Mukesh Goel vs Aldous Commodities Private Limited ... on 6 October, 2023

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National Company Law Appellate Tribunal

Mukesh Goel vs Aldous Commodities Private Limited ... on 6 October, 2023

This Appeal has been filed against order dated 12.09.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench- II admitting Section 9 application filed by the Respondent, Operational Creditor - Aldous Commodities Private Limited. Appellant, the Suspended Director of the Corporate Debtor aggrieved of the admission of the Section 9 application has come up in this Appeal. Brief facts of the case necessary to be noticed for deciding this Appeal are:

(i) The Operational Creditor is engaged in the business of trading of iron and steel products. The Corporate debtor engaged Operational Creditor for purchasing semi-finished steel products i.e MS Ingot and MS Billet from time to time on terms and conditions mutually agreed between the parties. Between April, 2018 to October, 2018, the Operational Creditor supplied semi-finished steel products to the Corporate Debtor. The Corporate Debtor received supplies and appropriated and utilized the same. The Operational Creditor thereafter raised various invoices aggregating to a sum of Rs.7,43,94,643, last invoice being issued on 04.10.2018.

(ii) In acknowledgment of its liability, the Corporate Debtor made part payments towards the amounts covered under the invoices. In November, 2018, the Corporate Debtor handed over seven post-

Company Appeal (AT) Insolvency No. 1235 of 2023 -3- dated cheques of Rs.15 Lakhs each aggregating to a sum of Rs.1,05,00,000. However, when one of the cheque dated 26.11.2018 was deposited, it was dishonoured and returned with bank memo as 'Funds Insufficient".

(iii) The Corporate Debtor continued to make on account payments to the Operational Creditor and till 18.01.2019 had paid sum of Rs.5,21,54,780 leaving a sum of Rs.2,22,39,863 due. Further payment of Rs.30 Lakhs was made making aggregate amount due to Rs.1,92,39,863.

(iv) The Corporate Debtor did not make any payment after 18.01.2019 but on 18.09.2019 sent an email to the Operational Creditor stating that quality discount on supplies has not yet been made by the Operational Creditor which is still awaited.

(v) On 26.09.2019, another email was sent when the ledger was forwarded by the Operational Creditor to the Corporate Debtor for confirmation. On 26.09.2019, it was stated that quality discount as discussed has not been posted which may be done.

(vi) On 25.02.2020, an email was issued on behalf of the Corporate Debtor recording that outstanding amount of Operational Creditor is Rs.1.40 Crores, which will be paid by M/s Aanchal International Pvt. Ltd., sister concern of Corporate Debtor. In pursuance of email dated 25.02.2020, M/s Aanchal International Pvt. Ltd. paid an Company Appeal (AT) Insolvency No. 1235 of 2023 -4- amount of Rs.10 Lakhs on 27.02.2020 making the outstanding of the Corporate Debtor as Rs.1,82,39,863.

(vii) Corporate Insolvency Resolution Process was initiated against the Corporate Debtor by order dated 21.02.2020 on an application filed by an Operational Creditor namely Shyam Metalics and Energy Limited. Appellant when came to know about the initiation of Corporate Insolvency Resolution Process, filed its claim before the Resolution Professional for a sum of Rs.2,30,14,436. Resolution Professional admitted the claim of Operational Creditor for an amount of Rs.1,42,49,863 only. The Resolution Professional admitted the aforesaid claim of the Operational Creditor on the basis of Book Balance of the Corporate Debtor qua Operational Creditor. Insolvency against the Corporate Debtor initiated on 21.02.2020 came to an end on 12.10.2020.

(viii) When the Corporate Debtor came out of the insolvency, letter was sent by Corporate Debtor on 14.10.2020 to the Operational Creditor that the Operational Creditor having agreed to allow financial discount to the tune of Rs.1.75 Crores, in the ledger of the Corporate Debtor a debit note of Rs.50 Lakhs on account of discount received was reflected for period of 01.04.2019 to 31.03.2020.

