National Company Law Appellate Tribunal
Mcc Concrete vs Northway Spaces Ltd on 22 January, 2021
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NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Company Appeal (AT) (Ins) No. 527 of 2020
IN THE MATTER OF:
MCC Concrete
11, Shreenath Bungalows
Opp. Yash Complex,
30 Mtr. Gotri-Gorwa Ring Road,
Vadodara 390 021
...Appellant.
Versus
Northway Spaces Ltd.
Formerly Known as Mayfair Space Ltd.
Opp. Delhi Public School,
Old Padra Vadsar Ring Road,
Vadodara, Gujarat State
...Respondent.
Present:
For Appellant: Mr. Malak Manish Bhatt and Mr. Udbhav Nanda,
Advocates.
For Respondent: Mr. Manu Aggarwal, Advocate.
JUDGMENT
JARAT KUMAR JAIN, J:
This Appeal has been preferred by the Appellant M/s MCC Concrete (Operational Creditor) against the order dated 12/02/2020 passed by the Adjudicating Authority (National Company Law Tribunal), Ahmadabad Bench, Company Appeal (AT) (Ins) No. 527 of 2020 2 Ahmadabad. Whereby the Application preferred by the Appellant under Section 9 of the Insolvency and Bankruptcy Code (In Short I&B Code) has been rejected.
2. Brief facts of this case are that the Operational Creditor (Appellant herein) has supplied ready MCC Concrete at various sites of the Corporate Debtor (Respondent herein) upon placing purchase order by the Corporate Debtor. Pursuant thereto the Operational Creditor had issued invoices upon the Corporate Debtor along with delivery challans. The delivery challans are signed and stamped by the Corporate Debtor. The Corporate Debtor was earlier known as Mayfair Spaces Ltd. Hence, all the invoices and delivery challans were issued in the name of Mayfair Spaces Ltd. As per ledger account the Operational Creditor has supplied goods to the Corporate Debtor for the total sum of Rs. 02,29,94,288/-. Whereas, the Corporate Debtor has made part payment of Rs. 02,09,30,948/-. Even after several email communications, the Corporate Debtor has not made any payment for balance amount of Rs. 20,63,340/-. Therefore on 11/02/2017 the Operational Creditor has sent a demand notice to the Corporate Debtor. Despite receipt of the notice, the Corporate Debtor has neither replied to the notice nor made any payment. Therefore, the Operational Creditor has filed an Application under Section 9 of the I&B Code before the Adjudicating Authority for initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor.
3. The Corporate Debtor resisted the Application on the ground that the invoices dated 15/07/2013 and 18/10/2013 bearing nos. 661 and 360 of Rs. Company Appeal (AT) (Ins) No. 527 of 2020 3 5,33,120/- and Rs. 5,16,460/- respectively have been issued to the Corporate Debtor. As per the said invoices, goods were delivered to Mayfair Corporate Park. The Corporate Debtor has no connection with Mayfair Corporate Park. Therefore, the said invoices were returned by the Corporate Debtor vide its letter dated 16/07/2013 and 21/10/2013 stating that the bills are erroneously sent to them. Again, 14 invoices (particulars mentioned at pg.76 of the appeal paper-book) were issued by the Operational Creditor without proper challans which shows that goods were not delivered to the Corporate Debtor. The claim of the Operational Creditor is based on the invoices which are of 2013, whereas the application is filed on 15/01/2018. Thus, the claim is barred by limitation.
4. After hearing the parties, Ld. Adjudicating Authority held that Operational Creditor is maintaining a running account of the Corporate Debtor and as per the ledger account, the last payment of Rs. 12 lacs were made by the Corporate Debtor on 05/11/2015 and the Application is filed on 15/01/2018. Thus, the application is within limitation. Ld. Adjudicating Authority held that on 15/07/2013 and 18/10/2013 no order was placed by the Corporate Debtor, therefore, the invoices dated 15/07/2013 and 18/10/2013 bearing nos. 661 and 360 have been issued erroneously. Therefore, the Corporate Debtor vide its letter dated 16/10/2013 and 21/10/2013 sent back the invoices stating that the Corporate Debtor has no connection with Mayfair Corporate Park to whom the goods were delivered. On this basis it is held that there is pre-existing dispute regarding the goods supplied and invoices raised thereof. Hence, rejected the application. Company Appeal (AT) (Ins) No. 527 of 2020 4
5. Being aggrieved with this order, the Operational Creditor has filed this Appeal.
6. Ld. Counsel for the appellant made following submissions:
i. There is no pre-existing dispute with respect to the two invoices. Actually, the goods delivered on the site of Mayfair Corporate Park which is developed by Mayfair Spaces Ltd. (respondent) which is an associated entity of the respondent. Delivery challans are duly signed and stamped by the respondent. Therefore, respondent cannot dispute the said invoices.
ii. The 14 invoices raised against the respondent amount to Rs. 08,53,775/- have been acknowledged with the seal and stamp of respondent.
iii. The ledger account placed on record by the appellant is in-tune with claims of the appellant.
iv. Within three years from the date of acknowledgment, the application is filed. Thus, it is within limitation.
