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2026 (4) TMI 802
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....re: i. The corporate debtor Essar Power Gujrat Limited (EPGL) is fully operational power generating company which supplies to state utility. ii. The appellant supplied coal to EPGL under Independent Supply Agreement executed on different dates between March 2023 to June 2024. Various Sale & Purchase Contracts were executed between the parties. Various consignments were delivered to the corporate debtor. Last Sale & Purchase Agreement was entered between the parties on 24.06.2024. Various payments from time to time were made by the corporate debtor. iii. The appellant issued a demand notice under Section 8 dated 11.08.2025 to the corporate debtor, claiming an outstanding amount of Rs. 85,04,04,994/- as on 04.08.2025, date of default was mentioned as 25.07.2024. iv. Demand notice claimed the amount towards the supply of quantities of scheme coal and invoices issued thereunder. The demand notice was replied by the corporate debtor by detail reply dated 21.08.2025, which reply was referred as noticed of dispute. In the reply to demand notice, corporate debtor pleaded that on 16.01.2025, the parties have reached the settlement under which Rs. 107 cror....
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....pecially when there is mutual exchange of the balances and its confirmation and that the stated credit invoices given cannot be produced before this tribunal which turns out to the fraudulent/drafts on arguments. The dispute regarding reconciliation appears to be genuine and is pre existing and is supported by evidence given even by the applicant. Even though the respondent appeared and has filed his reply, the applicant has given enough documents to decide the matter, while the inputs on the reconciliation process are enough to decide the matter. We do not arbitrate on the amount payable by either of the parties as the matter is now before arbitration and this application with un- reconciled settlement figures cannot be basis for initiating Sec 9 application under IBC 2016. This is not a recovery forum when the parties have dispute and reconciliation, which are subject to arbitration after mutual consideration of a settlement, which is built in the stated Purchase and Sale contract of both parties. 11. We rely upon the judgment of Hon'ble Supreme Court in 58 Engineers Vs Hindustan Petroleum Corporate Limited and others, (REEDLAW 2022 NCLAT Del 07549 and Sabarmati Gas Limi....
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....have been gone into or decided in Section 9 application. Proceeding under Section 9 cannot be utilised as a recovery measure to recover disputed amount. It is submitted that adjudicating authority has rightly dismissed the application. Learned counsel for the respondent further submitted that the respondent itself has initiated a proceeding under Section 11 of the Arbitration & Conciliation Act, 1996, before the Bombay High Court with respect to contract dated 24.06.2024 and at the time of hearing of the application, the operational creditor itself prayed that dispute pertaining to all contracts, including contract dated 24.06.2024, be sent to an arbitration. Bombay High Court disposed of the proceedings on 20.01.2026, directing for appointment of arbitrator to decide the dispute between the parties regarding Agreements/Contracts. The Agreement/Contracts which are subject matter of Section 9 application being also covered by the order referring the dispute. It is not open for the appellant to pray for admission of Section 9 application to press this appeal. 6. We have considered the submissions of the counsel for the parties and perused the records. 7. The first submission of....
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....in a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational creditor- (a) existence of a dispute, if any, or record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute; (b) the [payment] of unpaid operational debt- (i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or (ii) by sending an attested copy of record that the operational creditor has encashed a 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 payment of the operational debt in respect of which the default has occurred." 9. Section 9 provides for initiation for application of CIRP. Section 9(1) provides that after expiry of period of 10 days from the date of delivery of demand notice if operational creditor does not receive payment from the corporate debtor or notice of dispute under su....
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.... (a) As on 16 January 2025 Rs. 107 crores was divided into two parts principal and settlement amount. (b) The principal became Rs. 58.30 crores. (c) The remaining Rs. 49.42 crores was to be settled through provision of a credit note of Rs. 26.92 crores to be issued by NRPL in favour of EPGL and provision of Rs. 22.50 crores which would become payable as interest once the debit note was issued by NRPL to EPGI.. (d) Out of the principal sum of Rs. 58.30 crores, a sum of Rs. 54.3 crores was paid before 20 March 2025. Thereafter, a sum of Rs. 4 crores was paid on 20 March 2025, which meant that the entire sum of Rs. 58.30 crores stood paid as on 20 March 2025. (e) Credit notes of Rs. 15.7 Crores and Rs. 11.22 Crores were issued on 16 January 2025 and 20 March 2025, amounting to Rs. 26.92 Crores. A copy of the credit note dated 16 January 2025 and 20 March 2025 is annexed hereto and marked as ANNEXURE 1 and ANNEXURE 2. (f) Insofar as the provision of interest is concerned, NRPL never issued a debit note for Rs. 22.50 crores and to that extent, there was no amount payable by EPGL towards Rs. 22.50 Crores. 20. This settlement set ....