(ix) When the Operational Creditor received letter dated 14.10.2020, it immediately replied the same on 21.10.2020 stating that it is Company Appeal (AT) Insolvency No. 1235 of 2023 -5- Preposterous to suggest discounts in relation to supplies made between April to October, 2018 after consumption of materials and without any basis and consent of Operational Creditor and that too after lapse of a substantial period to time.

(x) The Operational Creditor thereafter issued demand notice under Section 8 on 22.10.2020 claiming a debt and default of Principal Amount of Rs.1,82,39,863 + interest of Rs.73,56,132 totalling to Rs.2,56,04,995.

(xi) Section 8 notice was replied by the Corporate Debtor on 25.11.2020 denying the claim. In the reply the Corporate Debtor referred to email dated 21.09.2019 and 26.09.2019 and letter sent on 14.10.2020. Corporate Debtor stated that discount of Rs.175 Lakhs was agreed, hence, the amount was outstanding was only Rs.17,39,863, which has already been communicated. It was stated that there is genuine pre-existing dispute.

(xii) The Reply to Demand Notice was responded by the Operational Creditor by letter dated 08.12.2020 stating that claim of the Corporate Debtor is fanciful and discounts are not substantiated with any contemporaneous documents.

(xiii) The Adjudicating Authority heard both the Operational Creditor and the Corporate Debtor and by impugned order dated 12.09.2023 has admitted Section 9 application.

Company Appeal (AT) Insolvency No. 1235 of 2023 -6-

2. We have heard Shri Diwakar Maheshwari, learned counsel for the Appellant and Shri Krishnendu Datta, learned senior advocate appearing for the Respondent.

3. Learned counsel for the Appellant challenging the order submits that there was pre-existing dispute between the parties which is reflected by email dated 21.09.2019 and 26.09.2019 sent by Corporate Debtor to the Operational Creditor which email communicated the Operational Creditor that the goods were not of required quality and specification and the goods were consumed with assurance of quality discount. It is submitted that after receipt of the Demand Notice dated 22.12.2020, the Corporate Debtor in its reply dated 25.11.2020 has again reiterated all facts. It is submitted that the quality discount is reflected in the leger of the Corporate Debtor on basis of which debit note of Rs.50 Lakhs was issued on 30.09.2019 and further of Rs.1.25 Crores on 15.10.2020. Thus, the debt due is only Rs.17,39,863, which was offered by the Corporate Debtor to the Operational Creditor by letter dated 14.10.2020. It is submitted that the application was also barred by Section 10A since the date of default mentioned in Section 9 application is 05.12.2020 which is within the prohibited period under Section 10A.

4. Shri Krishnendu Datta, learned senior counsel appearing for the Respondent - Operational Creditor refuting the submissions of learned counsel for the Appellant submits that the dispute sought to be raised by the Corporate Debtor is fanciful and potentially feeble legal argument which has rightly been rejected by the Adjudicating Authority. It is submitted that the Company Appeal (AT) Insolvency No. 1235 of 2023 -7- goods were supplied by the Operational Creditor between April, 2018 to October, 2018, which goods were consumed and all invoices sent by the Operational Creditor were received without raising any objection. The Corporate Debtor also continued to make payments against the invoices and till January, 2019 has made payment of Rs.5,21,54,780. Seven cheques of Rs.15 Lakhs each was given out of which one cheque was deposited which was dishonoured in November, 2018, at which time the Corporate Debtor has informed the Operational Creditor not to deposit other 6 cheques and payment will be made by RTGS. Thus, default was committed in November, 2018 itself. It is submitted that the Corporate Debtor itself on 25.02.2020 acknowledged the debt of Rs.1.4 Crore and has stated that said amount shall be paid by its sister concern i.e. Aanchal International Pvt. Ltd. There being acknowledgement by the Corporate Debtor on 25.02.2020 i.e. much after issuance of email dated 18.09.2019 and 26.09.2019 by which alleged quality issues were sought to be raised, it is not open for the Corporate Debtor to raise any dispute or claim that there is pre-existing dispute. It is further submitted that the Corporate Debtor was subjected to CIRP process by order dated 21.02.2020 till 12.10.2020 in which proceeding the Operational Creditor has filed its claim for an amount of Rs.2,30,14,436, out of which the Resolution Professional has admitted the claim of Rs.1,42,39,863. When in the CIRP of the Corporate Debtor the said claim stood admitted by the Resolution Professional, it is not open for the Corporate Debtor to say that there is any pre-existing dispute regarding outstanding dues of the Operational Creditor. It is submitted that the plea of Section 10A is wholly Company Appeal (AT) Insolvency No. 1235 of 2023 -8- erroneous since default was committed by the Corporate Debtor in November, 2018 itself in payment to the Operational Creditor. Corporate Debtor having acknowledging amount of Rs.1.4 Crore on 25.02.2020, it is not open for the Corporate Debtor to raise any dispute and the dispute sought to be raised by the Corporate Debtor is to wriggle out of its liability to pay its debt.

