National Company Law Appellate Tribunal
Nandamuri Meenalatha vs Immaneni Eswara Rao on 4 July, 2023
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
AT CHENNAI
(APPELLATE JURISDICTION)
IA No. 23 of 2023
in
Company Appeal (AT) (CH) (INS.) No. 11 of 2023
(Application for Leave to Prefer an Appeal filed by the
Petitioner / Appellant in respect of the Impugned Order dated 28.11.2022,
passed by the `Adjudicating Authority', National Company Law Tribunal,
Amaravati Bench in CP (IB) No.51 / 9 / AMR / 2021)
In the matter of:
Nandamuri Meenalatha
Erstwhile Director of
Vantage Machine Tools Pvt. Ltd.
D.No.895, R.S.No.50 and 53/2,
Hanuman Junction Road, Gollapalli
Nuzividu, Andhra Pradesh - 521111 .... Petitioner / Appellant
v.
M/s. Quality Steels and Wire Products
Registered Office at Survey No.118,
Duvvadu Station Road,
Kurmannapalem, Vishakapatnam ..... 1st Respondent /
Operational Creditor
Mr. Immaneni Eswara Rao
Interim Resolution Professional
of M/s. Vantage Machine Tools Pvt. Ltd.
D. No.2-48, Gollapalli,
Nujivedu Mandal,
Krishna District - 522111. ..... 2nd Respondent / Interim
Resolution Professional
IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023
Page 1 of 59
Present:
For Petitioner / : Mr. P.H. Arvindh Pandian, Senior Advocate
Appellant For Mr. Avinash Krishnan Ravi, Advocate
For Respondent No. 1 / : Mr. Arjun Suresh, Advocate
Operational Creditor
ORDER
(Physical Mode) Justice M. Venugopal, Member (Judicial):
IA No. 23 / 2023 in Comp. App (AT) (CH) (INS.) No. 11 / 2023:
According to the Petitioner / Appellant, being a `Promoter' / `Shareholder' of the `Corporate Debtor' / `M/s. Vantage Machine Tools Private Limited', is `Aggrieved', against the `impugned order', dated 28.11.2022, passed by the `Adjudicating Authority', `National Company Law Tribunal', Amaravati Bench, in CP (IB) No. 51 / 9 / AMR / 2021, whereby and whereunder, the `Corporate Debtor', was `admitted', into the `Corporate Insolvency Resolution Process', in an `Application', filed under Section 9 of the I & B Code, 2016, r/w Rule 6 of Insolvency and Bankruptcy (Application to Adjudicating Authority), Rules 2016, by the `1st Respondent / Operational Creditor / Petitioner'.
2. It is represented on behalf of the Petitioner /Appellant, as `Third Party', the `Petitioner / Appellant', has preferred the IA No. 23 / 2023 in Comp. App (AT) (CH) (INS.) 11 / 2023, seeking `Leave', to file the IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 2 of 59 instant Comp. App (AT) (CH) (INS.) 11 / 2023, before the `Appellate Tribunal'.
3. It is the version of the Petitioner / Appellant, that numerous `contentious points' / `controversies', exists between the `inter se Parties', including (a) Non production of test certificates; (b) Non submission of self inspection reports; (c) Poor quality of goods and the consequent non lifting of goods by BGR Energy Systems Ltd; (d) Legal Notice dated 27th April 2019 and corresponding Reply Notice dated 12th May 2019, which Reply Notice clearly disputed any liability to the 1st Respondent much prior to the date of Issuance of Notice under Section 8 of the Code and (e) No contractual obligation for interest and corresponding compensatory nature of `damages' in the form of `interest' sought. But, the `Adjudicating Authority' / `Tribunal', without noticing and not appreciating the factual and legal position, had proceeded to admit the `Application', filed under Section 9 of the Code, by the 1 st Respondent.
4. The Learned Counsel for the Petitioner / Appellant, submits that the `Petitioner / Appellant', as per dicta, laid down by the Hon'ble Supreme Court of India (vide Civil Appeals No. 8337 - 8338 of 2017 dated 31.08.2017), in the matter of Innoventive Industries Ltd. v. ICICI Bank IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 3 of 59 & Another, wherein, it I observed that a `Promoter' / a `Shareholder' of a `Corporate Debtor', may prefer an `Appeal', challenging an `Order of Admission', into `Corporate Insolvency Resolution Process'.
5. In this connection, this `Tribunal', aptly points out the decision of the Hon'ble Supreme Court of India, Innoventive Industries Ltd. v. ICICI Bank & Another, reported in (2018) 1 SCC Page 407, wherein at Paragraph 11, it is observed as under:
11. ``Having heard learned counsel for both the parties, we find substance in the plea taken by Mr. Salve that the present appeal at the behest of the erstwhile directors of the appellant is not maintainable. Dr. Singhvi stated that this is a technical point and he could move an application to amend the cause title stating that the erstwhile Directors do not represent the company, but are filing the appeal as persons aggrieved by the impugned order as their management right of the company has been taken away and as they are otherwise affected as shareholders of the Company. According to us, once an insolvency professional is appointed to manage the company, the erstwhile Directors who are no longer in management, obviously cannot maintain an appeal on behalf of the company. In the present case, the company is the sole appellant. This being the case, the present appeal is obviously not maintainable. However, we are not inclined to dismiss the appeal on this score alone''.
6. At this juncture, this `Tribunal', worth recalls and recollects the Judgment of this `Tribunal', in Comp. App (AT) (INS) No. 51 of 2017 dated 29.08.2017, between Steel Konnect (India) Pvt. Ltd. v. M/s. Hero Fincorp Limited, wherein, at Paragraphs 18 to 20 and 22, it is observed as under:
IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 4 of 59
18. ``Once the application under Section 7 or 9 is admitted, the 'Corporate Insolvency Resolution Process' starts in such case one of the aggrieved party being the 'Corporate Debtor' has a right to prefer an appeal under Section 61, apart from any other aggrieved person like Director(s) of the company or members, who do not cease to be Director(s) or member(s), as they are not suspended but their function as 'Board of Director(s)' is suspend.
19. The 'Corporate Debtor' if represented before the Adjudicating Authority through its Board of Directors or any person authorised by Board of Director or its officers, for the purpose of preferring an appeal, no objection can be raised that the 'Corporate Debtor' cannot appear through its Board of Directors or authorised person or officer through whom 'Corporate Debtor' represented before the Adjudicating Authority.
Once a 'Corporate Debtor' appeared before the Adjudicating Authority through its Board of Director(s) or its officers or through authorised person and is heard before admission of an application under 'I & B Code', being aggrieved such 'Corporate Debtor' cannot prefer an appeal under Section 61 on the ground that the 'Corporate Debtor' appeared through another person 'Interim Resolution Professional', though he had not appeared before the Adjudicating Authority.
20. Though the Board of Directors or partners of 'Corporate Debtor', as the case may be is suspended and their power can be exercised by the 'Interim Resolution Professional', but such exercise of power is limited to the extent to sub-section (2) of Section 17 of the 'I & B Code' and not for any other purpose. If the matter is looked from another angle, it will be clear as to why 'Corporate Debtor' should not be represented through 'Interim Resolution Professional' for preferring an appeal under Section 61 of the 'I & B Code'. The Role of 'Interim Resolution Professional' starts after initiation of 'Corporate Insolvency Resolution Process' against the 'Corporate Debtor'. The 'Interim Resolution Professional' once given consent to function directly or indirectly he cannot challenge his own appointment, except in case where he has not given consent. If the 'Corporate Debtor' is left in the hands of 'Interim Resolution Professional' to raise his grievance by filing an appeal under Section 61, it will be futile, as no 'Interim Resolution Professional' will challenge the initiation of 'Insolvency Resolution Process' which ultimately result into the challenge of his appointment.
IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 5 of 59
22. At this stage, it is desirable to notice that though pursuant to Section 17, the Board of Directors of a 'Corporate Debtor' stand suspended (for a limited period of 'Corporate Resolution Process maximum 180 days or extended period of 90 days i.e. 270 days), but they continued to remain as Directors and members of the Board of Directors for all purpose in the records of Registrar of Companies under the Companies Act 2013.''
7. In reality, when the Petitioner / Appellant (he being a `Promoter' / `Shareholder' of the `Corporate Debtor' / `M/s. Vantage Machine Tools Pvt. Ltd.), raises triable points for `rumination', in the instant Comp. App (AT) (CH) (INS) No. 11 of 2023, as an `Aggrieved Person', (obviously his `Right of Management of the Company', being taken away, by means of the `impugned order', coupled with the fact, being otherwise affected as `Shareholder' of the `Company'), `Leave', can be granted as `Third Party', on an `Interlocutory Application / Petition' , filed by him, as per Rule 31 of the NCLAT Rules, 2016, by the `Appellate Tribunal', exercising its `Discretion' and `Inherent Power', in terms of Rule 11 of the NCLAT Rules, 2016. Viewed in that perspective, the filing of IA No. 23 / 2023 in instant Comp. App (AT) (CH) (INS.) 11 / 2023 (seeking `Leave', to prefer the instant `Appeal', by the `Promoter' / `Shareholder' of the `Corporate Debtor' / `Third Party', is perfectly `maintainable' in the `eye of Law', and the same is `allowed', for meeting the `ends of Justice'. No costs.
IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 6 of 59 Company Appeal (AT) (CH) (INS.) No. 11 of 2023 (Filed under Section 61(1) of the Insolvency and Bankruptcy Code, 2016) (Against the Order dated 28.11.2022, passed by the `Adjudicating Authority', `National Company Law Tribunal', Amaravati Bench, in CP (IB) No. 51 / 9 / AMR / 2021) In the matter of:
Nandamuri Meenalatha Erstwhile Director of Vantage Machine Tools Pvt. Ltd.
D.No.895, R.S.No.50 and 53/2,
Hanuman Junction Road, Gollapalli
Nuzividu, Andhra Pradesh - 521111 .... Appellant
v.
M/s. Quality Steels and Wire Products
Registered Office at Survey No.118,
Duvvadu Station Road,
Kurmannapalem, Vishakapatnam ..... 1st Respondent /
Operational Creditor
Mr. Immaneni Eswara Rao
Interim Resolution Professional
of M/s. Vantage Machine Tools Pvt. Ltd.
