TaxTMI 
TaxTMI 
2026 (8) TMI 1805
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....ating Authority by the impugned order rejected Section 9 application taking the view that in the transactions there was no operational debt, on the basis of which Section 9 application could be admitted. Aggrieved by the order rejecting Section 9 application, this Appeal has been filed. 2. Brief facts of the case necessary to be noticed for deciding the Appeal are: (i) The Appellant Company is registered at Greater Noida, Gautam Buddh Nagar, U.P. The Satnam Global Infraprojects Ltd. ("CD") is a Company incorporated on 09.02.1987. Its registered office is at Patpar Ganj, Delhi. (ii) Both the Appellant and the CD entered into a Consortium Agreement on 29.05.2020 to bid for the Tender for supply, installation, implementation and integration of Meghalaya Multi Lane Free Flow Vehicle Monitoring System on Full Turnkey Contract Basis floated by Telecommunication Consultants India ("TCIL"). The parties agreed to form a Consortium to bid for the Project, which Agreement described the general conditions and the arrangements required to participate in the tender. The Consortium Agreement contained terms and conditions, where the Tech Lads (Appellant) was lead bidder and s....
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....lication, the Appellant gave details of the outstanding amount in default. Date of default mentions as 18.06.2021. Relevant documents including Bank Statements and cheques issued by CD were annexed. (viii) Section 9 application was replied by the CD. In the reply filed by the CD, the receipt of the amount of Rs. 8 crores was not denied. However, it was pleaded that Consortium Agreement dated 29.05.2020 has not been disclosed and Consortium Agreement dated 04.07.2020 was not given effect to. The CD pleaded that since the CD was responsible for financials of the Project the Operational Creditor ("OC") was required to deposit a security with the CD and the amount of Rs. 8 crores is security deposit by the Appellant to secure the financial facilities advanced by the CD. Receipt of the Demand Notice was admitted and email dated 24.04.2024 sent by the CD was also pleaded. It was pleaded that there is no operational debt involved in the transaction. Both Consortium Members had bid for the Project and both the Members had to work together to complete the Project and there was no operational debt in existence. It was the Appellant, who was responsible for supply and implementation ....
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...., the Applicant has not produced any further documentary evidence such as orders, letter/correspondence, or any relevant clauses of the Consortium Agreement, to establish the existence of any operational debt. In the absence of such material it would be unjust to conclude that an operational debt exists merely based on the bank statement and cheques relied upon by the Applicant. Thus, we find no merit in the contentions of the Applicant Operational Creditor. National Company Law. 19. In view of the foregoing analysis, we hold that the Applicant has failed to establish the existence of an "operational debt" as defined under Section 5(21) of the Code. Consequently, the Applicant cannot be treated as an "operational creditor" under Section 5(20). The present petition under Section 9 of the Code, filed by M/s Tech Lads India Pvt. Ltd. against Satnam Global Infra Projects Limited, is therefore not maintainable and stands dismissed, with no order as to costs." (x) The plea of the CD that amount of Rs. 8 crores was given as security deposit for performance of the Applicant's obligations was considered and rejected. The defense raised by the CD that amount of Rs. 8 crores....
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.... of any specific denial constitutes a clear and unequivocal admission that the payment was made pursuant to the contractual supply obligations under the Consortium Agreement. The fact that the CD uploaded an Invoice for an amount of Rs. 4,72,66,500/- on GST portal, which claimed supply to the OC, which Invoice was totally false and fictitious and was to cover the unpaid amount. The Appellant immediately filed a complaint before the Commissioner of GST that the said Invoice is fake. After the complaint having been filed by the Appellant, the CD immediately withdrew the Invoice, which fully supports that no supply was ever made and the amount advanced has not been refunded. It is submitted that Adjudicating Authority committed error in rejecting Section 9 application, where operational debt is fully proved. There was no dispute raised prior to issuance of Demand Notice and email regarding reconciliation is an afterthought. The Adjudicating Authority has not correctly construed the Consortium Agreement and obligations of each party and has come to wrong conclusions. 5. Learned Senior Counsel appearing for the Respondent refuting the submissions of learned Counsel for the Appellant ....
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....on of the Meghalaya Multi-Lane Free Flow Vehicle Monitoring System (MLFF-VMS) project inline with all terms and conditions of the client. b. SGIL will be the consortium bidder and shall be responsible for entire financial management of the project, upon winning the bid to provide required PBG. c. Mr. Prashaant Kr. Goswami, CEO Tech Lads shall be the authorized signatory to digitally sign and submit all documents and forms and deeds for the purpose of Meghalaya Multi-Lane Free Flow Vehicle Monitoring System (MLFF-VMS) tender submission. d. Tech Lads would supply and implement the complete Meghalaya Multi-Lane Free Flow Vehicle Monitoring System (MLFF-VMS) solution along with I servers required for Meghalaya Multi-Lane Free Flow Vehicle Monitoring System (MLFF-VMS) implementation, to its client(s) as per the application requirement and specification of the RFP. e. SGIL will provide reasonable assistance to Tech Lads to prepare/ submit a qualified Proposal with the customer. f. Tech Lads would be responsible for the successful execution of the Meghalaya Multi-Lane Free Flow Vehicle Monitoring System (MLFF-VMS) implementation as per the RFP ....