5. We have considered the submissions of learned counsel for the parties and perused the record.

6. The goods were supplied by the Operational Creditor to the Corporate Debtor between April, 2018 to October, 2018 for which invoices were sent by the Operational Creditor, last invoice being issued on 05.10.2018. The Corporate Debtor did not raise any issue regarding the quality of goods after receipt of the goods and invoices and it consumed the entire goods and has also made substantial payments. In November, 2018, seven cheques of Rs.15 Lakhs each were handed over towards the payment against the invoices, one of the cheque was dishonoured on 26.11.2018 with the Bank Memo 'funds insufficient', which was also informed to the Corporate Debtor. After said date also the Corporate Debtor made payment, last payment being made on 18.01.2019. Till 18.01.2019, the Corporate Debtor had made payment of Rs.5,61,54,780. Much reliance has been placed by learned counsel for the Appellant on two emails dated 18.09.2019 and 26.09.2019. Email dated 18.09.2019 which was sent by the Corporate Debtor is as follows:

Company Appeal (AT) Insolvency No. 1235 of 2023 -9- "Quality Discount-regarding Aanchal Ispat Limited <[email protected]> To: Naresh Agarwal <[email protected]> Wed, Sep 18, 2010 at 6:33 PM To, M/s Aldous Commodities Pvt Ltd Dear Sir, In continuation to our earlier communications and subsequent discussion with your director Sri Naresh Kumar Agarwal at our office from time to time with regards to quality discount on supplies made by you to us from the period 30.04.2018 to 04.10.2018 which were not as per our required quality and specification although the same were consumed based on your assurance of quality discount which you will offer us in due course.

We have continued to make payments to you against such supplies but since even after several discussion with you as stated above, we are still awaiting to receive quality discount on supplies made by you as stated above and discussed Kindly do the needful at the earliest.

Thanks and regards Aanchal Ispat Limited National Highway No. 6, Chamrail, Howrah-711 114, West Bengal Phone: 03212 246 121 Fax: 03212 246 069 e-mail: [email protected] website: www.aanchalapat.com Please don't print this email unless you really need to-this will preserve trees on earth"

7. The Operational Creditor has sent its ledger to the Corporate Debtor vide email dated 21.09.2019 showing the closing balance of Rs.2,22,39,863.

After receipt of ledger by email dated 26.09.2019 Corporate Debtor wrote to the Operational Creditor following:

"Aanchal Ispat Limited <[email protected]> To: Naresh Agarwal <[email protected]> Thu, Sep 20, 2019 at 5:55 PM Company Appeal (AT) Insolvency No. 1235 of 2023 -10- Sir, Please refer to our email dated 18.09.2019. The copy of the ledger attached by you in trail email is denied as the quality discount as discussed has not been posted. Kindly do the needful and revert.

Regards Aanchal Ispat Limited National Highway No. 6, Chamrail, Howrah-711 114, West Bengal Phone: 03212 246 121 Fax: 03212 246 069 e-mail: [email protected] website: www.aanchalapat.com Please don't print this email unless you really need to-this will preserve trees on earth"

8. It is first to be noticed that prior to 18.09.2019, at no point of time there is any contemporaneous documents to indicate that any issue regarding quality were raised nor any of the invoices were objected on the said ground. The goods were consumed and last payment by the Corporate Debtor towards goods were made on 18.01.2019 also. When after 18.01.2019 the Corporate Debtor could not make any payment of the dues of the Operational Creditor, the alleged quality issue was sought to be raised by email dated 18.09.2019.