D. No.2-48, Gollapalli,
Nujivedu Mandal,
Krishna District - 522111. ..... 2nd Respondent / Interim Resolution Professional Present:
For Appellant : Mr. P.H. Arvindh Pandian, Senior Advocate For Mr. Avinash Krishnan Ravi, Advocate For Respondent No. 1 / : Mr. Arjun Suresh, Advocate Operational Creditor IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 7 of 59 JUDGMENT (Physical Mode) Justice M. Venugopal, Member (Judicial):
Comp. App (AT) (CH) (INS.) No. 11 / 2023:
The `Appellant / Promoter / Shareholder' of the `Corporate Debtor' / `M/s. Vantage Machine Tools Private Limited', has preferred the instant Comp. App (AT) (CH) (INS.) 11 / 2023, as an `Aggrieved Person', in respect of the `impugned order', dated 28.11.2022, passed by the `Adjudicating Authority', `National Company Law Tribunal', Amaravati Bench, in CP (IB) No. 51 / 9 / AMR / 2021.
2. The `Adjudicating Authority' / `Tribunal', while passing the `impugned order', in CP (IB) No. 51 / 9 / AMR / 2021 (Filed by the 1st Respondent / Operational Creditor / Petitioner), at Paragraph Nos. 6 to 10, had observed the following:
6. ``It can be seen that the Petition is filed on 28.09.2022. A demand notice was sent by the OC for which no reply was issued. The Counsel for the CD submits that the notice was served on the watchmen of the CD and they did not know about the notice, which does not at all seem to be cogent. The account statement of the OC shows that an amount of Rs.10,00,000/- was transferred to the CD on 03.10.2017 and Rs.20,00,000/- was transferred on 13.12.2017.
There is no denial of the fact that there was a contract between the parties for supply of structural steel by the OC.
7. The Counsel for the CD submits that with the steel they purchased from the OC, they supply finished goods to BGRESL. The only contention raised on behalf of the CD is that the material supplied by the OC is defective and hence, IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 8 of 59 the BGRESL did not lift the material supplied by the CD due to which they sustained loss and consequently they are not liable to pay the amount to the OC. But he does not succeed in showing that there was any condition imposed at the time of entering into the contract that test certificates are to be supplied by the OC for the material supplied by them. It is true that there was a request to send the test certificates on 04.10.2017 and there is a letter dated 19.04.2019 issued to the OC that they have prepared and supplied material as per the request of BGRESL; however, due to inferior quality of raw materials supplied by the OC, the BGRESL rejected the materials and they are not lifting the balance of materials, due to which they incurred a loss of Rs.82,60,000/- and that they are also black listed by the MNC Company. Except mentioning all these facts in the letter addressed to the OC, the CD did not furnish any material to the Tribunal with regard to their black listing and with regard to the BGRESL rejecting the materials on the ground that the quality of raw materials is of inferior quality.
8. The Counsel for the OC contends that the rejection if any might also be due to the defectiveness in the making of goods by the CD, which is possible. Hence, unless any concrete evidence is produced with regard to the BGRESL rejecting the materials in the first place and rejecting the material on the ground of the defective raw material in the second place, it cannot be said that the quality of the material was the reason for the BGRESL not lifting the material from the CD. Apart from that, a letter addressed by the CD to the Chairman and Managing Director APGENCO does not anywhere spell that the BGRESL has refused to lift the material on the ground of defective raw material. Moreover, it says that the CD executed works as a sub-contractor to M/s. BGR Energy Systems Limited for the works allotted by APGENCO. It is stated that the CD has to receive an amount of Rs.4.25 Lakhs towards settlement of bills for executed and completed works and that they have contacted M/s.BGR Energy Systems Limited, but there was no positive response. It is mentioned that they are facing severe liquidity crises as most of the funds were stuck up in the bills. It is only mentioned that material worth Rs.40 tonnes for which they have completed the allotted works is waiting for lifting from the end to M/s.BGR Energy Systems Limited. It is requested that the APGENCO advises and directs the officials of M/s.BGR Energy Systems Limited to lift the same and settle their bills immediately. Nowhere in the said letter is it indicated that the BGR Energy Systems Limited did not lift the material due to defective raw material.
9. A letter dated 18.10.2019 issued to the APGENCO also does not spell anything about the defect in the raw material. Except saying that the BGRESL is not responding with regard to the settlement of amount, nothing is stated IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 9 of 59 about the defect in the raw material. Though, the Counsel for the CD contends that the BGRESL did not lift the material on the ground of defective raw material, he does not place on record any correspondence by the BGRESL to that effect. Hence, without any supporting material for the contentions of the Counsel for the CD that the material was defective, no finding can be given on the same. With help of the fact that the CD has acknowledged the debt by virtue of the mail dated 02.11.2017 in which the payment schedule is given in three instalments admitting their liability with regard to the amounts mentioned therein, it can be held that there is a clear acknowledgement of debt by the CD. The mails calling upon the OC to furnish test certificates is dated 04.10.2017. But a part payment was made just one day prior to the said mail for Rs.10,00,000/- and even after the said mail for Rs.20,00,000/- which is on 13.12.2017. If really the quality issue was there by then, he would not have paid the amounts just for the sake of good relations.
10. The contention of the Counsel for the CD that the cheque was issued with a condition not to present it also does not have any basis and support. The cheque is dated 04.04.2019 which is much after the last invoice. The contention that the cheque was issued to maintain good relations with the OC is not at all tenable. Moreover, the cheque was dishonoured on the ground of insufficient funds and not because of the instructions given by the CD to the Bank not to honour the cheque as submitted by the Counsel for the CD. In the light of the part payments made under the invoices the contention that they do not bear the signature does not stand to merit, so also in the light of the mail dated 03.11.2017 acknowledging the debt. Hence, in view of the above there need not be any demur in concluding that the CD acknowledged the debt and has failed to discharge the debt.'' and finally admitted the `Company Petition', and appointed a `Interim Resolution Professional', and declared `Moratorium', etc. Appellant's Submissions:
3. According to the Learned Counsel for the Appellant, the `impugned order', dated 28.11.2022, passed by the `Adjudicating Authority', `National Company Law Tribunal', Amaravati Bench, in CP (IB) No. 51 IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 10 of 59 / 9 / AMR / 2021, in admitting the Section 9 Application, filed by the 1 st Respondent / Operational Creditor / Petitioner, is an `illegal' one, because of the fact that numerous `Pre-existing Disputes', between the `Parties', were not taken note of in proper and real perspective.
4. The Learned Counsel for the Appellant submits that there is `no evidence on record', to exhibit that the `Test Certificates', were given to the `Corporate Debtor', in compliance with the conditions in the `Purchase Order', but, this vital fact was not taken into consideration, by the `Adjudicating Authority / Tribunal', at the time of passing the `Impugned Order'.
5. The Learned Counsel for the Appellant proceeds to point out that the emails dated 26.09.2017 and 04.10.2017 of the Corporate Debtor wherein, a request was made for `Test Certificates', but, they were not considered by the `Adjudicating Authority' / `Tribunal', at the time of passing of the `impugned order'.
6. Advancing his argument, the Learned Counsel for the Appellant takes a stand that the `Corporate Debtor', through `Notice dated 19.4.2019, had `Disputed', then `Quality of Goods Supplied', thereby, proving a `Pre-Existing Dispute', as per the ingredients of I & B Code, IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 11 of 59 2016, but this was not considered by the `Adjudicating Authority' / `Tribunal', at the time of passing of the `impugned order'.
7. The other contention advanced on behalf of the Appellant, is that, the `Corporate Debtor', had `Disputed' the `Debt', through `Reply Notice' dated 12.05.2019, which was issued in response to the Notice under Section 138 of the Negotiable Instruments Act, 1881.
8. The Learned Counsel for the Appellant, projects an argument that `any Claim for damages, in the form of Interest, as per Section 61 of the Sale of Goods Act, 1930, is essentially a `Disputed Question of Fact', which requires evidence, to be led before a Competent Civil Court and in the absence of any such determination, there can be `no Order', determining `Default', in respect of an `Undetermined Claim', for `Damages'.
9. The Learned Counsel for the Appellant submits that the Adjudicating Authority / Tribunal, had failed to consider that there was `no Interest Clause, in the Contract' and hence, the Interest of 24% claimed in the Application (under Section 9 of the I & B Code, 2016), is uncrystallised and in the nature of unliquidated damages, for which, an `Application', under Section 9 of the I & B Code, 2016, does not lie.
IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 12 of 59
10. The Learned Counsel for the Appellant contends that the `impugned order', passed by the `Adjudicating Authority' / `Tribunal', seeks to determine `Liability', as per Section 73 of the Indian Contract Act, 1872, and consequently seeks to decide `Default' of the said `Damages' itself, in gross Violation of the `Judgment' of this `Tribunal' dated 05.11.2022 (vide Comp. App (AT) (INS) 474 / 2020), in the decision in Sanjeev Kumar v. Aithent Technologies Pvt. Ltd. & Ors., reported in MANU/N/0420/2020.
11. The Learned Counsel for the Appellant comes out with a plea that some random `Test Certificates', were produced, for the first time in `Rejoinder', before the `Adjudicating Authority' / `Tribunal', which, on mere perusal show that they relate to some `Parties' named `Sri Vijayalakshmi Steel Traders'; `M/s Shine Steels', `M/s. WHM Visakhapatnam'; and `M/s. BM BSO', Vishakapatnam, and they were dated before the `Dates of Purchase Order', thereby, showing that they do not relate to the `Corporate Debtor.
12. It is pointed out on behalf of the Appellant that the main Contractor, namely BGR Energy Systems Limited, had lifted only 85 MT out of 300 MT of Steel ordered, as BGR Energy System Ltd was unwilling to lift steel for which Test Certificates were not produced. IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 13 of 59 Moreover, BGR Energy Systems Limited were of the view that the material supplied, by the 1st Respondent had not matched the `quality standards', prescribed by them, which were back-to-back applicable to the 1st Respondent and were set out in the `Purchase Orders', issued to the 1 st Respondent.