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....dition to the above under heading "D" it was pleaded that there is a Pre-Existing Dispute on losses suffered by EPGL. 14. When we look into paragraph 19 of the reply to the demand notice, it was a clear case of the corporate debtor that the outstanding dues of Rs. 107 crore payable by the corporate debtor to operational creditor were settled on 16.01.2025, principal amount of Rs. 58.30 crore and remaining amount of Rs. 49.42 crore, paragraph 19 clearly mention the manner in which the said liability has to be discharged. Paragraph 20 of the reply to the demand notice which was in reference to the settlement and is reflected in the Whatsapp between the Authorised Representatives of the corporate debtor and operational creditor dated 20.03.2025. The corporate debtor's clear case is that entire principal amount has been paid and the credit note has also been received from operational creditor as per settlement and advance interest has also been paid by corporate debtor to Rs. 8 crore, whereas, debit note as was agreed between the parties of Rs. 22.5 crore has not been issued. 15. Hon'ble Supreme Court in celebrated judgement of 'Mobilox Innovations Private Limited' Vs. 'Kirsua So....
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.... 6(2), the applicant is to dispatch by registered post or speed post, a copy of the application to the registered office of the corporate debtor. Under Section 9(3), along with the application, the statutory requirement is to furnish a copy of the invoice or demand notice, an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt and a copy of the certificate from the financial institution maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt by the corporate debtor. Apart from this information, the other information required under Form 5 is also to be given. Once this is done, the adjudicating authority may either admit the application or reject it. If the application made under sub-section (2) is incomplete, the adjudicating authority, under the proviso to sub- section (5), may give a notice to the applicant to rectify defects within 7 days of the receipt of the notice from the adjudicating authority to make the application complete. Once this is done, and the adjudicating authority finds that either there is no repayment of the unpaid operation....
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....e legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application." 16. Section 9(5)(ii) provide as follows: "9. Application for initiation of corporate insolvency resolution process by operational creditor. (5) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), by an order- (ii) reject the application and communicate such decision to the operational creditor and the corporate debtor, if- (a) the application made under sub-section (2) is incomplete; (b) there has been payment of the unpaid operational debt; (c) the creditor has not delivered the invoice or notice for payment to the corporate debtor; (d) n....
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.... is only apposite to be remindful of the observation in Mobilox Innovations [Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd., (2018) 1 SCC 353 : (2018) 1 SCC (Civ) 311] that in doing the act of separating the grain from chaff the Court need not to be satisfied that the defence is likely to succeed. It is enough that a dispute exists between the parties and in other words, what is to be seen is whether there was a plausible contention requiring investigation for the purpose of adjudication. Taking note of the nature of the dispute of the respondent as referred hereinbefore in respect of the claim made by the appellant, we do not find any reason to disagree with the concurrent findings of the Tribunals that there existed a "pre-existing dispute" between the parties before the receipt of demand notice under Section 8 IBC. In other words, the dismissal of the application under Section 9 IBC on the ground of "pre-existing dispute" cannot be held to be patently illegal or perverse. We also do not find any reason, in the facts and circumstances, to hold that the case set up by the respondent was a patently feeble legal argument. At any rate, we are not inclined to brush aside the....
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.... and suppression and has been purposefully doing such act to create artificial dispute to illegally get out from the notice of dispute. The complete and accurate record of the exchange, including the omitted voice calls, demonstrates that the text relied upon by EPGL formed part of an ongoing and inconclusive discussion, not a final agreement. 30. The three omitted voice calls, when taken into account, reveal the true sequence of events. After receiving the so-called "settlement" message, Mr. Ankur Agarwal of NRPL responded with "Sir please call." During the subsequent voice call, Mr. Ankur Agarwal specifically requested clearance of long- pending dues. In response, Mr. Pravin Katre of EPGL., asked NRPL to share a draft credit note so that the matter could be placed for internal discussions with the management of the EPGL to convince them that based on draft credit notes, the parties are discussing for modalities of payment and in the meantime some of the outstanding payment can be released to NRPL. Mr. Ankur replied that he would confirm and revert shortly. In a later call, Mr. Ankur Agarwal informed Mr. Pravin Katre that a draft credit note would be shared for internal d....
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....dent itself has filed an application under Section 11 of the Arbitration & Conciliation Act, 1996, before the Hon'ble Bombay High Court being Commercial Arbitration Application (L) No.39178/2025, where Bombay High Court has passed an order on 20.01.2026, in which order, it was on the request of the appellant herein that all disputes between the parties regarding Contractual Agreement has been referred to. The subject matter of Section 9 application is fully covered by the order dated 20.01.2026. It is useful to notice paragraphs 3 & 4 which are as follows: "3. While this Court would have gone ahead with the constitution of the Arbitral Tribunal in view of the clause in the Sale and Purchase Contract dated 24 June 2024, the learned counsel appearing for the Respondent submits that there are numerous other Agreements/Contracts executed between the parties, which have also given rise to disputes and differences. He therefore submits that the Applicant cannot be permitted to seek constitution of Arbitral Tribunal selectively in respect of Sale and Purchase Contract dated 24 June 2024. According to the learned counsel for the Respondent, following are the Agreements/Contracts o....