9. We may further notice the email dated 25.02.2020 sent on behalf of the Corporate Debtor to the Operational Creditor which email clearly acknowledged the outstanding amount of Rs.1.40 Crore by the Corporate Debtor. The said email mentions that amount of Rs.1.40 Crore shall be paid by Aanchal International Pvt. Ltd. sister concern of the Corporate Debtor. Email dated 25.02.2020 is as follows:

"Regarding O/s of approx 1.40 Cr.

From: Aanchal Ispat Limited ([email protected]) To: Naresh Agarwal <[email protected]> Company Appeal (AT) Insolvency No. 1235 of 2023 -11- Date: Tuesday, 25 February 2020, 02:59 pm IST Sir, As per our discussion with your director, Sri Naresh Agarwal at our office, it was finalized that that the outstanding dues of approx. 1.40 Crores on account of Aanchal Ispat Limited will be paid by Aanchal International Pvt Ltd.

This is for your information and record. Aanchal Ispat Limited National Highway No. 6, Chamrail, Howrah-711 114, West Bengal Phone: 03212 246 121 Fax: 03212 246 069 e-mail: [email protected] website: www.aanchalapat.com Please don't print this email unless you really need to-this will preserve trees on earth"

10. In pursuance of the email dated 25.02.202, payment of Rs.10 Lakhs was also made by Aanchal International Ltd. dated 27.02.2020 which is also reflected in the ledger of the Operational Creditor. Thus, email dated 25.02.2020 was given effect partly by making part payment.

11. We have noticed above that the Corporate Debtor was under

insolvency by an application filed by another Operation Creditor from 21.02.2020 to 12.10.2020. In the CIRP of the Corporate Debtor, the Operational Creditor i.e. Respondent No.1 filed its claim, however, the Resolution Professional admitted claim of Rs.1,42,39,863 only. It is the case of the Appellant itself that amount of Rs.1,42,39,863 was admitted by the Resolution Professional, which was the book balance of the Corporate Debtor qua Operational Creditor, which has been pleaded by the Appellant in Para 7.10 of the Appeal itself. Thus, admission of the claim of the Operational Company Appeal (AT) Insolvency No. 1235 of 2023 -12- Creditor to the tune of Rs.1,42,39,863 indicate that the same is the balance as per the Books of Account of the Corporate Debtor, which was taken by the Resolution Professional after admitting the part claim as filed by the Operational Creditor. The above fact clearly proves that in the Books of Account of the Corporate Debtor amount of Rs.1,42,39,863 is reflected. The email dated 25.02.2020 sent on behalf of the Corporate Debtor to the Operational Creditor that outstanding amount of Rs.1.40 Crores shall be paid by Aanchal International Ltd. fully corroborate the existence of debt and due of Rs.1.40 Crores.

12. In view of the above facts and acknowledgment on behalf of the Corporate Debtor Rs.1.40 Crores vide email dated 25.02.2020, the email which was sent on 18.09.2019 and 26.09.2019 praying for quality discount loses its importance. It is further relevant to notice that the Corporate Debtor has on its own issued a debit note of Rs.50 Lakhs and Rs.1.25 Crore which is communicated by letter dated 14.10.2020 sent to the Operational Creditor by the Corporate Debtor. The Corporate Debtor intend to set off the outstanding dues of the Operational Creditor by quality discount claimed on 30.09.2019 and 15.10.2020. There are no contemporaneous documents to indicate that the Operational Creditor at any point of time consented to any quality discount as alleged by the Corporate Debtor and the Corporate Debtor at relevant time raised any quality issue, the email dated 18.09.2019 and 26.09.2019 were afterthought when Corporate Debtor defaulted in payment. Company Appeal (AT) Insolvency No. 1235 of 2023 -13-