13. Continuing further, on behalf of the Appellant, it is pointed out that the 1st Respondent, had approached the `Corporate Debtor', with a promise that they would produce the `Test Certificates', that were due and requested the `Corporate Debtor', to issue a Post Dated Cheque for a Sum of Rs.50 Lakhs, so as to enable them, to finalise their Accounts, for the Financial Year 2018-19, and believing the said Proposal, the Corporate Debtor, had issued a Cheque dated 04.04.2019 (Bearing No. 148405) to the 1st Respondent and violating the promise, the 1st Respondent, had failed to produce the `Test Certificates' and further proceeded to seek realisation of the Cheque, without satisfying the conditions precedent of producing the `Test Certificates'.
14. The Learned Counsel for the Appellant brings it to the notice of this `Tribunal', that the `Corporate Debtor', was perforced to issue a `Letter', dated 19.04.2019, wherein, it was communicated to the 1 st Respondent / Operational Creditor, that because of the inferior quality of IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 14 of 59 the raw materials, applied by it, the Employer / BGR Energy Systems Limited, had rejected the finished goods and refused to lift the balance material. That apart, the Corporate Debtor, because of the `Inferior Quality of Goods', supplied by the 1st Respondent / Operational Creditor, had suffered a loss of Rs.82,60,000/-, which was brought to the knowledge of the 1st Respondent.
15. According to the Learned Counsel for the Appellant, the 1 st Respondent / Operational Creditor, had initiated proceedings under `Section 138 of the Negotiable Instruments Act, 1881, for which, a `Statutory Demand Notice', dated 27.04.2019, was issued to the `Corporate Debtor', and that the Corporate Debtor, issued a `Reply', dated 12.05.2019, disputing the `Claim', to the amount claimed under the Cheque.
16. The Learned Counsel for the Appellant emphatically points out that the 1st Respondent / Operational Creditor, had issued a `Notice', under Section 8 of the I & B Code, 2016, claiming a Sum of Rs.3,04,76,004/- comprising of Rs.1,53,16,611/- as `Principal', and Rs.1,51,59,393/- towards `Interest', which was followed by an `Application', under the I & B Code, 2016, and it was objected on variety of reasons and ultimately the `Adjudicating Authority, had admitted the `Application', filed by the IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 15 of 59 1st Respondent / Operational Creditor, under Section 9 of the I & B Code, 2016.
Appellant's Decisions:
Hon'ble Supreme Court's Decisions:
17. The Learned Counsel for the Appellant, refers to the `Judgment' of the Hon'ble Supreme Court of India dated 21.09.2017, in Mobilox Innovations Pvt. Ltd., v. Kirusa Software Pvt. Ltd. (vide Civil Appeal No. 9405 of 2017), wherein at Paragraph 40, it is observed as under:
40. ``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 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.''
18. The Learned Counsel for the Appellant, relies on the `Judgment' of the Hon'ble Supreme Court of India dated 21.09.2017, in K. Kishan v IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 16 of 59 Vijay Nirman Company Pvt. Ltd. (Civil Appeal No.21824 & 21825 of 2017), wherein at Paragraphs 13 to 16 and 19, it is observed as under:
13. ``Following this judgment, it becomes clear that operational creditors cannot use the Insolvency Code either prematurely or for extraneous considerations or as a substitute for debt enforcement procedures. The alarming result of an operational debt contained in an arbitral award for a small amount of say, two lakhs of rupees, cannot possibly jeopardize an otherwise solvent company worth several crores of rupees. Such a company would be well within its rights to state that it is challenging the Arbitral Award passed against it, and the mere factum of challenge would be sufficient to state that it disputes the Award. Such a case would clearly come within para 38 of Mobilox Innovations (supra), being a case of a pre-existing ongoing dispute between the parties. The Code cannot be used in terrorem to extract this sum of money of Rs. two lakhs even though it may not be finally payable as adjudication proceedings in respect thereto are still pending. We repeat that the object of the Code, at least insofar as operational creditors are concerned, is to put the insolvency process against a corporate debtor only in clear cases where a real dispute between the parties as to the debt owed does not exist.
14. Mr. Banerji referred us to certain judgments of the English and Singapore Courts. In Re A Company - Victory House General Partner Ltd. vs. RGB P & C Ltd. [2018] EWHC 1143 (Ch), the Chancery Division of the High Court, in a situation where a debt has to be "bona fide" disputed in order to attract the winding up jurisdiction of the Courts in the UK, made it clear that even in a case where a judgment debt is no longer a disputed debt, as it has been finally adjudicated upon, yet if there be a cross-claim which is being adjudicated upon, or which may not even have reached the adjudicatory process at all, would be sufficient to stave off a winding up order. The learned Judge referred to the judgment in Re Bayoil SA [1999] 1 WLR 147 as follows, and concluded:-
"27. This, of course, is not a case of a disputed debt. There is a judgment debt and it can be enforced immediately. However, Mr. Chivers draws attention to Re Bayoil SA [1999] 1 WLR 147, which deals with a case not involving a disputed debt but involving a cross- claim by the company, the subject of the petition or the intended petition, where the amount of the cross-claim exceeds the petition debt. The headnote to Re Bayoil recites the essential facts. The petitioner claimed for freight. The established law is there is no defence of set-off available in relation to a claim to freight. The claim went to IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 17 of 59 arbitration and the arbitrators made an award in favour of the petitioner. The petitioner then presented a petition on the basis of the sum determined by the arbitration award. The company applied for the petition to be dismissed or stayed on the ground that it had a genuine and serious counterclaim in an amount which exceeded the petition debt. It was a matter of detail in that case, which the company put forward to advance its case, that it had not been able to litigate that counterclaim. Later cases discussing Re Bayoil make it clear that the ability, or inability, to litigate the counterclaim is not of the essence of the principle in this case. So I put that on one side......"
"32. I therefore have to ask whether the nascent cross-claim, the claim in restitution which Mr. Chivers has explained to me, is a bona fide cross-claim on substantial grounds. I have no doubt it is a bona fide claim. I have also no doubt it is on substantial grounds. At the moment it seems to me that it is a claim that would succeed but I need not go that far......"
"34. Nothing which I have said detracts in any way from the binding character of the judgment which has been made. It may appear to be a strong thing to say that the employer, having failed to comply with a judgment against it, should nonetheless escape the consequences involved in a winding up, but it seems to me that that is the very thing which was considered to be appropriate in the Bayoil case and, on the facts of this case, I also consider it is a more just result that the alternative contended for by the petitioner."
15. A recent judgment of the Singapore High Court, contained in Lim Poh Yeoh (alias Lim Aster) and TS Ong Construction Pte Ltd. MANU/SGHC/0068/2016 : [2016] SGHC 179, was also referred to by Mr. Banerji. Again, in a situation which demands a far higher threshold that has to be crossed before the Insolvency Law can be said not to apply, the Singapore High Court referred to Rule 98(2)(a) of the Rules made under the Bankruptcy Act. The said Rule states that where a debtor appears to have a valid counter claim or cross-demand which is equivalent to or exceeds the amount of debt, the insolvency process will not be put against such debtor. It also referred to the Supreme Court Practice Directions to the same effect. (see paras 43 & 45 of the said judgment)
16. We now come to some of the judgments referred to by learned counsel for the respondent. It is important to note that both the Practice Directions referred to in the U.K. judgment and the Singapore High Court judgment, referred to in LKM Investment Holdings Pte Ltd. vs. Cathay Theatres Pte Ltd. IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 18 of 59 [2000] SGHC 13, are in situations where the debt needs to be bona fide disputed, which is not the situation under our Code. For this reason, it is not possible to agree with learned counsel for the Respondent that a pending proceeding challenging an award or decree of a tribunal or Court would not make the debt contained therein a debt that is disputed.
19. We may hasten to add that there may be cases where a Section 34 petition challenging an Arbitral Award may clearly and unequivocally be barred by limitation, in that it can be demonstrated to the Court that the period of 90 days plus the discretionary period of 30 days has clearly expired, after which either no petition under Section 34 has been filed or a belated petition under Section 34 has been filed. It is only in such clear cases that the insolvency process may then be put into operation.''
19. The Learned Counsel for the Appellant, adverts to the `Order' of this `Tribunal', dated 13.01.2022, in the matter of Sherbahadur D. Yadav v. Rohan Dyes and Intermediates Ltd. (vide Comp. App (AT) (INS.) No. 472 of 2021), wherein, at Paragraphs 8 and 9, it is observed as under:
8. ``When the allegations against each other are serious allegations including allegations of offence against each other, we are not convinced by the Appellant that police complaint do not evidence any dispute between the parties. It is to be noted that all the aforesaid complaints are much before initiation of proceedings u/s 9 by the Appellant. The Adjudicating Authority has not committed any error in relying of the facts and materials on record to come to the conclusion that there was pre-existing dispute between the parties.
9. We are of the view that IBC proceedings are not for the purposes of adjudicating such dispute between the parties and are not the recovery proceedings to recover the unpaid amount by the official creditor whose claim is disputed by the 'Corporate Debtor'.''
20. The Learned Counsel for the Appellant, falls back upon the `Order' of this `Tribunal', dated 03.11.2017, in the matter of Siddharth Nahata v.
IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 19 of 59 Billets Elektro Werke (P) Ltd. (vide Comp. App (AT) (INS.) No. 199 of 2017), wherein, at Paragraphs 1 and 6, it is observed as under:
1. ``The present appeal has been filed in view of the admission of Insolvency proceedings filed under Section 9 of the Insolvency & Bankruptcy Code, 2016 (Code-In brief) by the Adjudicating Authority- NCLT, New Delhi Bench in Insolvency Proceeding (IB-257(ND)/ 2017), vide orders dated 8th September, 2017. The respondent claimed to be an Operational Creditor & initiated the insolvency resolution process against the appellant (original respondent) Corporate Debtor on the grounds of default. The respondent claimed outstanding debt of Rs. 33.78 lakhs including of overdue interest.
