made by the corporate debtor was of Rs. 6,31,23,755/-. It is on that basis, the corporate debtor has pleaded that corp....
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.... That your Demand Notice under Rule 5 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 is defective and does not conform to the mandatory requirements of law as the same has not been registered with the Information Utility. 2. The contents of the Demand Notice are false, baseless, misleading and no amount whatsoever is due from our client and that there exists a dispute within the meaning of Section 5(6) of the insolvency and Bankruptcy Code, 2016 ("Code") between you and Company as set out in the proceeding paras. 3. That there is no relationship between our client and you within the purview of being an operational creditor in terms of the provision of insolvency and bankruptcy Code, 2016 and be made out in the current scenario." 24. Thus, reply notice was clearly notice of dispute which refuted the claim and clearly pleaded that there exists a dispute within meaning of Section 5(6) of the IBC. In the reply to demand notice, it was pleaded that as per arrangement, the corporate debtor has picked up the material worth Rs. 13.98 crore for operational creditor from SAIL, which was kept in the custody of the corporate debtor. In p....
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....gards to sale of goods and loss suffered by our client. 11. That due to the goods being not purchased by you, our client had to bear grave difficulty in selling off the goods, as the goods purchased by our client on behalf your client, were sold in losses. 12. It is submitted that due assurance made by you, our client booked huge amount of materials for you. But due to loss being suffered by our client, our client was left with no other option rather than selling the goods kept in its custody in loss." 25. It was further pleaded that at no point of time from September 18, till issuance of demand notice at no demand, no email or letter was sent pertaining to any amount due on corporate debtor which has been pleaded in paragraph 15, which is as follows: "15. It is relevant to point out at this juncture that at no point any email, letter whatsoever, has been sent by you pertaining to any amount due by our client towards you, before sending the Demand Notice, which clearly indicated that the Demand Notice sent by you is an afterthought just to escape your liability of clearing out dues pending on your part towards our client and illegally using demand noti....
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....n 9 applicant that corporate debtor was liable to pay for invoices who has defaulted in making payment is incomplete picture of the transaction. The defence which has been taken by the corporate debtor in detail in its reply to Section 9 application has been turned down by the adjudicating authority by making following observations in paragraph 14; "however, there is no supporting document to corroborate the same. Therefore, the defence of the corporate debtor with respect to pre-existing dispute appears to be moonshine defence". 28. The judgement of the Hon'ble Supreme Court in 'Mobilox Innovations Private Limited' Vs. 'Kirusa Software Private Limited' reported in [2018 1 SCC 353], where in paragraph 51, following has been laid down: "51. It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(i)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the "existence" of a dispute or the....
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....on the corporate debtor was only facilitator of disposal of goods which were in custody of corporate debtor as security to the amount disbursed by OXYZO to the SAIL on behalf of the operational creditor and corporate debtor was not purchaser of the goods from operational creditor, rather goods were sold to the customers of the operational creditor and the invoices 29.08.2018 and 30.08.2018, which were issued in favour of the corporate debtor, were for purpose of issuing counter invoices which actually was issued and has been detailed in the reply and all counter invoices covering the goods which were received from corporate debtor have been brought on the record. There is no question of any default committed by corporate debtor to the operational creditor regarding any of the said invoices. The whole basis of the operational creditor was unfounded, and the application did not deserve to be admitted for more than one reason as noted above. 31. Learned counsel for the respondent, after the arguments had commenced in the appeal, filed an I.A. No.6638/2025 dated 28.10.2025, praying for dismissal of the appeal as being non-est and without jurisdiction. The ground taken in I.A.6638/20....