13. As noted above, the Corporate Debtor has consumed the goods supplied between April, 2018 to October, 2018 and did not raise any objection against any of the invoices nor any quality issue was raised. It was after about eleven months that on 18.09.2019 an email was sent raising the alleged quality issue of the goods. As noted above, email dated 18.09.2019 and 26.09.2019 shall not give any credence to the case set up by the Corporate Debtor in view of the subsequent acknowledgement by the Corporate Debtor on 25.02.2020, where after acknowledging dues of Rs.1.40 Crores, it has been communicated to the Operational Creditor that said dues shall be paid by sister concern of the Corporate Debtor. The aforesaid email was written on behalf of the Corporate Debtor due to reason that insolvency was commenced against the Corporate Debtor on 21.02.2020 and it could not have made any payment to the Operational Creditor, hence, the Corporate Debtor communicated to the Operational Creditor that amount shall be paid by Aanchal International Ltd., sister concern of the Corporate Debtor, which is clear acknowledgment.

14. Further in the CIRP of the Corporate Debtor at instance of another Operational Creditor, the Resolution Professional has admitted a claim of Rs.1,42,39,863 of the Operational Creditor, which is admitted fact. It is further case of the Appellant that said admission of the claim is on the basis of Books of Accounts of the Corporate Debtor which reflected amount of Rs.1,42,39,863. The Books of Accounts of the Corporate Debtor immediately prior to it went into insolvency on 21.02.2020 also contain acknowledgement of the debt of the Operational Creditor.

Company Appeal (AT) Insolvency No. 1235 of 2023 -14-

15. It is true that the Corporate Debtor has submitted a reply to the Demand Notice where it has raised the issue of quality discount and as claimed that it has taken quality discount of Rs.50 Lakhs and Rs.1.25 Crore. In the reply, it has also referred to email dated 18.09.2019 and 26.09.2019. It is relevant to notice that the aforesaid reply which was given by the Corporate Debtor was responded by the Operational Creditor on 08.12.2020, which letter is also on the record. In Paras 3 to 11 of the letter dated 08.12.2020 following has been stated:

"3. There are no pre-existing disputes and our entire claim is admitted. Having received and appropriated various quantities of the products from us, you have developed dishonest intentions and are purporting to negate admitted claims maliciously. There were never any quality issues as demonstrated on your consuming the entire supplies.

4. Purported and fanciful claims relating to our having agreed to provide you any discounts are not substantiated with any contemporaneous documents.

5. Your communications relate to a dubious intention to seek to deny us receiving our legitimate outstanding.

6. Our ledgers reflect the true and factual details and narrate the admitted outstanding receivable by us. Contemporaneous documents would substantiate and evidence admission of liabilities and decimate your alleged and false claims with respect to quality issues. Though we do not wish to dwell or make any comment Company Appeal (AT) Insolvency No. 1235 of 2023 -15- on an earlier insolvency proceeding involving your company, suffice to iterate that during the course of such insolvency proceedings, we had submitted our claim to the Resolution Professional and the Resolution Professional had also admitted a substantial and major portion of our outstanding claim towards principal dues.

7. On the culmination of your existing Insolvency proceedings, we were aghast to receive a purported debit note wherein you had sought to maliciously debit substantial sums as purported discount and seeking to admit to a sum of Rs. 17,39,863/- only. Such act and conduct was demonstrably mala fide and in continuance with your repeated attempts in seeking to avoid making payments of your legitimate outstanding.

8. Constrained by your behavior and shallow attempts to deprive us of our just and due outstanding and continual defaults, we have Issued Notice under the provisions of Section 8 of the Insolvency and Bankruptcy Code, 2016 (Code) on October 22, 2030. The contents of this Notice are true and correct and are reiterated.

9. Around this time, at your suggestion we had sought to meet in person in order to avoid acrimony and legal proceedings to settle the issues

10. It is utterly false that we had received any payment Instrument for Rs. 17,39,863/-. Such purported instrument was clandestinely caused to be deposited Company Appeal (AT) Insolvency No. 1235 of 2023 -16- by you in our Bank Account immediately, on receiving intimation of such unauthorized and malicious credit, such sum has been refunded.