6. Similar dispute has been raised by the appellant in reply to the Section 8 notice. Learned counsel for the appellant is submitting that the understanding between parties about the business was violated and thus dispute had arisen. A prior existing dispute was there before Section 8 notice was sent and thus according to him the respondent could not have resorted Insolvency Proceeding.''
21. The Learned Counsel for the Appellant, brings it to the notice of this `Tribunal', in regard to the `Judgment' of this `Tribunal', dated 05.11.2020, in Sanjeev Kumar v. Aithent Technologies Private Limited and Ors. (vide Comp. App (AT) (INS.) No. 474 of 2020), wherein, at Paragraphs 34 and 36, it is observed as under:
34. ``The applicant has further stated that the lease deed was not properly terminated, as part termination was in breach of the Lease Agreement. The security deposit given by the Corporate Debtor for phase II was forfeited to realise the rent on the basis of the deemed continuation of lease deed. It is also contended that the Corporate Debtor vacated the ground floor without any intimation to the Operational Creditor, and moved out their computers and other official equipments overnight. Thereafter, on inspection of the premises, damages to the property were noticed for which the Operational Creditor is claiming damage charges from the Corporate Debtor for the damage caused IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 20 of 59 to articles such as AC, Chairs and Tables, false roofing, flooring, plumbing and carpet based on estimated repair charges.
36. In this case, the question, 'whether lease Rent falls under the category of 'operational debt' or not', loses its significance when the alleged lease rent itself is disputed. The undisputed claim is the sine qua non for initiating CIRP U/S 9 of the Code.''
22. The Learned Counsel for the Appellant, refers to the `Judgment' of this `Tribunal', dated 24.02.2020, in the matter of Neeraj Jain v. Cloud Walker Streaming Technologies Private Limited (vide Company Appeal No. 1354 of 2019), wherein, at Paragraphs 74 and 75, it is observed as under:
74. ``The claims in the heads mentioned above, seeking damages on account of Custom Charges; interest charges; interest amount; and loss on account non-taking of delivery of items imported based on the order and assurance of the Corporate Debtor has not been crystallized, and the Adjudicating Authority under summary jurisdiction cannot adjudicate and determine the claim amount payable to the Operational Creditor.
75. It is pertinent to mention that before issuance of Demand Notice under Section 8(1) of the Code, the Operational Creditor issued a notice against the Corporate Debtor for making the payment within 30 days, failing which the Operational Creditor threatened to refer the dispute to Arbitral Tribunal. On perusal of the records, it appears that there is a pre-existing dispute, but the Operational Creditor withdrew the Notice issued by it on the pretext that the corporate debtor would try to settle the dispute amicably. After that, the Operational Creditor issued Notice under Section 8(1) of the Code and initiated action against the Corporate Debtor under Section 9 of the Code.
Withdrawal of the said Notice does not mean that the dispute ceased to exist. The entire claim of the Operational Creditor is based on the loss caused to it on account of not taking delivery of 21,808 LED TVs which were imported and shipped on the assurance of the Corporate Debtor. Resultantly, Operational creditor suffered a huge loss and had to pay customs charges in addition to the normal customs duty and also suffered losses due to clearance of stock of uncollected LED TVs at heavily marked down prices. The loss to the IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 21 of 59 Operational Creditor is not crystallized. The Adjudicating Authority exercising summary jurisdiction cannot determine the claim amount and initiate the corporate insolvency resolution process, as per law laid down by the Hon'ble Supreme Court in the case of ― Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd., MANU/SC/1196/2017 : (2018) 1 SCC 353: (2018) 1 SCC (Civ) 311''.
In the above case, the Hon'ble Supreme Court has held that:
``37. It is now important to construe Section 8 of the Code. The operational creditors are those creditors to whom an operational debt is owed, and an operational debt, in turn, means a claim in respect of the provision of goods or services, including employment, or a debt in respect of repayment of dues arising under any law for the time being in force and payable to the Government or to a local authority. This has to be contrasted with financial debts that may be owed to financial creditors, which was the subject-matter of the judgment delivered by this Court on 31.08.2017 in Innoventive Industries Ltd. vs. ICICI Bank [Innoventive Industries Ltd. vs. ICICI Bank, MANU/SC/1063/2017 :
(2018) 1 SCC 407) (Civil Appeals Nos. 8337 - 38 of 2017).
``29. The scheme of Section 7 stands in contrast with the scheme under Section 8 where an operational creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the operational debtor in the manner provided in Section 8(1) of the Code. Under Section 8(2), the corporate debtor can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned in sub-section (1), bring to the notice of the operational creditor the existence of a dispute or the record of the pendency of a suit or arbitration proceedings, which is pre-existing -- i.e. before such notice or invoice was received by the corporate debtor. The moment there is existence of such a dispute, the operational creditor gets out of the clutches of the Code.
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 IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 22 of 59 contention which requires further investigation and that the ``dispute'' is not a patently feeble 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.''
23. The Learned Counsel for the Appellant, cites the `Judgment' of this `Tribunal', dated 11.01.2022, in Pitti Coal Company v. Mahalaxmi Continental Ltd. and Ors., (vide Comp. App (AT) (INS.) No. 943 of 2020), wherein, at Paragraphs 44 and 45, it is observed as under:
44. `` To be noted, as per Section 73 of the Indian Contract Act, 1872 which deals with 'compensation for loss or damage caused by breach of contract', this Section can be pressed into service by the concerned party only when a contract was broken and a violation of the said Agreement/Contract ought to be established before proceeding about the issue of 'damages'.
45. Suffice it, for this Tribunal to make a pertinent mention that whether there was a violation of the 'Agreement'/'Contract' is to be determined and further the same is to be established under the 'Violations' is to be proved before a 'Competent Civil Court'. It cannot be gainsaid that that in a Civil Suit to enforce a contract, it is essential to find out what the terms of the Contract/Agreement are, with a view to decide about the breech as per decision 'BiBi Durga Devi Vs. Shivram' AIR 1932 Lahore 148.''
24. The Learned Counsel for the Appellant, refers to the `Order' of this `Tribunal', dated 06.10.2017, in A.D. Electro Steel Co. Pvt. Ltd. & Anr. IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 23 of 59 v. Anil Steels (vide Comp. App (AT) (INS.) No. 194 of 2017), wherein, at Paragraphs 4 to 6, it is observed as under:
4. ``The question about existence of a dispute fell for consideration before the Hon'ble Supreme Court in "Mobilox Innovations Private Ltd v. Kirusa Software Private Ltd, MANU/SC/116/2017''. Taking into consideration the provisions in the 'I&B Code', the Hon'ble Supreme Court observed and held as follows: -
"33. The scheme under 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)). 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. In case the unpaid operational debt has been repaid, the corporate debtor shall within a period of the self-same 10 days send an attested copy of the record of the electronic transfer of the unpaid amount from the bank account of the corporate debtor or send an attested copy of the record that the operational creditor has encashed a cheque or otherwise received payment from the corporate debtor (Section 8(2)(b)). It is only if, after the expiry of the period of the said 10 days, the operational creditor does not either receive payment from the corporate debtor or notice of dispute, that the operational creditor may trigger the insolvency process by filing an application before the adjudicating authority under Sections 9(1) and 9(2). This application is to be filed under Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 in Form 5, accompanied with documents and records that are required under the said form. Under Rule 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 IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 24 of 59 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 operational debt after the invoice (Section 9(5)(i)(b)) or the invoice or notice of payment to the corporate debtor has been delivered by the operational creditor (Section 9(5)(i)(c)), or that no notice of dispute has been received by the operational creditor from the corporate debtor or that there is no record of such dispute in the information utility (Section 9(5)(i)(d)), or that there is no disciplinary proceeding pending against any resolution professional proposed by the operational creditor (Section 9(5)(i)(e)), it shall admit the application within 14 days of the receipt of the application, after which the corporate insolvency resolution process gets triggered. On the other hand, the adjudicating authority shall, within 14 days of the receipt of an application by the operational creditor, reject such application if the application is incomplete and has not been completed within the period of 7 days granted by the proviso (Section 9(5) (ii) (a)). It may also reject the application where there has been repayment of the operational debt (Section 9(5)(ii)(b)), or the creditor has not delivered the invoice or notice for payment to the corporate debtor (Section 9(5)(ii)(c)). It may also reject the application if the notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility (Section 9(5)(ii)(d)). Section 9(5)(ii)(d) refers to the notice of an existing dispute that has so been received, as it must be read with Section 8(2)(a). Also, if any disciplinary proceeding is pending against any proposed resolution professional, the application may be rejected (Section 9(5)(ii)(e)). IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 25 of 59
34. Therefore, the adjudicating authority, when examining an application under Section 9 of the Act will have to determine:
(i) Whether there is an "operational debt" as defined exceeding Rs. 1 lakh? (See Section 4 of the Act)
(ii) Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid?
And
(iii) Whether there is existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute?"
39. It is now important to construe Section 8 of the Code. The operational creditors are those creditors to whom an operational debt is owed, and an operational debt, in turn, means a claim in respect of the provision of goods or services, including employment, or a debt in respect of repayment of dues arising under any law for the time being in force and payable to the Government or to a local authority. This has to be contrasted with financial debts that may be owed to financial creditors, which was the subject matter of the judgment delivered by this Court on 31.8.2017 in Innoventive Industries Ltd. v. ICICI Bank (Civil Appeal Nos. 8337-8338 of2Ol 7). In this judgment, we had held that the adjudicating authority under Section 7 of the Code has to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor within 14 days. The corporate debtor is entitled to point out to the adjudicating authority that a default has not occurred; in the sense that a debt, which may also include a disputed claim, is not due i.e it is not payable in law or in fact. This Court then went on to State:
"29. The scheme of Section 7 stands in contrast with the scheme under Section 8 where an operational creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the operational debtor in the manner provided in Section 8(1) of the Code. Under Section 8(2), the corporate debtor can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned in sub-section (1), bring to the notice of the operational creditor the existence of a IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 26 of 59 dispute or the record of the pendency of a suit or arbitration proceedings, which is pre-existing - i.e before such notice or \ invoice was received by the corporate debtor. The moment there is existence of such a dispute, the operational creditor gets out of the clutches of the Code.
30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced. by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is "due" i.e payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise."
