AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 873
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.... for deciding this appeal are: (i) The Corporate Debtor - M/s. Aryan Ispat & Power Private Limited is engaged in the business of manufacturing of sponge iron and generation of power. The Corporate Debtor has a land on leasehold basis from Odisha Infrastructure Development Corporation (OIIDC) and also private owned land on which it has constructed and maintained the plant for a capacity of 160,000 MTPA of sponge iron and 18MW power plant, coal washery 0.7 MTPA alongwith fixtures and appurtenances. The Corporate Debtor has obtained all necessary consent for operating the plant from Government Department. (ii) On 01.02.2021, an agreement namely the Operation & Management Agreement was entered between the Corporate Debtor and M/s. Durgapur Corporation Private Limited (DCPL), the Appellant herein. The Corporate Debtor was mentioned as 'Owner' and Appellant as 'Operator'. Appellant claimed that it is qualified and has expertise to operate the plant owned by the Owner. The Owner agreed to permit the Appellant to operate in consideration of the service fees and the Operator agreed to pay usage fee to the Owner as per terms set out in the Agreement. Various terms and condi....
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....ubmitted that Applicant has concealed fact that he was served demand notice under Section 8 by the Corporate Debtor who has also preferred Section 9 petition also. The petition under Section 9 by the Operational Creditor is nothing but counter blast to the application which is filed by the Corporate Debtor. The Corporate Debtor is running business of manufacturing sponge iron and more than 800 employees are working. Recoveries are due from the Operational Creditor by the Corporate Debtor. Corporate Debtor prayed the application to be dismissed. (vii) The Adjudicating Authority heard the parties and by impugned order has rejected Section 9 application. The Adjudicating Authority after hearing the parties and considering materials on record, came to the conclusion that clauses of the Operation and Management Agreement does not create any debt or financial liability payable by the Corporate Debtor to the Operational Creditor, but merely defines the entitlement of the operator (Operational Creditor) to a share of profits arising from the operations of the plant. In para 29 (xx), (xxv), (xxvi), (xxvii) following was held: "xx. On a careful examination of this clause it....
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....porate Debtor had served a demand notice dated 16.12.2023 under Section 8 of the Insolvency and Bankruptcy Code 2016 to the Operational Creditor and has also preferred a application under Section 9 of the Insolvency and Bankruptcy Code 2016 before the NCLT, Kolkata Bench, for debt and default for an amount of Rs. 5,66,26,383/- (Rupees Five Crores Sixty Six Lakhs Twenty Six Thousand Three Hundred and Eighty Three). While with respect to the present application the Operational Creditor served the Corporate Debtor a demand notice dated 12.03.2024 for an amount of Rs. 34,12,10,212/-. This goes on to suggest that prior to filing of the present application there was an existing dispute between the parties for which the Corporate Debtor served a demand notice under section 8 and filed an application under Section 9 of the Insolvency and Bankruptcy Code 2016 before the NCLT, Kolkata Bench, for debt and default for an amount of Rs. 5,66,26,383/-." (ix) Aggrieved by the order, this appeal has been filed by the Appellant. 2. We have heard Shri Ramji Srinivasan, learned senior counsel appearing for the Appellant and Shri Abhijeet Sinha, learned senior counsel appearing for the Resp....
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....and management of the manufacturing of Sponge Iron and generation of power of the Corporate Debtor. Under the contractual arrangement, the fee of the operator was on the basis of profit sharing basis. Under the agreement, the Operator was obliged to pay usage fee of Rs. 2 Crore per month to the Owner with stipulation to increase the usage fee from time to time. All expense for operation of the plant were to be borne by the Operational Creditor. It is submitted that there was pre-existing dispute between the parties. The O&M Agreement was already terminated by the Owner on 25.11.2022 which clearly contemplated that all liabilities subsisting as on date or may arise in future shall be borne and settled by the Operator. The Agreement having been terminated on 25.11.2022 along with which Balance Settlement Sheet dated 18.10.2022 was also part of it where Rs. 11,32,24,945/- was to be paid by the Operational Creditor to the Corporate Debtor. There was pre-existing dispute between the parties, which is clear from the Termination Agreement and the Balance Settlement Sheet dated 18.10.2022. In any view of the matter, the Corporate Debtor has already issued demand notice under Section 8 on 1....
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....the same. The copy of the demand notice and the petition under Section 9 filed by the Corporate Debtor against the Operational Creditor is attached herewith and marked as ANNEXURE R-8." 7. It is settled law that even if the Corporate Debtor has not replied the demand notice, in reply to Section 9 application it can bring into notice of the Court pre-existing dispute. Pre-existing dispute which can be referred and relied by the Corporate Debtor in reply to Section 9 application has to be dispute existing on the date prior to receipt of the demand notice. In the present case the Corporate Debtor has brought into notice existence of pre- existing dispute which is issuance of demand notice and filing of Section 9 application by the Corporate Debtor against the Operational Creditor, which is much prior to issuance of demand notice by the Appellant. The Corporate Debtor, thus, has brought into notice of the Adjudicating Authority existence of dispute prior to receipt of demand notice by the Corporate Debtor. Disputed has been defied under Section 5(6) of the I&B Code in following words: "5(6) "dispute" includes a suit or arbitration proceedings relating to- (a) the e....