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....d or services. The Adjudicating Authority rejected the claim on the ground that there is no 'operational debt' and there is no inter se commercial transaction between the parties. The above observation of the Adjudicating Authority is not in accord with the terms and conditions of the Consortium Agreement. We have noticed the terms and conditions of Consortium Agreement above. It is useful to recapitulate the Clauses (i) and (k), which are as follows: "i. SGIL will be solely responsible for supply, installation and commissioning of all specified Poles and related items as specified in the tender. k. Parties further agree that Tech Lads shall make the due payments to SGIL and other sub-vendors for the supplies and services rendered as per their scope of work." 11. When we look into the terms and conditions of the Consortium Agreement, it is clear that Consortium Agreement was entered between the parties with the object of submitting a Tender and in event the Tender is accepted the manner and mode of performance of the Project inter se responsibility and obligations are also captured in the Consortium Agreement. The most crucial condition, which is relevant in th....
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....ondent towards the project. However, to substantiate this assertion, the Respondent has failed to place on record any supporting document evidencing such an understanding between the parties. Furthermore, the Consortium Agreement dated 29.05.2020 is silent as to any security deposit payable by the Applicant, in favour of the Respondent. In the absence of any supporting material, we are not inclined to rely upon the contention of the Corporate Debtor." 14. Learned Counsel for the Appellant has relied on the judgment of the Hon'ble Supreme Court in Consolidated Construction Consortium Ltd. v. Hitro Energy Solutions (P) Ltd., (2022) 7 SCC 164 in which case, the Hon'ble Supreme Court had occasion to consider the definition of 'operational debt' under Section 5(21) of the IBC. The above was the case where an advance was made for supply of materials and the payment of Rs. 50 lakhs to CMRL was not denied. It is useful to notice Paragraphs 50, 50.1 and 50.2 of the judgment, which are as follows: "50. It is then that we come to the core of the dispute-while the appellant has argued that the debt is in the nature of an operational debt which makes them an operational creditor, th....
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....case where Demand Notice was issued under Section 8, which notice can be issued on the basis of other documents, which prove the existence of debt. 16. There is one more aspect of the matter, which needs consideration. The Appellant in Section 9 application has brought on record four cheques each of Rs. 2 crores issued on behalf of the CD in the name of Operational Creditor. In the Demand Notice, which was issued by the CD, details of four cheques dated 05.09.2023 drawn on Canara Bank have been mentioned. The Demand Notice gives details of the outstanding amount after adjusting the amount received from the CD. It is useful to notice entire Demand Notice for appreciating the controversy between the parties, which is as follows: "TECH LADS INDIA PRIVATE LIMITED Regd Office: A-163 Alpha-1, Gautam Buddha Nagar, Greater Noida, Uttar Pradesh, India, 201308. Branch: Near Barik Bus Stand, Soso Tham Road, Shilong, East Khasi Hills, Meghalaya, 793003 Ph. +91-89206-56076, Email [email protected] UAN: UDY AM-UP-28-0003911, CIN: U74999UP 2017PTC096269 Dated 08.04.2024 To The Managing Director SATNAMGLOBAL INFRAPROJECTS LIMITED Plot No. 272,....
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.... 3. Cheque No. 511698 amt to Rs. 2,00,00,000.00 dated 05.09.2023 drawn on Canara Bank. 4. Cheque No. 511699 amt to Rs. 2,00,00,000.00 dated 05.09.2023 drawn on Canara Bank. But after issuing the cheque you made us request to return the cheques as Satnam Global wanted to make the payments through RTGS. We accepted your request and Tech Lads returned the cheques in good faith. But after returning the aforesaid cheques you never made the payment. Further on Satnam Global uploaded on GST portal a fake invoice (Snapshot of GSTi Portal attached) GST/ML/23-24/152 dated 26.03.2024 as follows: E-Invoice No. Name of supplier Taxable amount CGST SGST Total Invoice value GS1/ML/23-24/152 Satnam global infra project 4,00,56, 356.00 36,05, 072.00 36,05, 072.0 4,72,66, 500.00 Company (Tiech lads has taken very serious view of fake billing and considering legal options). So, Tech lads has decided to give you final opportunity to make the payment of defaulted amount of Rs. 9,29,55,562.00 (Inclusive of 18% P.A Interest). Computation of defaulted amount is as follows: Outstanding as on Amount O....