40. It is, thus, clear that so far as an operational creditor is concerned, a demand notice of an unpaid operational debt or copy of an invoice demanding payment of the amount involved must be delivered in the prescribed form. The corporate debtor is then given a period of 10 days from the receipt of the demand notice or copy of the invoice to bring to the notice of the operational creditor the existence of a dispute, if any. We have also seen the notes on clauses annexed to the Insolvency and Bankruptcy Bill of 2015, in which "the existence of a dispute" alone is mentioned. Even otherwise, the word "and" occurring in Section 8(2)(a) must be read as "or" keeping in mind the legislative intent and the fact that an anomalous situation would arise if it is not read as "or". If read as "and", disputes would only stave off the bankruptcy process if they are already pending in a suit or arbitration proceedings and not otherwise. This would lead to great hardship; in that a dispute may arise a few days before triggering of the insolvency process, in which case, though a dispute may exist, there is no time to approach either an arbitral tribunal or a court. Further, given the fact that long limitation periods are allowed, where disputes may arise and do not reach an arbitral tribunal or a court for upto three years, such persons would be outside the purview of Section 8(2) leading to bankruptcy proceedings commencing against them. Such an anomaly cannot possibly have been intended by the legislature nor has it so been intended. We have also seen that one of the objects of the Code qua operational debts is to ensure that the amount of such debts, which IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 27 of 59 is usually smaller than that of financial debts, does not enable operational creditors to put the corporate debtor into the insolvency resolution process prematurely or initiate the process for extraneous considerations. It is for this reason that it is enough that a dispute exists between the parties."
5. In the present case, we find that there was an "existence of dispute" between the parties. Learned Counsel for the Respondent-'Operational Creditor' while did not dispute the aforesaid fact and submits that the amount due to the 'Operational Creditor' have already been paid.
6. In view of the fact that there was a dispute between the parties and the decision of the present case is covered by the Hon'ble Supreme Court in "Mobilox Innovations Private Ltd v. Kirusa Software Private Ltd" we have no other option but to set aside the impugned order dated 7th September, 2017 passed in CP (IB) No. 415/KB/2017. The said order is accordingly, set aside.''
25. The Learned Counsel for the Appellant, cites the `Order' of this `Tribunal', dated 22.11.2019, in the matter of P.M. Mahendran v. Tharuvai Ramachandran Ravichandran & Ors. (vide Comp. App (AT) (INS.) No. 642 of 2019), wherein, at Paragraphs 9, 12 & 13, it is observed as under:
9. ``From the documents at page 128, Annexure-A7, a letter from Factum Law Advocates to King and Partridge, Advocates dated 13.11.2018 whereby the Lawyers of Corporate Debtor i.e., M/s A.M. Clean Air Engineering Private Limited replied to the notice dated 25.10.2018 issued by the Operational Creditor under Section 138 of the Negotiable Instruments Act. However, from the letter dated 13.11.2018 at paragraph-7, it is stated that the Operational Creditor did not complete the supply of RTU as agreed. It is further stated that even as on date, 22 RTU are to be supplied to the Corporate Debtor failing to supply it has caused great hardship to the Corporate Debtor. Further at paragraph-9 of the letter it is stated that Operational Creditor yet to complete supply all 65 RTU as ordered by the Corporate Debtor, although the Corporate Debtor had been diligently making payments to the Operational Creditor for the work done.
IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 28 of 59
12. From all the correspondences between the Corporate Debtor and the Operational Creditor it is clear that there is a pre-existing dispute raised by the Corporate Debtor prior to issuance of Demand Notice dated 04.12.2018. It is a settled law that where there is an existence of dispute prior to the issuance of Demand Notice, the Adjudicating Authority must reject the application as held by the Hon'ble Supreme Court in "Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software (P) Limited - MANU/SC/1196/2017'' C) Precedents:
...
"The Hon'ble Supreme Court in "Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software (P) Limited - MANU/SC/1196/2017 : (2018) 1 SCC 353'' it is held that the 'existence of 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 and observed.
"33. The scheme under 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)]. 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. .....'' At paragraph 51 it is held:
"51. ..... 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 IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 29 of 59 patently feeble legal argument or an assertion of fact unsupported by evidence." ....
[Emphasis supplied]
13. From the aforesaid correspondences it is clear that there is pre-existence dispute with regard to quality and service prior to issuance of Demand Notice. In view of the decision of the Hon'ble Supreme Court and this Appellate Tribunal in the matter of R.S Cottmark (India) Pvt. Ltd. Vs. Rajvir Industries Ltd. in Company Appeal (AT) (Insolvency) No. 653 of 2018, dated 5th August, 2019 the appeal needs to be allowed.'' 1st Respondent's Contentions:
26. The Learned Counsel for the 1st Respondent / Operational Creditor / Petitioner, submits that the Appellant, had secured a `Sub-Contract', through Purchase Order Bearing No.350000008275 dated 17.08.2017, for a Sum of Rs.2,12,40,000/- plus GST from BGR Energy Systems Ltd. for supply of 300 MT of `Fabricated Structural', as per BGRESL technical specifications, required for executing works to APGENCO.
27. It is represented on behalf of the 1st Respondent / Operational Creditor / Petitioner that, it approached the `Corporate Debtor' / `M/s.
Vantage Machine Tools Private Limited', to supply `Structural Steel' and that the `Corporate Debtor', had agreed for this `Arrangement', and later all supplies were made by the `1st Respondent', to the `Appellant', as per 18 Invoices, from 20.09.2017 to 24.10.2017, and that the total value of the supply is worth Rs.1,83,16,611/-.
IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 30 of 59
28. Furthermore, according to the 1st Respondent, the aforesaid `Goods', were consumed and completely utilised by the `Corporate Debtor', without `raising any issues', relating to the `Quality' of `Goods' supplied, and that the `Invoices', had not contained any `stipulations' or `conditions'.
29. The Learned Counsel for the 1st Respondent, points out that the `Purchase Order's 2nd Condition, related to `Payment', which must be made within 30 days from the receipt of the `Goods', and the 4 th Condition was concerned with the `Issuance of Test Certificate', and it mentioned that `Test Certificates', were to be issued with the `Goods', at the time of delivery. Indeed, the Corporate Debtor, had requested for the `Test Certificates', on 26.09.2017 and 04.10.2017 and in fact, some `Test Certificates', were already given, prior to the communication and remaining said Certificates were subsequently handed over to the `Corporate Debtor's Representative'.
30. The Learned Counsel for the 1st Respondent, brings it to the notice of this `Tribunal', that the `Corporate Debtor', had made a payment of Rs.10,00,000/- on 03.10.2017 and another part payment made on 13.12.2017, amounting to Rs.20,00,000/- and there was a Sum of Rs.1,53,16,611/-, being the balance, to be paid to the 1st Respondent, IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 31 of 59 together with interest @ 24% per annum. Also that, the `Corporate Debtor', through email dated 02.11.2017, had confirmed the `Outstanding Sum', and a `Schedule', to make `balance payment(s)', was / were also mentioned in the said email.
31. The grievance of the 1st Respondent / Operational Creditor / Petitioner is that, the `Corporate Debtor', had not followed the `Payment Schedule', envisaged and in the meanwhile the 1st Respondent's `Composition of Partnership', was also changed and `5 out of the 7 Original Partners', were resigned. As a matter of fact, on 30.07.2018, the change in `Composition', was `registered', and that the Corporate Debtor, had decided to make further part payment of Rs.50,00,000/- through Cheque dated 04.04.2019 and on 11.04.2019, the 1 st Respondent had presented the Cheque and the Cheque `got returned', on 12.04.2019, with an endorsement `insufficient funds'.
32. The Learned Counsel for the 1st Respondent submits that the 1st Respondent, had issued a Legal Notice on 27.04.2019, under Section 138 of the Negotiable Instruments Act, 1881, to the Corporate Debtor, and a `Reply', was sent to the 1st Respondent by the `Corporate Debtor', on 12.05.2019, mentioning that there is `no Debt payable', since the `Test Certificates', were not produced. In fact, the Corporate Debtor had consumed the entire lot of `Goods', supplied by the 1 st Respondent and IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 32 of 59 that the 1st Respondent, issued a `Demand Notice', on 30.07.2021, as per Section 8 of the I & B Code, 2016, and later, the 1 st Respondent the CP(IB) No. 51 / 9 / AMR / 2021, before the `Adjudicating Authority' / `Tribunal'.
33. The core contention advanced on behalf of the 1 st Respondent / Operational Creditor / Petitioner is that, the entire alleged `Dispute', is a smokescreen, invented by the `Corporate Debtor', to avoid `prosecution'.
34. According to the 1st Respondent, a reading of the `Clause in Purchase Order', will show that the `Test Certificates', were related only to the `Acceptance of Delivery', and at no `Correlation to the Payment'. That apart, the letter dated 19.04.2019, was not related to only 40 MT of Steel and whereas 85 MT, was already lifted and nothing was placed on record, relating to the remaining 175 MT.
35. The Learned Counsel for the 1st Respondent takes a stand that the `Undisputed Principal Sum', is over the `threshold limit' of Rs.1 Crore, and hence, the `permissibility of interest', over and above the `Principal Sum', is immaterial. Continuing further, the definition of `Claim', as per Section 3(6) of the Code, will include, within its purview, `interest' that can be awarded, under Section 61 of the Sale of Goods Act, 1930. IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 33 of 59
36. The Learned Counsel for the 1st Respondent, submit that the 1st Respondent purchases the `Steel', `from different Manufacturers', and `Sells' it, to the `Buyers', and that the `actual testing' of the `Steel', is done by the concerned Manufacturers and that the `Corporate Debtor', was fully aware of the same, which inturn is quite clear, upon perusal of the email dated 04.10.2017, relied on by the `Appellant', to show that there was a `Pre-existing Dispute'.
37. Advancing his argument, the Learned Counsel for the 1 st Respondent comes out with a plea that the subject line in the email dated 04.10.2017, clearly proceeds to the effect `TEST CERTIFICATES SENDING FROM SHINE STEEL', and as such, the `Appellant', was aware of the fact that the `Test Certificates', would only be sent by the `Manufacturers', and hence request was made taking into account of the same.
