TaxTMI 
TaxTMI 
2026 (1) TMI 568
X X X X Extracts X X X X
X X X X Extracts X X X X
....on filed by Operational Creditor- Unox S.p.A and admitted the Corporate Debtor-Ambro Asia Pvt. Ltd. into the rigours of CIRP. Aggrieved by the impugned order, the present appeal has been preferred by the suspended director of the Appellant. 2. Coming to the brief background of the case at hand, we notice that the Operational Creditor-Unox S.p.A ("Unox" in short) which was engaged in the manufacture and supply of professional ovens was approached by Ambro Asia S.r.L for helping in the expansion of their business in the Indian market. Ambro Asia S.r.L entered into negotiations with Unox thereafter and an Agreement was entered into by both parties on 20.02.2017 in Italy. The Agreement was to be valid for a duration of three years from 10.03.2017 to 28.02.2020. Put in broad terms, Ambro Asia S.r.L was to receive fixed remuneration as well as commission on sales executed. Since the Operational Creditor did not have any representative company in India or any warehousing facility, Ambro Asia S.r.L suggested that Operational Creditor-Unox could use their India based company- Ambro Asia Pvt. Ltd. to sell their goods. The Operational Creditor-Respondent No.1 had started sending goods unde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arehouse and only after the ovens were sold by the various dealers who had been selected with the consent and satisfaction of the Operational Creditor that payment was to be made to the Operational Creditor and that too after realising the payments from the dealers. Thus, the Corporate Debtor was not the purchaser but the Operational Creditor had misrepresented before the Adjudicating Authority that their relationship with the Corporate Debtor was a simple buyer and seller relationship based on invoices. This crucial aspect escaped notice of the Adjudicating Authority which has led to the erroneous impugned order admitting the Section 9 application. It was further asserted that in the case of a running account where the accounts are yet to be reconciled and settled and where the Operational Creditor had themselves agreed to take back unsold ovens, the claim of outstanding debt by the Operational Creditor was not tenable. 4. Assertion was also made that there were several pre-existing disputes between the two parties and hence the Section 9 application was clearly not maintainable. It was pointed out that the Operational Creditor had dishonestly stopped paying Ambro Asia S.r.L. w....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... it has been reiterated that IBC is a beneficial legislation which is intended to put the Corporate Debtor on its feet and is not a money recovery legislation for the creditors and therefore it was contended that the impugned order deserves to be set aside. 6. Refuting the contentions of the Appellant, Shri Rahul Chitnis, Ld. Advocate representing the Operational Creditor contended that in terms of the Agreement between them and Ambro Asia S.r.L, the latter was to act as a commercial point of reference in India to promote the sale of ovens manufactured by them. Ambro Asia S.r.L had committed to promote the sales of the product of the Operational Creditor in the Indian market upon payment of fixed remuneration and commission on the executed sale and the Operational Creditor had agreed to use the Indian company of Ambro Asia S.r.L i.e. Ambro Asia Pvt. Ltd. for the purpose of creating a local warehouse and selling ovens in the market. While Ambro Asia S.r.L promoted the sales of the products of the Operational Creditor with various customers to receive payment of the respective commissions from the Operational Creditor, it was the Corporate Debtor which purchased the products direc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... but no exclusivity terms were ever agreed to or granted by the Operational Creditor to Ambro Asia S.r.L. The linkage of breach of exclusivity and its alleged settlement with the goodwill gesture of the Operational Creditor agreeing to buyback 25 ovens was falsely trumped up. Besides the fact that the term of the aforesaid agreement had already ended on 28.02.2020 even before the issuance of notice under Section 8 on 09.07.2020 and hence exclusivity could not be a ground of dispute, it was also argued that even otherwise if this alleged settlement couldn't be reached for some reason, it did not absolve the Corporate Debtor of its liabilities towards the Operational Creditor. It was also added that the proceedings before the Court at Italy cannot qualify as a dispute as those proceedings were not only between different parties other than the Corporate Debtor but the cause of action being unrelated to the six invoices was also different. The defence of pre-existing dispute as put forth by the Corporate Debtor was a moonshine defence and a feeble argument made in order to avoid payment of the legitimate dues of the Operational Creditor, hence, the present Appeal is liable to be di....