11. It is palpable that you are resorting to falsities and purporting to create false evidences. It is obvious that your intentions are not bona fide. Please note that there has been a default committed by you in making payment of your legitimate outstanding since a substantial time and such default has occurred much before March 25, 2020.Consequentially, by reason of such default, we have issued Notice under Section 8 of the Code on October 22, 2020 and by reason of your refusal to cure such default by making payment of the admitted principal outstanding with interest, we shall move legally and file appropriate proceedings as envisaged under the Code without further reference and hold you responsible for all cost and consequences."

16. In the above factual background and sequence of events, we are of the view that Adjudicating Authority did not commit any error in rejecting the plea of the Corporate Debtor of pre-existing dispute. The Adjudicating Authority has rightly observed that case set up by the Corporate Debtor that there is a pre-existing dispute is clearly an afterthought. The Hon'ble Supreme Court in "Mobilox Innovations (P) Ltd. vs. Kirusa Software (P) Ltd., (2018) 1 SCC 353" has laid down the principles which the Adjudicating Authority is to consider while considering the plea of pre-existing dispute. In Para 51 of the judgment following has been laid down:

Company Appeal (AT) Insolvency No. 1235 of 2023 -17- "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 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."

17. The Hon'ble Supreme Court has clearly held that the "dispute" is not a patently feeble legal argument. The Hon'ble Supreme Court has emphasised that it is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. When we look into the facts of the present case and sequence of events, it is clear that defence which was taken by the Corporate Debtor is a spurious defence.

18. The Corporate Debtor has never at the time of receipt of the goods or at the time of utilisation of the goods or after receipt of invoices raised any issue and continued to make payments towards the invoices. Cheques issued in November, 2018 were dishonoured and even after this, some amount was paid in the account of the Operational Creditor and when Corporate Debtor Company Appeal (AT) Insolvency No. 1235 of 2023 -18- could not make payment of outstanding amount it invented the quality issue which was communicated by email dated 18.09.2019.

19. Learned counsel for the Appellant has further raised the issue of Section 10A. In the present case invoices were issued for the supply made in April, 2018 to October, 2018 and last invoice was dated 04.10.2018. When entire payment was not made after receipt of the goods and receipt of all invoices, default in payment was committed in 2018 itself. Further, in November, 2018, seven cheques of Rs.15 Lakhs each were handed over, out of which one cheque was deposited which was dishonoured on 26.11.2018. Thus, default was committed on 26.011.2018. The Corporate Debtor has also continued to make payment till January, 2019 and on 25.02.2020, it acknowledged that Rs.1.4 Crores are outstanding. The question of outstanding dues arose only when it made default. The plea of the Appellant that the Application is barred by 10A is wholly groundless and shows the intent of the Corporate Debtor to raise frivolous pleas to defeat the rightful claim of the Operational Creditor. We, thus, do not find any merit in the submission of the Appellant that application was barred by Section 10A.

20. Learned counsel for the Appellant has relied on recent judgment of Hon'ble Supreme Court in "Rajratan Babulal Agarwal vs. Solartex India (P) Ltd., (2023) 1 SCC 115", Para 75, which lays down following:

"75. When we speak about evidence, we must not overlook the law laid down in Mobilox that the court need not be satisfied that the defence is likely to succeed. The standard, in other words, with reference Company Appeal (AT) Insolvency No. 1235 of 2023 -19- to which a case of a pre-existing dispute under IBC must be employed cannot be equated with even the principle of preponderance of probability which guides a civil court at the stage of finally decreeing a suit. Once this subtle distinction is not overlooked, we would think that NCLAT has clearly erred in finding that there was no dispute within the meaning of the IBC."

21. The Hon'ble Supreme Court in the above case has reiterated the judgment of the Hon'ble Supreme Court in "Mobilox Innovations (P) Ltd. vs. Kirusa Software (P) Ltd.", the Hon'ble Supreme Court in the above case in Para 74 has held the case of the Respondent not spurious, hypothetical and illusory. In Para 74 of the judgment following has been laid down:

"74. Again, following what this Court held in Mobilox, we do not have to go to the extent of finding that the second respondent is likely to succeed. Still further, finding guidance from Mobilox, the examination of the merits need not transcend the limited extent which we have undertaken which is to find that the case of the second respondent is not to be brushed aside as spurious, hypothetical or illusory. We cannot find that the dispute as projected by the appellant on behalf of the second respondent does not exist. In the teeth of the e-mails which we have adverted to, and the inference sought to be drawn in particular as also the lab reports produced, no doubt, from the second respondent's labs, we cannot also find that the case of the corporate debtor is wholly unsupported by evidence. As to the acceptability of these materials and Company Appeal (AT) Insolvency No. 1235 of 2023 -20- the weight to be attached to them, needless to say, we have not pronounced on the same."