38. According to the 1st Respondent, the self-serving `Report on Structural Elements', made at the Workshop of M/s. Vantage Machine Tools Pvt. Ltd., dated 26.09.2022, was much after filing of `Rejoinder', in Section 9 Application of I & B Code, 2016, and the document, being a self-serving one, prepared by an `Individual of an Unknown Qualification', with the main intention of `Defrauding' the `Tribunal'. IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 34 of 59
39. The Learned Counsel for the 1st Respondent, adverts to the conditions annexed to the `Purchase Order', which runs as under:
Terms and Conditions:
a. Freight and Loading Charges : At your scope (@ Quality Steel and Wire Products) b. GST : 18% Extra c. Delivery : Immediately as per material priority list d. Payment : 30 days credit after receiving the material e. Inspection : Self Inspection Report signed by you.
f. Test Certificate : The above material should be
delivered along with test
certificate, and in each test
certificate you need to mention
Heat number, chemical properties
and mechanical properties in
`test certificates'.
40. The Learned Counsel for the 1st Respondent, submits that the last Invoice was dated 24.10.2017, and that the `Period of Limitation' for filing any `Suit', is `three years', from the `Date of Violation of Contract', and hence, any action, sought to be `invoked', by the `Appellant', is `barred by Limitation'.
41. According to the 1st Respondent, email dated 08.02.2019 from `BGRESL' to the `Corporate Debtor', reliance being placed by the IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 35 of 59 `Appellant', was not `produced', before the `Adjudicating Authority' / `Tribunal', and no reasons were furnished, as to why it was not `produced', and hence, the said `Document', may not be taken on record, and to be discarded.
42. The Learned Counsel for the 1st Respondent, points out that the `alleged Letter', dated 19.04.2019, filed by the Appellant, merely mentions that some amount of Steel was `not lifted by BGRESL', and it does not amount to `Dispute', and further it does not endeavour to affix any `liability', in the proceedings.
43. The Learned Counsel for the 1st Respondent, submits that according to the `Appellant', the 1st Respondent, is not entitled to `Factor Interest', in its calculation and that the `Claim' for `Interest', by the `1st Respondent / Operational Creditor / Petitioner', was on account of failure to effect payment, within the period aggrieved between the `Parties', and the moment there is `Default', interest would automatically follow under Section 61 of the Sale of Goods Act, 1930. As such, there is no prohibition to include interest in Section 9 Application (Filed under I & B Code, 2016) and in this regard, a reliance is placed on the decision of this `Tribunal', in Mr. Prashant Agarwal v. Vikash Parasrampuria (vide Comp. App (AT) (INS) 690 of 2022 dated 15.07.2022).
IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 36 of 59
44. The Learned Counsel for the 1st Respondent, contends that the Judgments relied on, by the `Appellant', does not cover situations where `Interest', is sought to be levied and further that this would not require `any determination' / `disputed question of fact', as the case may be. 1st Respondent's Citations:
45. The Learned Counsel for the 1st Respondent / Operational Creditor / Petitioner, relies on the decision of the Hon'ble Supreme Court of India, in Mobilox innovations (P) Ltd. v. Kirusa Software (P) Ltd., reported in (2018) 1 SCC 353, wherein, at Paragraphs 33, 34 and 51, it is observed as under:
33. ``The scheme under 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)). 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. In case the unpaid operational debt has been repaid, the corporate debtor shall within a period of the self-same 10 days send an attested copy of the record of the electronic transfer of the unpaid amount from the bank account of the corporate debtor or send an attested copy of the record that the operational creditor has encashed a cheque or otherwise received payment from the corporate debtor IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 37 of 59 (Section 8(2)(b)). It is only if, after the expiry of the period of the said 10 days, the operational creditor does not either receive payment from the corporate debtor or notice of dispute, that the operational creditor may trigger the insolvency process by filing an application before the adjudicating authority under Sections 9(1) and 9(2). This application is to be filed under Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 in Form 5, accompanied with documents and records that are required under the said form. Under Rule 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 operational debt after the invoice (Section 9(5)(i)(b)) or the invoice or notice of payment to the corporate debtor has been delivered by the operational creditor (Section 9(5)(i)(c)), or that no notice of dispute has been received by the operational creditor from the corporate debtor or that there is no record of such dispute in the information utility (Section 9(5)(i)(d)), or that there is no disciplinary proceeding pending against any resolution professional proposed by the operational creditor (Section 9(5)(i)(e)), it shall admit the application within 14 days of the receipt of the application, after which the corporate insolvency resolution process gets triggered. On the other hand, the adjudicating authority shall, within 14 days of the receipt of an application by the operational creditor, reject such application if the application is incomplete and has not been completed within the period of 7 days granted by the proviso (Section 9(5) (ii) (a)). It may also reject the application where there has been repayment of the operational debt (Section 9(5)(ii)(b)), or the creditor has not delivered the invoice or notice for payment to the corporate debtor (Section 9(5)(ii)(c)). It may also reject the application if the notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility (Section 9(5)(ii)(d)). Section IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 38 of 59 9(5)(ii)(d) refers to the notice of an existing dispute that has so been received, as it must be read with Section 8(2)(a). Also, if any disciplinary proceeding is pending against any proposed resolution professional, the application may be rejected (Section 9(5)(ii)(e)).
34. Therefore, the adjudicating authority, when examining an application under Section 9 of the Act will have to determine:
(i) Whether there is an "operational debt" as defined exceeding Rs.1 lakh? (See Section 4 of the Act)
(ii) Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid? and
(iii) Whether there is existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute?
If any one of the aforesaid conditions is lacking, the application would have to be rejected. Apart from the above, the adjudicating authority must follow the mandate of Section 9, as outlined above, and in particular the mandate of Section 9(5) of the Act, and admit or reject the application, as the case may be, depending upon the factors mentioned in Section 9(5) of the Act.
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 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.'' IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 39 of 59
46. The Learned Counsel for the 1st Respondent, refers to the Judgment of this `Tribunal', dated 11.11.2022 (vide Comp. App (AT) (INS) No. 662 - 663 of 2022), between Suzlon Synthetics Ltd. v. Stressed Asset Stabilization Fund (2022) 145 taxmann.com 594 (NCLAT-New Delhi), wherein, at Paragraph 14, it is observed as under:
14. ....... ``There is no requirement in the adjudication of Section 7 application to calculate and fix the exact amount of debt in default of repayment. It is only to be seen whether the amount in default is more than the minimum or threshold value that is prescribed in Section 4 (1) of the IBC.'' Sale of Goods Act, 1930:
47. It is pertinent to point out that to constitute a `Transaction of Sale', there should be an `Agreement', between the `Parties', for the purpose of `Transferring Title' in `Goods'. Further, `Right to reject the Goods', is not equivalent to `Right for cancelling the Contract'.
48. As a matter of fact, `Price', means `Money Consideration', for the `Sale of Goods', is a `prime element', in a `Transaction of Sale'.
Moreover, the `measure' of `compensation', is the `difference between the `Contract Price', and the `Price', at which, the `Goods', were finally `Sold', and `incidental expenses'.
49. A `Seller', can `Claim' as `Damages', the `difference between the `Contract Price', and the Sum `realised', on `Resale of Goods', where he has a `Right to Resale'.
IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 40 of 59
50. However, in case of `Breach', by a `Seller', the `Buyer' might have sued for `Money' and `Damages' or for `Shares' and `Damages' or for `Interest' of `Money' or `Damages'.
Adjudicating Authority / Tribunal:
51. An `Adjudicating Authority' / `Tribunal', under the I & B Code, 2016, is not a `Court of Law', and it does not determine a `Money Claim' or `Suit'. Admittedly, an `Adjudicating Authority' / Tribunal', is not a `Recovery Forum' or `Court'.
52. Section 5 (20) of the I & B Code, 2016, defines `Operational Creditor', meaning, `a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred'.
53. Section 5 (21) of the I & B Code, 2016, defines `operational debt', meaning, `a claim in respect of the provision of goods or services including employment or a debt in respect of the repayment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority'.
54. Once, the `Debt', is shown as `Due', it is for the `Corporate Debtor', to establish that there are `No Outstanding Dues', to be paid to an `Operational Creditor'.
IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 41 of 59
55. An `Admission' of an `Application' / `Petition' (under the I & B Code, 2016), on `explicit acknowledgement of liability', by a `Corporate Debtor', is just a `Fair' and a `Proper' one.
56. No wonder, a `Resolution of Dispute', is not the function of an `Adjudicating Authority' / `Tribunal', it is the function of `Civil Court'. Also that, an `Adjudicating Authority' / `Tribunal', is not to conduct full trial of the matter, since `Corporate Insolvency Resolution Process', is `not a Litigation'.
Evaluation:
57. Before the `Adjudicating Authority' / `Tribunal', the 1st Respondent / Operational Creditor / Petitioner, in Form 5 of the `Application', in CP (IB) No. 51 / 9 / AMR / 2021 (Filed under Section 9 of the Code, r/w Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, under Part IV - `Particulars of Operational Debt', at Paragraph 4, has mentioned ``...... that Creditor has supplied the total structural Steel worth of Rs.1,83,16,611/- out of which the Debtor has paid Rs.10,00,000/- on 03.10.2017; and on 13.12.2017 Debtor paid Rs.20,00,000/-. Debtor, is liable to pay the balance amount of Rs.1,53,16,611/- along with interest at 24% per annum which was confirmed by debtor to operational creditor by email on 02.11.2017'', and IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 42 of 59 also at Paragraph 6, had observed that ``the debt has accumulated to the tune of Rs.3,04,76,004/-, as on 22.07.2021''.
58. In fact, in Form 3, `Demand Notice' / `Invoice', demanding payment, under I & B Code, 2016, as per Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, dated 30.07.2021, addressed to the `Vantage Machine Tools Private Limited', represented by Mr. Pothluru Mohana Murali Krishna, Krishna District, under `Particulars of Operational Debt', the `Total Debt', as on 22.07.2021, was mentioned as Rs.3,04,76,004/-, and the `Principal Outstanding', was mentioned as Rs.1,53,16,611/-. The interest outstanding, as on 22.07.2021, was Rs.1,51,59,393/-, and that the total Outstanding as on 22.07.2021, was Rs.3,04,76,004/-.
