TaxTMI 
TaxTMI 
2026 (7) TMI 532
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....ny under Section 9 of the Insolvency and Bankruptcy Code, 2016. Appellant claims that the Operational Creditor deliberately concealed the pendency of disputes between the parties and has inherent technical defects. Further it claims that the principles of natural justice have been violated in deciding the Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("Code"). Brief facts of the Csase 2. 19.07.2022: The Operational Creditor entered into an agreement with the Corporate Debtor for supply of Paddy Biomass. The agreement is accompanied by a Deed of Hypothecation of assets of the Corporate Debtor. The total consideration amount agreed between the parties was Rs. 4,40,00,000/- for supply of 20,000 tons of Biomass Bales. The period of supply of the biomass bales was from 15.09.2022 to 15.12.2022. 3. 20.07.2022: As per the agreement the Operational Creditor paid an amount of Rs. 77,00,000/- to the Corporate Debtor towards advance or the supply of biomass bales. 4. 18.08.2022: As per the agreement, the Operational Creditor paid a further amount of Rs. 77,00,000/- to the Corporate Debtor towards advance or the supply of biomass bales. Thus, a total advan....
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....edy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured." 14. The alleged dues of Respondent No. 1, does not constitute 'debt', as it is a liability in respect of a claim which is due. However, there is no debt due or payable and hence for any Application to be filed under Section 9 of the Code, the element of 'debt' is not present in the Application. Section 5(11) of the Code is reproduced hereunder: "(11) "debt" means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt" 15. There were no documents on record to prove that the Corporate Debtor has admitted any dues payable towards the Respondent No. 1. 16. The Operational Creditor had no locus to proceed against the Corporate Debtor under Section 9 of the Code, as the alleged debt owed by the Corporate Debtor was pursuant to a supply Agreement and not in the nature of any operational debt in default and hence, no Section 9 Application could hav....
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....e matter. The Operational Creditor did not serve the pleadings upon the Corporate Debtor and the proof of service appended with the Rejoinder filed by the Operational Creditor contains no attachment of any document being constituted as a proof of service. 21. The Operational Creditor has ventured to invoke the provisions of the Code as a means to recover the disputed amounts under a Contract of Supply and the Contract of Supply specifically contains an Arbitration Clause for settlement of disputes between the parties. However, instead of referring the dispute to Arbitration, the Operational Creditor has illegally proceeded to initiate the CIRP proceedings against the Corporate Debtor, in the case of pendency of disputes and non-ascertainment of debt. 22. Once the CIRP is commenced against the Corporate Debtor, the operations of the Corporate Debtor would be run to the ground. Any proposed CIRP will endanger and damage the confidence of the investors in the Corporate Debtor and further damage the finances of the Corporate Debtor. The operations of the Corporate Debtor pertain to farming, farm produce and soil based output. Any Resolution Professional appointed by the Hon'b....
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.... Court in Transmission Corporation of Andhra Pradesh Limited vs. Equipment Conductors and Cables Limited, (2019) 12 SCC 697, wherein the Hon'ble Supreme Court has held that: XXX 10. From the aforesaid, it follows that existence of an undisputed debt is sine qua non of initiating CIRP. It also follows that the adjudicating authority shall satisfy itself that there is a debt payable and there is operational debt and the corporate debtor has not repaid the same. XXX 27. The Impugned does not take into consideration the law laid down by Hon'ble Supreme Court of India in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited, Civil Appeal No. 9597 of 2018, wherein the Hon'ble Supreme Court has observed that IBC is not intended to be substitute to a recovery forum. It is also laid down that whenever there is existence of real dispute, the IBC provisions cannot be invoked. The relevant paragraphs are reproduced as follows: XXX 45. Going by the aforesaid test of "existence of a dispute", it is clear that without going into the merits of the dispute, the appellant has raised a plausible contention requiring further investigation whi....
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...., 2023 and hence can't be relied upon. 31. Corporate Debtor did not make complete supply and tenure of the Agreement also expired on 15th December 2022, and supplies against the Advance of Rs. 1,19,53,864/- (Rupees One Crores Nineteen Lacs Fifty-Three Thousand Eight Hundred Sixty Forty Only) have not been made, the aforesaid amount is being illegally retained by the Corporate Debtor and same is duly acknowledged by Corporate Debtor vide its Emails. 32. The Operational Creditor served a demand notice under the Insolvency and Bankruptcy Code 2016 upon the Corporate Debtor, seeking refund of payment/advance amount due in the prescribed format which has been duly received by the Corporate Debtor as well. A true copy of the statutory demand notice in terms of Section 8 of IBC, 2016 dated 17.01.2023 which was duly delivered on 19.01.2023 and thus, stands served upon the Corporate Debtor. 33. It is a matter of record that for the period 19.01.2022 till 29.01.2022 (10 days statutory period), the Corporate Debtor did not raise any objection as regards the claim of the Operational Creditor. The Operational Creditor did not receive any notice of dispute during the statutory perio....