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ar that the relationship between the Operational Creditor and Corporate Debtor was not a simple buyer and seller relationship based on invoices. 12. Per contra, it is the case of the Operational Creditor that purchase orders were placed by on them by the Corporate Debtor basis which 346 ovens were supplied which had all been received by them without any demur or protest with regard to quality, quantity or price of the ovens supplied. The relationship between Unox-Operational Creditor and Ambro Asia Pvt. Ltd.- Corporate Debtor was that of a seller and buyer and the business dealing between the two parties was on principal-to-principal basis. The invoices also clearly show that they were drawn in the name of the Corporate Debtor by the Operational Creditor and hence it was a buyer-seller relationship between them. It was also added that the Appellant had also failed to submit any documentary proof to the contrary to substantiate that there was some understanding that the dealers had to make the payment first before the same became payable to Operational Creditor. It was incumbent on the Corporate Debtor to make good the payment and therefore the Adjudicating Authority had not comm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Corporate Debtor and stored in their warehouse and even sale proceeds of the goods were admittedly received by the Corporate Debtor, prima facie, the Adjudicating Authority did not commit any infirmity in holding the relationship between the Corporate Debtor and Operational Creditor to be one of a simple buyer-seller relationship. 15. It is an undisputed fact that the Operational Creditor during the period 11.12.2017 to 29.04.2019 had raised six different invoices for 346 ovens. The Corporate Debtor has not disputed or denied the receipt of 346 ovens to the tune of Euro 2,13,584.50. Material on record shows that against these six invoices, only part payment amounting Euro 85,379.80 was received by the Operational Creditor in tranches and an outstanding balance amount of Euro 1,28,204.70 remained unpaid. We also notice that while releasing the part-payments, no disputes were raised by the Corporate Debtor either on the quality or quantity of goods received or on the pricing of the goods. Neither was the quantum of outstanding debt disputed. It is also noticed that the last invoice was raised by the Operational Creditor in 2019 and until 2020 when the Operational Creditor had s....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ought to have been rejected by the Adjudicating Authority. Even if it is accepted that 25 ovens were not taken back, this accounted for only 7% of the 346 ovens that had been supplied. What further stares at our face is that Euro 1,28,204.70 was still outstanding as only 60% of the outstanding dues against 346 ovens supplied had been cleared. Moreover, we find contradiction in the statements of the Corporate Debtor that the ovens were not purchased by them but only kept by them in their warehouse and in the same breath contending that the Operational Creditor had agreed to buy the ovens back. If the ovens were not sold to the Corporate Debtor, then the question of buying them back defies logic. If we accept the claim of the Corporate Debtor that they did not purchase ovens from the Operational Creditor but only kept the ovens in their warehouse and were required to pay as and when sale through the dealers would take place, it is difficult to comprehend why the Operational Creditor would need to buy back these ovens as the ovens logically remained their property though stored in the warehouse of the Corporate Debtor. The above dispute based on mutually contradictory pleas projected....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al to their commercial interests. 23. Weighing the rival submissions, we are inclined to agree with the Operational Creditor that their Agreement of 20.02.2017 was with Ambro Asia S.r.L and not with Ambro Asia Pvt. Ltd. Though both were sister concerns, however, they were independent legal entities. The terms of the said Agreement of 20.02.2017 cannot be selectively used by the Corporate Debtor to suit their convenience as they were not a signatory or executant of the said Agreement. The plea of exclusivity taken up by the Corporate Debtor basis the 2017 Agreement therefore to our mind lacks credence. In such circumstances, the bogey of violation of the Agreement with respect to exclusivity rights as a ground of pre-existing dispute appears to be frivolous and cannot be a tenable ground to establish pre-existing dispute. 24. This brings us to the two other disputes projected as pre-existing disputes. We first come to the pre-existing dispute which was claimed by the Appellant to have arisen out of the commercial suit filed in the Commercial Court at Greater Noida. It was asserted by the Operational Creditor that the filing of the commercial suit was more of retaliatory measur....