59. Before the `Adjudicating Authority' / `Tribunal', the `Corporate Debtor' / `M/s. Vantage Machine Tools Private Limited', in its `Counter' to CP (IB) No. 51 / 9 / AMR / 2021, had averred among other things that the 1st Respondent / Operational Creditor / Petitioner, had supplied structural Steel on credit basis, under 18 Invoices from 20.09.2017 to 24.10.2017, for Rs.1,83,16,611/-, with such assurance that the 1st Respondent will share `Test Certificates', in due course of time, trusting the same, the `Corporate Debtor', had accepted the material. Also that, the IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 43 of 59 1st Respondent / Petitioner, had enclosed `Test Certificates', only to Invoice No.2192 & 2207 dated 20.09.2017 and 21.09.2017, respectively and failed to produce `Test Certificates', for remaining Invoices. Moreover, the Corporate Debtor, to maintain cordial relationship with the 1st Respondent / Petitioner, had paid Rs.10,00,000/- and Rs.20,00,000/- on 03.10.2017 and 13.12.2017, respectively, to the 1 st Respondent / Petitioner.
60. According to the Corporate Debtor, through Letter dated 19.04.2019, it had communicated to the 1st Respondent / Petitioner, due to `inferior quality of raw materials, supplied by it', the BGRESL, had rejected the `finished goods', and also they refused to lift the remaining material. Besides this, the 1st Respondent / Petitioner, was informed that on account of conversion of 413 Tonnes Structural Steel into Finished Goods, the Corporate Debtor, had suffered a loss of Rs.82,60,000/- as `Conversion Charges', at Rs.20,000/- per Tonne. Apart from that, the BGRESL, had blocked the Corporate Debtor / Company, thereby the 1st Respondent / Petitioner, had spoiled the carrier of the Corporate Debtor, and committed `Breach of Trust'.
61. The Corporate Debtor, in its `Counter', before the `Adjudicating Authority', had averred that the `alleged Principal Amount', claimed by the `1st Respondent / Operational Creditor / Petitioner', and `Interest', IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 44 of 59 claimed thereon, as `consequential damages', is completely `arbitrary' and `baseless', which cannot be relied upon in the absence of `adjudication', and further that the `alleged Claim', was not adjudicated, by any `Competent Authority', in `Law', and therefore, such a `Claim', cannot be described as `Operational Debt'.
62. Proceeding further, the Corporate Debtor, in its `Counter', to the main Petition, filed by the 1st Respondent / Operational Creditor / Petitioner, had taken a clear stand that the 1st Respondent, had violated the `Terms of Contract', and as such, the `Corporate Debtor', is entitled, to claim `Damages', from the 1st Respondent / Petitioner, in terms of the ingredients of Section 73 of the Indian Contract Act, 1872, for the losses suffered by it, in lieu of `inferior quality material supplied by the 1 st Respondent / Petitioner.
63. As a matter of fact, the `Corporate Debtor', before the `Adjudicating Authority / Tribunal', in its `Reply', had referred to the decision of the Hon'ble Supreme Court of India, in the matter of Union of India v. Raman Iron Foundry, reported in AIR 1974 at Page 1265, wherein, it is observed and held as under:
``A claim for unliquidated damages does not give rise to a debt until the liability is adjudicated upon and damages assessed by an adjudicatory authority. When there is a breach of contract, the party who commits the IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 45 of 59 breach does not eo instanti incur any pecuniary obligation nor does the party complaining of the breach becomes entitled to a debt due from the other party.
The only right which the party aggrieved by the breach has is the right to sue for damages and this is not an actionable claim.''
64. The Corporate Debtor, before the `Adjudicating Authority' / `Tribunal', took a stand that the `alleged Claim', of the 1st Respondent / Operational Creditor / Petitioner, was based on `misconstruction of facts', `devoid of merits', and as such, the `Company Petition', was not `maintainable in Law', and the same was `liable' to be `dismissed'.
65. Before the `Adjudicating Authority' / `Tribunal', the 1st Respondent / Operational Creditor / Petitioner', in main CP (IB) No. 51 / 9 / AMR / 2021, had averred that it never gave any assurances to the `Corporate Debtor', to issue `Test Certificates' and that the `whole transactions and the documents', pertaining thereto, do not indicate, that it was transpired between the `Corporate Debtor' and the 1 st Respondent / Operational Creditor that a `Test Certificate', shall be issued as `condition precedent'. In reality, the `Test Reports', were collected by the Representative of the `Corporate Debtor', personally.
66. The 1st Respondent / Operational Creditor / Petitioner in its `Rejoinder', before the `Adjudicating Authority' / `Tribunal', at IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 46 of 59 Paragraph 4(i), had mentioned that upon `Receipt of Supply of Structural Steel', and the `Invoices', the `Corporate Debtor', had made `Part Payments', and the balance amounts remained `Due' and `Outstanding', from the `Corporate Debtor', along with `Interest'.
67. According to the 1st Respondent / Operational Creditor, the 2nd Email dated 04.10.2017, does not indicate that `Test Certificate', was agreed to be part of the `Contract of Sale of Goods', between the `Parties', and it is not relevant for the purpose of present Petition under the I & B Code, 2016. Also that, if `Part Payments', were made `without raising protests', it amounts to `Waiver' by the `Corporate Debtor', its `objections', if any, relating to `Non-issuance of Test Certificates'.
68. Besides the above, the 1st Respondent / Operational Creditor, before the `Adjudicating Authority', took a stand that the `Corporate Debtor', had never initiated the `Enforcement of Purported Terms of Contract', either by `Claiming Damages' or `otherwise', and such a `Counter Relief', cannot be taken as `Defence', in a `Proceeding', under Section 9 of the I & B Code, 2016.
69. According to the 1st Respondent / Operational Creditor, an `Adjudicating Authority', is not a `Common Law Fora', to adjudicate upon the `Entitlement of the Corporate Debtor', for `Loss' or `Damages'. IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 47 of 59 Hence, such a `plea', is `impermissible', to be raised as a `Defence', to the initiation of `Corporate Insolvency Resolution Process'.
70. The Learned Counsel for the 1st Respondent / Operational Creditor / Petitioner points out that the `Corporate Debtor', had not `denied' the Email address [in email dated 02.11.2017) , through which, the `Balance Confirmation', had originated was [email protected] and when the email was not disputed and it belong to the `Corporate Debtor' only, and it was not significant the `Person', who sent that email, was describing himself in what capacity, because his capacity in the Office of the Corporate Debtor, was not known to the Operational Creditor and it should be within the exclusive knowledge of the `Corporate Debtor only). In any event, if there was `no Chief Executive', it is for the `Corporate Debtor' to explain, how the `Balance Confirmation', was generated by a person, describing himself as `Chief Executive' of the Corporate Debtor, through the email of the `Corporate Debtor'.
71. At this juncture, this `Tribunal', points out that the 1st Respondent / Operational Creditor / Petitioner, through its Advocates, had issued a `Registered Legal Notice', dated 27.04.2019, with `Acknowledgment Due', to the `Corporate Debtor' / `M/s. Vantage Machine Tools Private Limited', Sri Potlru Mohana Murali Krishna, Managing Director of IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 48 of 59 Corporate Debtor, Sri Somasekhar Potluru, Director of Corporate Debtor / M/s. Vantage Machine Tools Private Ltd. and Smt. Nandamuri Meena Latha, Director of M/s. Vantage Machine Tools Pvt. Ltd. (Corporate Debtor), wherein, at Paragraph 3, it was mentioned among other things that the `Corporate Debtor', was liable to pay the remaining balance Sum of Rs.1,53,16,611/- with interest at 24% per annum, for a Sum of Rs.18,25,320/- and in total, the Company was liable to pay Rs.1,71,41,931/-, as on 26.04.2018. In fact, the 1st Respondent / Operational Creditor / Petitioner in the `Legal Notice', dated 27.04.2019, had mentioned that the `Corporate Debtor Company', had paid Rs.10,00,000/- on 03.10.2017 and another payment of Rs.20,00,000/- on 13.12.2017. Indeed, the 1st Respondent / Operational Creditor / Petitioner, had supplied the total structural Steel worth of Rs.1,83,16,611/-, and ultimately, through the said `Notice', the 1st Respondent / Operational Creditor's Advocates, had called upon the Corporate Debtor, represented by its Managing Director and three Others, to pay the Cheque Sum of Rs.50,00,000/- to the 1st Respondent's Firm, within 15 days from the `Date of Receipt of the said Notice'.
72. The `Corporate Debtor' / `Vantage Machine Tools Private Limited', Mr. Potlru Mohana Murali Krishna, and Nandamuri Meena IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 49 of 59 Latha, had issued a `Reply', dated 12.05.2019, through Advocate to the 1st Respondent / Operational Creditor / Petitioner's Advocate, wherein, it was averred that, there was `no Legally Enforceable Debt', payable to the 1st Respondent / Operational Creditor, and that the `Debt', was failed to be established, after a lapse of one and half years.
73. A perusal of clear copies of Purchase Orders and Invoices (vide Page 145 to 171 of the Appeal Paper Book - vide Diary No.1132 dated 14.12.2022), exhibit that there was `no mention' of `any Interest percentage', to be paid by the `Corporate Debtor'. But, the 1st Respondent / Operational Creditor's side, takes a stand, that there is `no fetter', to include interest in the Section 9 Application of the I & B Code, 2016.
74. Be it noted, that `Interest', is not a `Penalty' or `Punishment', at all, but, it is the normal accretion on `Capital', as per decision of the Hon'ble Supreme Court of India, in Alok Shankar Pandey v. Union of India, reported in AIR 2007, Supreme Court at Page 1198.
75. In this connection, this `Tribunal', aptly points out the decision of the Hon'ble Supreme Court of India in Secretary, Irrigation Department, Government of Orissa & Ors., v. G.C. Roy, reported in 1992, 1 SCC at Page 508, wherein, it is held that, `a `Person', deprived of the use of money, to which, he is legitimately entitled, has a right to be compensated IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 50 of 59 and such compensation, may be called `interest', `compensation' or `damages'.