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....ed a legal notice to the Corporate Debtor for Rs. 1,19,53,864/- and later on followed by a statutory demand notice dated 17.01.2023 under Section 8 of the Code. The date of default as mentioned in para 4 of the petition is 16.01.2022. The Operational Creditor also filed an Affidavit confirming that the Section 8 demand notice was served upon the Operational Creditor. 42. The Corporate Debtor in its reply before the Adjudicating Authority had submitted that the Operational Creditor intentionally denied to accept some of the Biomass Bales. Initially, the Operational Creditor accepted 5 to 6 trollies of Biomass Bales in a selective mode and rejected most of the supply on the basis of the grading linked to moisture. However, the Operational Creditor accepted the bales which are prepared from its own equipment. It is also claimed that the Corporate Debtor tried to contact the Operational Creditor physically and through email to accept the grievance of the Corporate Debtor. It is further claimed that the Corporate Debtor received an advance of Rs. 1,54,00,000/-, out of total agreement of Rs. 4.4 crores. It is claimed by the Corporate Debtor that it did a work of Rs. 2.2 Crores as it s....
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....e. 47. On the claim of the Corporate Debtor that they supplied goods worth Rs. 2.2 Crores, we observe that the Corporate Debtor has not produced any bill to claim that it made supply of biomass sales worth Rs. 2.2 Crores. 48. In the facts and circumstances of the case, we observe that the statutory demand notice in terms of Section 8 under of the Code, which was dated 17.01.2023, was duly delivered on 19.01.2023. On the other hand, the appellant has raised an objection that an application under Section 9 of the Code must be accompanied by an affidavit to the effect and issuance of a Demand Notice is sine qua non for admission of the Application and it is missing in this case. Vehemently opposing such an argument being made at the Appellate stage, Respondent No.1 brings to our notice that it was duly served. Proof of service of the notice under Section 8 of the Code read with Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016 was duly filed before the Adjudicating Authority and was part and parcel of the court file in CP (IB) No. 80/CHD/PB/2023. Respondent No.1 has brought these facts before us in IA No. 1596 of 2026 in its affidavit of ....
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[email protected]> Cc: Govind Singh Bhandari <Govind. [email protected]>; Sukhbir Singh Dhallwal <[email protected]> Subject: Re: Solution proposed regarding Paddy Straw Collection Issue - Farm2Energy Dear Ashish, With regards to the trail email, we would like to update you that we are working on arranging funds i.e. the differential amount to be paid back after adjusting the material supplied to your organization from the amount received as an advance. Whatever the situation happened during the collection period & as mentioned earlier in the trail emails we are very clear that we have to settle your account by returning the pending amount. To close it smoothly, we have found 2-3 small buyers for the remaining material and material shifting will start after the 1st week of Jan 2023. The delay is due to fog. Fast movement of material will start happening only after 15th Jan 2023. Also, we are arranging funds from other sources and found that a major share of funds will start coming from January End of 2023 onwards. So, we will be able to clear the Verbio India Pvt Ltd account by the closure of the current financial year i....
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....t the Corporate Debtor, and therefore Section 9 could very well be initiated. We do not find any infirmity in the order of the Adjudicating Authority in accepting such a petition. 55. Another argument presented by the Appellant that the initiation or continuation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor would not lead to any maximization of value of the Corporate Debtor, since the operations of the Corporate Debtor pertain to collection of farm produce across the states of Punjab and Haryana, the operations are highly interpersonal to the Appellant, and cannot possibly be performed by any other person. Hence, the purpose of proceeding under the provisions of the Code is defeated. We find such an argument to be completely baseless. The Code prescribes the existence of debt and default, and if the above is established and there is no pre-existing dispute, then the Adjudicating Authority doesn't have to go beyond that and therefore such an argument is totally untenable. 56. Another argument of the Appellant that the banks/financial institutions have not filed any claim in the CIR proceedings against the Corporate Debtor doesn't p....