TaxTMI 
TaxTMI 
2024 (12) TMI 1723
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.... rejected. 2. The facts which arise for consideration in the instant appeal, and as portrayed by the Appellant, in the appeal was that, a business relationship subsisted between the Appellant (i.e., the Operational Creditor) and, the Respondents (the Corporate Debtor) herein, for supply of stainless steel sheets, rods and pipes etc. And the said business transactions persisted between the Appellant and the Respondent (Corporate Debtor), which in the instant case as alleged pertained to the period from March 2018 to June 2018. The Appellant contends that, he has supplied the material to the Corporate Debtor and a total transaction which has been ultimately carried and quantified between the parties during this aforesaid period was determined by the Appellant, as to be Rs. 1,14,70,735.98/-. It is an admitted case of the Appellant that the Corporate Debtor till 18.06.2018 had made the payment of Rs. 60,00,000/-, with an addition of Rs. 5,00,000/- as an interest towards it, out of the total principal amount due to be payable. And after the aforesaid payment and having deducted the same from the principal amount due, it was contended by the Appellant (Operational Creditor) in his app....
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.... the eyes of the law. 6. It is observed that the acknowledgement of debt, by the Corporate Debtor, had been given quite regularly, in its various communications placed by the Appellant on record and particularly that of 18.12.2018, where the Corporate Debtor has acknowledged the issuance of demand notice and further in response thereto as made on 20.12.2018 the Corporate Debtor had rather promised that, he is going to make good the payment of the amount thus claimed to be paid by issuance of notice under Section 8 of I & B Code. After the issuance of demand notice under Form-3 under Section 8 of I & B Code, an email communication was also sent to the Corporate Debtor, which was responded by the Corporate Debtor, though purportedly attempting to raise a concocted dispute which was not even subsisting before, raising a dispute that there was no question of liability and that the same cannot be determined on the basis of the WhatsApp communications and the messengers conversation, in order to establish that there was an existing financial debt, which could have been said to have fallen due to be paid by the Respondent (Corporate Debtor) to the Appellant (Operational Creditor). Base....
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.... This communication as recorded will amount to be an admission of debt and as an assurance too, to remit the amount and it will also amount to admitting the default. In yet another WhatsApp communication dated 10.07.2018, the Corporate Debtor through his mobile number has dropped a message to the effect that "tomorrow evening hopefully, your payment will be initiated". Almost a similar nature of correspondences was made by the Corporate Debtor on 16.07.2018, where the Corporate Debtor has submitted that, "tomorrow evening some amount will make you in cash". Lastly, as it has been submitted by the Appellant that, the Corporate Debtor on 05.12.2018 had made a communication that by Saturday, he will be ensuring to release the entire amount, referring the demand of Rs. 54,70,735/- as raised in the demand notice. All these aforesaid communications, and the ultimate communication which was made on 18.12.2018, wherein the Respondent Corporate Debtor has submitted that "tomorrow we will try to get your payment", point to the fact that there was an apparent and admitted, default because of non-compliance with the conditions of notice of demand issued to him under Section 8 of I & B Code and....
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....ion 9 of I & B Code for initiation of the CIRP proceedings, by assigning reasons to the effect, that according to the evidence which has been led by the Operational Creditor, if it is read with the evidence led by the Corporate Debtor, the Tribunal has recorded a very evasive finding in Para 11 of the Judgment, in relation to the purchase orders issued by the Corporate Debtor to the effect that, the Operational Creditor was required to provide a 'Material Test Certificates (MTC)' along with the dispatched codes and hence in the absence of there being a Material Test Certificate being placed on record, it has to be held that the Operational Creditor has supplied the material of inferior in quality. This argument cannot be accepted by us, because, at no point of time when the business transaction was subsisting between the parties and the material was being supplied by the Appellant and being used by the Respondent (Corporate Debtor), they had ever raised any objection pertaining to the quality of the material supplied, and rather the material supplied was being utilized without objection and material quality test in the operational activities of the Corporate Debtor, even after the ....
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....der Sections 8 and 9 of the Code, appears to be that an operational creditor, as defined, may, on the occurrence of a default (i.e. on non-payment of a debt, any part whereof has become due and payable and has 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)1. 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." "51. Therefore, all that the adjudicating authority is to see at this stage is w....
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.... to the legal notice of 05.12.2018, will not carry much weight. 13. Much stress has been placed by the Ld. Counsel for the Appellant with regards to the legal notice dated 05.12.2018, and the reply statement which was filed by the Respondent Company on 06.12.2018. If the contents of said legal notice are taken into consideration in its entirety particularly, the conclusion as referred to therein, it does make out a case as argued by the Appellant from the contents of the reply and the Material Test Certificates (MTC), which has been referred to in the response affidavit. Apart from it, even if for the time being we presume that, the legal notice of 05.12.2018, if at all it had any bearing, the Ld. Tribunal ought to have dealt with it and could have made reference to as to how the said legal notice will at all, have been any impact on drawing the proceedings under Section 9 of I & B Code, but there is an absence of there being any specific finding recorded by the Ld. Tribunal with regards to the implication of the contents of the legal notice and the effect of its contents, on the demand notice issued by the Appellant for initiation of Section 9 proceedings. If the Respondent was....