22. In the facts of the present case, as noticed above, we have clearly come to the conclusion that case of the Appellant is spurious, hypothetical and illusory. Thus, the judgment of the Hon'ble Supreme Court in the above case does not help the Appellant in any manner. Learned counsel for the Appellant has further relied on judgment of this Appellate Tribunal in "Davinder Kumar Singhal vs. Sanjay Kumar Chetwani, 2022 SCC OnLine NCLAT 203", where this Appellate Tribunal has held that mere issuance of cheque cannot be considered as admission of debt. The dishonour of cheque in the present case has been referred to as default committed on part of the Corporate Debtor in making the payment. There cannot be any dispute to the preposition as laid down by this Tribunal in the aforesaid case. Para 15, 16 and 17 of the judgment lays down following:

"15. Learned counsel for the Respondent No. 1 Shri Harsh N. Gokhale has emphatically submitted that issuance of Cheque is equivalent to admission of liability by the Appellant. He has relied on Section 139 of the Negotiable Instruments ACT, 1881 (for short "NI Act") and submitted that Section 139 raises a presumption in favour of the holder of the Cheque that the same has been issued for discharge of any debt or other liability. He submits that even when the Cheque was dishonoured by reasons of Stop Payment, the presumption under Section 139 has to be drawn. He has placed reliance on the judgment of Hon'ble Supreme Court reported in (2002) 1 SCC 234 -

Company Appeal (AT) Insolvency No. 1235 of 2023 -21- "M.M.T.C. Ltd. v. Medchi Chemicals & Pharma (P) Ltd.".

In para 19, the Hon'ble Supreme Court laid down following:-

"19. The authority shows that even when the cheuge is dishonoured by reason of stop payment instructions by virtue of Section 139 the Court has to presume that the cheque was received by the holder for the discharge, in whole or in part, of any debt or liability."

16. In the above case, the Hon'ble Supreme Court was considering an Appeal against a judgment by which complaint filed under Section 138 of NI Act had been quashed. The observations made in Para 19 have been made in the above context. In the present case, the issue is not as to whether the Appellant has committed an offence within the meaning of N1 Act and whether he has been able to dislodge the presumption drawn under Section 139 of NI Act. The question for consideration is as to whether there was a pre-existing dispute prior to service of Notice under Section 8 dated 11.09.2019.

17. In the present case, a post-dated Cheque was given by the Appellant bearing date 15.03.2018 and before 15.03.2018 could arrive or the Cheque was presented, Respondent No. 1 was communicated by letter dated 12.03.2018 that the Appellant does not accept any liability to make payment of GST and instructions are being issued to the Bank to Stop Payment."

23. In the above case, post-dated cheques were presented before the date in the cheques could arrive. In the above circumstances, Appellant did not accept any liability to make payment. Thus, facts of the present case are Company Appeal (AT) Insolvency No. 1235 of 2023 -22- clearly different from the above case and does not help the Appellant. Learned counsel for the Appellant has also placed reliance on judgment of this Appellate Tribunal in "Om Prakash vs. Wipro Enterprises (P) Ltd., 2023 SCC OnLine NCLAT 224", where this Tribunal has laid down that overall facts must be seen to determine a pre-existing dispute. There can be no quarrel to above preposition. In the present case, we have looked into all communications between the parties including the email dated 18.09.2019, 26.09.2019, 25.02.2020 and other correspondences.

24. In view of the foregoing discussion, we do not find any error in the order of the Adjudicating Authority admitting Section 9 application. There is no merit in the Appeal. Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson [Barun Mitra] Member (Technical) NEW DELHI 06th October, 2023 Archana Company Appeal (AT) Insolvency No. 1235 of 2023

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