76. `Interest', can be `allowed', by Court, if there is an `Agreement', as to interest or usage of `Trade', having force of `Law', permits to grant it.
77. It cannot be gainsaid that like `grant of interest', `rate of interest', is also, in the `discretion of the `Court', in a reasonable manner, and the `exercise of discretion', is to be a `sound and prudent' one, and not based on any `arbitrariness' or `capriciousness', as the case, may be.
78. It is to be remembered that the `Proceedings', under the I & B Code, 2016, are `Summary in Character', and that an `Adjudicating Authority', not being a `Recovery Fora' or `Court', (no elaborate enquiry is conducted like that of a `Regular Trial' of a `Civil' case, and also, it does not determine, a `Money Claim' or `Civil Suit', this `Tribunal', is of the earnest opinion, that the `Controversy' / `Dispute' / `Claim', in respect of `Interest', based on `Privity of Contract' or `otherwise', has no relevance / significance, if the `Debt', payable is more than the `threshold limit' of Section 4 of the I & B Code, 2016, considering the fact that the `Principal Outstanding', as mentioned in Form 3 of the Demand Notice dated 30.07.2021, was Rs.1,53,16,611/- (which is more than Rs.1 Crore), IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 51 of 59 to be paid by the `Corporate Debtor' / `M/s. Vantage Machine Tools Private Limited'.
79. Also that, the `Dispute', relating to `Violation of Agreement' / `Contract', between the `Inter se Parties', in the instant `Appeal', before this `Tribunal', does not constitute a `Pre-existing Dispute', qua the `Sum', payable in `Law'.
80. It must be borne in mind that an `Exact Sum of Claim' of an `Operational Creditor', is not relevant for an `Admission' of an `Application', ofcourse, during the course of `Corporate Insolvency Resolution Process', the exact `Claim Amount', can be determined, by an `Interim Resolution Professional' / `Resolution Professional', and in the instant case, `Parties', are free to approach the `Interim Resolution Professional' / `Resolution Professional', in the course of `Corporate Insolvency Resolution Process'.
81. Furthermore, the point / aspect, whether a `Corporate Debtor', is a `Going Concern', becomes `irrelevant', to the admission of an `Application', under Section 9 of the `Code'.
IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 52 of 59
82. In `Law', once the `Debt', shown as `Due', it is for the `Corporate Debtor', to establish that, there are `no Outstanding Dues', to be paid to an `Operational Creditor'.
83. In this connection, it is not out of place, for this `Tribunal', to make a significant mention that the `Corporate Debtor', had not filed any `Suit' or any `Legal Proceeding', before the `Competent Court', against the `1st Respondent / Operational Creditor / Petitioner', claiming `Damages', seeking redressal of its grievances.
84. It is brought to the fore on behalf of the 1st Respondent / Operational Creditor / Petitioner, that `Transfer Certificates', are sent from `Shine Steels', and the email dated 08.03.2022, was much after the initiation of `Proceedings', commenced by the `1st Respondent / Operational Creditor / Petitioner'. Moreover, in a `Transaction', between the `1st Respondent / Operational Creditor / Petitioner', and the `Corporate Debtor', `Shine Steels', is an `Alien'. Besides these, there is nothing to point out in a convincing manner, to the subjective satisfaction of this `Tribunal' that `Transfer Certificates', found part and parcel of `Sale of Goods Transaction', between the `Parties'.
IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 53 of 59
85. When the `Delivery of Goods, were taken delivery by the `Corporate Debtor', without any meandic mumbling and grumbling, then, it unerringly, points out that the `Test Certificate', is not a `prerequisite factor', in the earnest opinion of this `Tribunal'.
86. Going by the last Invoice date, being 24.10.2017, the final `Violation', would be on 24.10.2017, and at this distant point of time, if the `Appellant' initiates any `Legal' action, it will be clearly barred by time, in the considered opinion of this `Tribunal'. That apart, even, in respect of the `Test Certificates', and the `Quality of Steel', supplied was not proper, and there is alleged `Deficiency', admittedly, `no steps were taken', by the `Corporate Debtor', to get it `decided', by the `Appropriate Forum'. In the absence of the same, the `Dispute', at best, if it exists, then, at the maximum, it only pertains to a `Out-of-date Claim', and as such, it is only an `Otiose' one, as opined by this `Tribunal'.
87. In regard to the email dated 08.02.2019 (the plea of the 1 st Respondent / Operational Creditor is that, it was not produced, before the `Adjudicating Authority' / `Tribunal', and it relates to 40 MT, out of 300 MT, which could not be lifted and that too, for the reason that `Goods Manufactured', by the `Appellant', was not upto the `Specifications' of `BGRESL', it is the stand of the `1st Respondent / Operational Creditor', IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 54 of 59 is that 75 MT of Steel using the same `raw material', was accepted by `BGRESL', and in any event, the `Appellant', had not filed any material / communication, to exhibit any `Dispute', in regard to the balance 185 MT Steel.
88. In the present case, there is no second opinion of a primordial fact that there was a `Contract', between the `Parties, for supply of structural Steel by the `Operational Creditor'. A mere perusal of the Email dated 02.11.2017, issued by the `Corporate Debtor' / `M/s. Vantage Machine Tools Private Limited' (signed by Rajababu Dasari, Chief Executive of the Company), shows that the total Invoices value was Rs.1,83,16,952.00/-, advance paid was Rs.10,00,000.00/-, balance amount was shown as Rs.1,73,16,952.00/- and further it was mentioned that as per `Mutual Agreement', the Ist Payment Schedule was Rs.30,00,000/- on 15.11.2017, IInd Payment Schedule was Rs.1 Cr. on 20.11.2017 and IIIrd Payment Schedule Balance was Rs.43,16,952.00/- on 30.11.2017.
89. Therefore, it is quite evident from the contents of the aforesaid email dated 02.11.2017, in and by which, the `Payment Schedule', was provided in three Instalments, wherein, the Corporate Debtor, had admitted its `Liability', in regard to the Sum(s), specified therein, and as such, it is a `Tacit' acknowledgment of `Debt', by the `Corporate Debtor', IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 55 of 59 in the considered opinion of this `Tribunal'. In this connection, this `Tribunal', aptly points out that just a day before the said email, a `Part Payment' of Rs.10,00,000/- dated 03.10.2017, and a further Sum of Rs.20,00,000/- on 13.12.2017, were made by the `Corporate Debtor (ofcourse, after the said email).
90. Section 3(11) of the I & B Code, 2016, defines `Debt', meaning, `a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt'.''
91. Section 3(6) of the I & B Code, 2016, defines `Claim', meaning;
(a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured;
(b) right to remedy 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;
92. At this stage, this `Tribunal', points out that the aspect of determining a `Claim', which may include the interest by an `Adjudicating Authority' / `Tribunal', does not arise for the purpose of triggering the `Corporate Insolvency Resolution Process', because of the fact that an initiation of `Corporate Insolvency Resolution Process', under IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 56 of 59 Section 7 or 9 of the I & B Code, 2016, will not amount to a `Recovery Proceeding'.
93. It cannot be lost sight off that it is incumbent upon the `Corporate Debtor', to show that its `Liability', is in `Dispute', as to the `Debt', and not a just demand, made by it, to satisfy certain obligations, on the part of the `1st Respondent / Operational Creditor / Petitioner'.
94. As far as the present case is concerned, the `Corporate Debtor in its `Reply', before the `Adjudicating Authority' / `Tribunal', took a plea, that it was not in receipt of the `Demand Notice', dated 30.07.2021, issued by the 1st Respondent / Operational Creditor / Petitioner. But, the 1st Respondent / Operational Creditor / Petitioner's stand was that the `Notice', was addressed to the `Corporate Debtor' / `Company', as per `MCA Portal', and as such, this `Tribunal', holds that the `Notice', served at the `Company's Registered Office Address', was a `Sufficient Service', as per ingredients of `Section 12 of the Companies Act, 2013'.
95. Dealing with the aspect of cheque dated 04.04.2019, issued by the `Corporate Debtor', `got bounced' / `dishonoured', this `Tribunal', points out that because of `insufficiency of funds', the `cheque' got `bounced' / `dishonoured'.
IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 57 of 59
96. In the instant case on hand, this `Tribunal', considering the contentions advanced on the respective sides, taking into account of the `Part Payments', made by the `Corporate Debtor', under `Invoices', and keeping in mind of the Email dated 02.11.2017, whereby the `Debt' confirmation, was made by the `Corporate Debtor', and the same being received by the `1st Respondent / Operational Creditor / Petitioner', on 03.11.2017, considering the fact that the `Part Payment' of Rs.10,00,000/- and another payment for Rs.20,00,000/-, by the `Corporate Debtor', was made, one day earlier, on to the mail dated 03.10.2017, and keeping in mind of the facts and circumstances of the instant case, in an encircling manner, comes to a consequent conclusion that the `Debt' and `Default', committed by the `Corporate Debtor', were established, by the `1st Respondent / Operational Creditor / Petitioner', and hence, the `Outstanding Debt', is due and payable in `Law', by the `Corporate Debtor', to the `1st Respondent / Operational Creditor / Petitioner', and that the `Admission' of the `CP(IB) No.51 / 9 / AMR / 2021', by the `Adjudicating Authority' (`National Company Law Tribunal', Amaravati Bench), is a just, `Valid' and `Proper' one, in the `eye of Law'. Viewed in that perspective, the instant `Appeal' fails.
IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 58 of 59 Result:
In fine, the instant Comp. App (AT) (CH) (INS.) No.11 of 2023, is `Dismissed'. No costs. IA No. 24 of 2023 (`For Stay') and IA No. 25 of 2023 (`For Exemption'), are `Closed'.
[Justice M. Venugopal] Member (Judicial) [Shreesha Merla] Member (Technical)
04 / 07 / 2023 SR / NG IA Nos. 23, 24 & 25 / 2023 in Comp. App (AT) (CH) (INS) No. 11 / 2023 & Comp. App (AT) (CH) (INS) No. 11 / 2023 Page 59 of 59