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....he Demand Notice. However, it is an admitted case of the CD that it sent an email on 24.04.2024 to the Appellant. It is useful to notice the above email dated 24.04.2024, which is as follows: "priya sharma [email protected] Wed, 24 Apr at 3:35 PM To: Prashaant Kumar Goswami <[email protected]> Dear Sir We are doing finalise and reconcile our books and accounts and will inform you as and when we complete it, Thanks & Regards [Quoted text hidden]" 18. On the first opportunity which the CD had to put its case after receipt of the Demand Notice on 25.04.2024, it did not controvert the case set up by the Appellant that amount of Rs. 8 crores was advanced for supply and it came only with a case that "We are doing finalise and reconcile our books and accounts and will inform you as and when we complete it". 19. The fact is also admitted that four cheques drawn in the name of Appellant of Rs. 2 crores each totaling to Rs. 8 crores, which according to the Appellant were returned to the CD on its request that it shall make the payment by RTGS. In Paragraphs 9.9 and 9.10 of Section 9 application, following have been pleaded: "9.9 After....
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.... goods were required to be supplied by the CD to the Operational Creditor. The Appellant immediately after coming to know about the uploading of the Invoice, has filed a complaint before the Commissioner of GST stating the Invoice is fake. The copy of the complaint dated 06.05.2024 is on the record, which reads as follows: "Prashant Joshi [email protected] Mon, 6 May, 2024 at 6:00 pm To: Ramakrishna Chitturi [email protected], [email protected] Cc: CA SANDEEP GOEL [email protected] Bcc: Prashaant Kumar Goswami [email protected] To The Commissioner of Taxes Shillong, Meghalaya Sub: Reporting of Fake E-Invoice no. GST/ML/23-24/152 dated 26.03.2024( Invoice Reference Number: d3c47a788cdc43 0de76ba6cba8bf8b78fb085 0407dd84316a667080fa42518db Date and Time of Registration 2024-04-03 16:58:25 by Satnam Global Infraprojects Limited through GSTIN: 17AAACS2509K2ZD Respected Sir, This is brought to your notice that the aforesaid invoice generated by Satnam global is a fake invoice under section 132 (b) as Satnam global has issued this invoice to us i.e Tech Lads Indi....
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....to similar work of Orissa Power Transmission Corporation Ltd. The CD has questioned that there was no operational debt, since both the parties have jointly executed the contract and under the Agreement both the parties have different responsibilities, which was questioned. In Paragraphs 15 and 16 of the judgment, following have been noticed: "15. All materials brought in Section 9 application makes it clear that the Section 9 claim was only related to towards the outstanding payment against the supplies made by the operational creditor. We had already noticed the agreement between the parties dated 04.01.2019 and first Addendum under which the supply component was to be performed by the operational creditor and operational creditor was to receive payments towards supply component after the said amount is received from OPTCL by corporate debtor. 16. The submission which has been raised by the applicant challenging the order on the ground that there being JV Agreement between the parties, there was no operational debt for filing an application under Section 9 needs to be considered. Further, appellant has submitted that profit was to be distributed between at the ra....
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....above judgement where obligations of both the parties were clearly differentiated and obligation and liabilities were clearly spelled out in the Agreement dated 04.01.2019 and the Addendum as noted above." 27. Learned Counsel for the Respondent has relied on the judgment of the Hon'ble Supreme Court in Global Credit Capital Ltd. and Anr. v. Sach Marketing Pvt. Ltd. and Anr., (2024) 9 SCC 482. The above judgment of the Hon'ble Supreme Court is even noticed by the Adjudicating Authority in Paragraph 16, which is as follows. "16. We would rely on the judgment rendered by the Hon'ble Apex Court in Global Credit Capital Limited v. Sach Marketing Pvt. Ltd. reported at 2024 sec OnLine SC 649: (2024) ibclaw. in 125 SC that: "20. Subject to what is held above, we summarize our legal conclusions: a. There cannot be a debt within the meaning of subsection (11) of section 5 of the IB Code unless there is a claim within the meaning of sub-section (6) of section 5 of thereof; b. The test to determine whether a debt is a financial debt within the meaning of sub-section (8) of section 5 is the existence of a debt along with interest, if any, which is disb....
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....on could not be admitted. To the same effect is another judgment of the Hon'ble Supreme Court relied by the Respondent in Raj Ratan Babulal Agarwal vs. Solartex India Pvt. Ltd. (2023) 1 SCC 115 in which judgment, the Hon'ble Supreme Court again has reiterated that there being existence of dispute, Section 9 application could not be admitted. There can be no quarrel to the proposition laid down by the Hon'ble Supreme Court in this regard. The present is not a case of any existence of dispute. There is no material on record showing any existence of any dispute prior to issuance of Demand Notice. We, thus, are of the view that no benefit of the above judgments can be taken by the Respondent in the present case. 30. In result of the foregoing discussions, we are of the view that Adjudicating Authority committed error in rejecting Section 9 application. Operational debt being in existence, which is more than the threshold limit of Rs. 1 crore, the Adjudicating Authority was to admit Section 9 application in the facts and circumstances of the case. 31. In view of the foregoing discussions and conclusions, we are of the view that order impugned is unsustainable and deserved to be se....