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....es with respect to the contract which Termination Agreement was entered on 25.11.2022 much prior to issuance of the demand notice by the Appellant, clearly points that there is dispute between the parties. The claim filed by the Operational Creditor is not admitted claim. It is further relevant to notice that the Corporate Debtor in its reply to Section 9 application has also clearly pleaded that along with the Termination Agreement dated 25.11.2022, a Balance Settlement Sheet was enclosed where an amount of Rs. 11,32,21,975/- was to be paid by the Operational Creditor to the Corporate Debtor, which pleading has been made in Para 20 of the reply to Section 9 application: "20. That it is pertinent to mention that the said agreement dated 30.01.2021, was terminated between the parties as per the termination agreement dated 25.11.2022. Along with the said termination agreement, a balance settlement sheet was enclosed, which was signed by both the parties, wherein, an amount of Rs. 11,32,24,975/- (Rupees Eleven Crore Thirty Two Lakhs Twenty Four Thousand Nine Hundred and Seventy Five Only) was to be paid by the Petitioner to the Corporate Debtor. Since, the complete accounting....
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....nd appropriate, and has fully satisfied itself as to the existing conditions with respect to the Plant and also various permissions as are necessary for the operation of the plant. Operator is familiar with the facilities and equipment comprising the Plant and has experience in operating and maintaining these types of facilities and equipment. Operator has also observed and gone through the nature, scope and extent of the operation and maintenance services for the Plant. H. The Owner, relying upon the representation and warranties of the Operator, is desirous of appointing the Operator for operating the Services, in consideration of the Service Fees (defined below) and upon the Operator agreeing to pay a Usage Fees (defined below) to the Owner, as per the terms set out in this Agreement." 13. The Clause (H) clearly indicates that the Operator agreed to pay usage fee to the Owner and Operator has agreed to operate the services in consideration of the service fee. Service fees is defined in Clause 1.1.17 and Usage fees is defiled in clause 1.1.18 which are as follows: "1.1.17 "Service Fees" shall have the meaning assigned to it under clause 5.1 hereto and detaile....
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....the Plant, stated in Part B of Schedule I ("Permitted Use"), in order to provide the Services, under this Agreement. The Usage Fees will be increased by INR 15,00,000 per month (Indian Rupees Fifteen Lacs Only) from the first day of the power export to a dedicated plant of the Operator. The Usage Fees per month will be increased by 7% after completion of every three years w.e.f. 21st February 2024. The Usage Fees for the month of February 2021 will be of INR 66,66,667 (Indian Rupees Sixty Six Lacs, Sixty Six Thousand Six Hundred and Sixty Seven Only)" 16. Thus, payment of usage fees was obligation of the Operator to the Corporate Debtor whereas service fee was payable to the Operator was out of the profit after deduction of usage fee and expenses. Thus, the Usage Agreement does not create any liability on the Corporate Debtor to pay any service fee to the Appellant. The Adjudicating Authority in the impugned order has noted relevant clauses. The Adjudicating Authority, thus, has rightly come to the conclusion that there was no obligation on the Corporate Debtor to pay any amount to the Operational Creditor and there was no debt due on the Corporate Debtor for which any Section 9....
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....termining its meaning is a mixed question of fact and law. This concept is encapsulated by sections 91 and 92 of the Evidence Act, 1872. 18.1 Section 91 of the Evidence Act, 1872 denotes that a deed constitutes the primary evidence of the terms to which the parties are to adhere. Whereas section 92 of the Evidence Act, 1872 forbids any contradictions or variations in a written document by extrinsic evidence. However, there are exceptions outlined in the proviso to section 92, that allow variations from this general rule: "92. Exclusion of evidence of oral agreement. - "When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document have been proved according to the last section, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying, adding to, or subtracting from, its terms; Proviso (1): Any fact may be proved which would invalidate any document, or which would entitle any person to any decree or order relating thereto: such as fraud, Int....
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....le Supreme Court has held that the Court by interpretative process cannot rewrite or create a new contract between the parties and have to simply apply the terms and conditions of the agreement as agreed between the parties. There can be no dispute to the above proposition. To the same effect is judgment of Hon'ble Supreme Court in "General Assurance Society Ltd. vs. Chandumull Jain, 1966 SCC OnLine SC 208". 22. We also need to notice the submission of the Appellant on the basis of email dated 15.06.2023, which is clamed as acknowledgment by the Corporate Debtor of balance confirmation. The said emails have been brought on record by the Appellant. As submitted by the Appellant, the said emails were sent by the Finance and Account Department of the Corporate Debtor to its Senior Manager who had forwarded the email to the office of the Operational Creditor. The email has been extracted by the Adjudicating Authority in the impugned order. The email does not indicate as to which official of the Corporate Debtor has send the email. 23. Learned counsel for the Appellant has place reliance on judgment of High Court of Karnataka in "Sudarshan Cargo v. Techvac Engineering, 2013 SCC On....
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....) Ltd. vs. Kirusa Software (P) Ltd., (2018) 1 SCC 353" where the Hon'ble Supreme Court has clearly laid down that the Adjudicating Authority at the stage of admitting Section 9 application has to only see whether there is plausible contention which requires further investigation and that the "dispute" is not a patently feeble legal argument or an assertion of fact unsupported by evidence. In Para 51 of the judgment following was 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)(2)(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 fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the "dispute" is not a patently feeble legal ....