7. Per contra, ld. counsel for the respondent has made the following submissions:
i. The appellant has failed to establish that there is an Operational Debt of more than Rs. 1 lac due to it from the respondent. As per ledger only Rs. 70,165/- is due which is less than Rs. 1 lac. Therefore, the application under section 9 is not maintainable. Company Appeal (AT) (Ins) No. 527 of 2020 5 ii. The respondent has never supplied the copy of ledger account to the appellant. The copy of the ledger account produced by the appellant is unsigned and source of procurement is not disclosed. Therefore, it cannot be relied upon.
iii. The appellant has supplied the goods to Mayfair Corporate Park but erroneously raised the disputed bills to the respondent. Thus, there is a pre-existing dispute in regard to payment of these invoices. iv. The appellant has claimed Rs. 20,63,340/- without filing any statement of accounts.
v. The section 9 application could not have been decided only on the basis of absence of reply to demand notice.
8. After hearing the arguments of ld. counsel for the parties we have perused the record.
9. The Hon'ble Supreme Court in Mobilox Innvations Pvt. Ltd. Vs. Kirussa Software Pvt. Ltd. 2017 1 SCC Online SC 353 held as to what are facts to be examined by the Adjudicating Authority while examining an Application under Section 9 of I & B Code which is as follows: -
"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) Company Appeal (AT) (Ins) No. 527 of 2020 6
(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."
10. In the light of this pronouncement firstly we examined whether there is an operational debt exceeding Rs. 1 lac as defined under Section 4 of the I&B Code. In the application under Section 9 of the I&B Code, it is mentioned that appellant has supplied ready-mix concrete material to respondent for their various construction sites from 30/09/2012 to 20/10/2014 for which various invoices were issued from time to time as against the total outstanding payment of Rs. 02,29,94,288/-. The respondent (Corporate Debtor) has paid a sum of Rs. 02,09,30,948/- and balance of Rs. 20,63,340/- is outstanding as on 11/11/2015.
Company Appeal (AT) (Ins) No. 527 of 2020 7
11. The respondent denied this fact and according to him as per the ledger, the outstanding amount is only Rs. 70,165/-. In support of this contention, the respondent filed ledger account of appellant maintained by the respondent for period of 01/04/2012 to 20/03/2018. (See Page 97-102 of Appeal Paper Book) The respondent has produced its statement of accounts which clearly shows that the total amount outstanding against the appellant is Rs. 70,165/- which is less than Rs. 1 lac. The appellant has not pointed out any error in the statement of account filed by the respondent.
12. In rebuttal, the Appellant has filed the ledger account of the appellant, copy of which served by the respondent upon appellant. In this ledger account the amount payable to appellant is shown as Rs.19,89,130/-.
13. The respondent has taken a serious objection that the respondent's officer has not supplied any such copy of ledger account to the appellant. Such unsigned copy cannot be relied upon.
14. We have considered the objection in regard to the ledger account filed by the appellant (please see pg. 117-122 of the appeal paper-book). It is true that this ledger account is not signed by anybody and the appellant has not disclosed the name of respondent's officer who has supplied the copy of this ledger account. The copy of ledger account which is filed by the respondent is also an unsigned document. It is not argued on behalf of the respondent that the ledger account filed by the appellant is forged or fabricated. We are of the view that the ledger account filed by the appellant is genuine and shows the true picture. Thus, it is a reliable document.
Company Appeal (AT) (Ins) No. 527 of 2020 8
15. We have reconciled these ledger accounts. We noted that following 17 items are missing in the copy of ledger account filed by the respondent which are as under:
16. Following ledger account is filed by the Appellant, in this account above referred items are shown in the box however, these items are missing in the ledger account (See Page 97-102 of Appeal Paper Book) filed by the Respondent.
Company Appeal (AT) (Ins) No. 527 of 2020 9 Company Appeal (AT) (Ins) No. 527 of 2020 10 Company Appeal (AT) (Ins) No. 527 of 2020 11 Company Appeal (AT) (Ins) No. 527 of 2020 12 Company Appeal (AT) (Ins) No. 527 of 2020 13 Company Appeal (AT) (Ins) No. 527 of 2020 14 Company Appeal (AT) (Ins) No. 527 of 2020 15
17. From the above referred ledger account maintained by the respondent we hold that as on 31/03/2017, operational debt Rs. 19,89,130/- was due and payable and has not yet been paid.
18. Hon'ble Supreme Court, in the case of Mobilox Innovations Pvt. Ltd. (Supra) held that what is the scope of ascertaining the existence of a dispute at the time of admitting the Application, which is as follows:- "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."
19. Now, we have considered whether there is a pre-existing dispute between the parties. As per the respondent, the appellant has delivered goods to Mayfair Corporate Park but erroneously sent invoices dated 15/07/2013 and 18/10/2013 bearing nos. 661 and 360 amounting to Rs. 05,33,120/- and 05,16,460/-. The respondent has no connection with Mayfair Corporate Park, therefore they have returned the invoices to the appellant. According to Company Appeal (AT) (Ins) No. 527 of 2020 16 the appellant, the Mayfair Corporate Park is a construction project developed by Mayfair Spaces Ltd. (respondent) and thus they are associated entities. Therefore, the disputed invoices were rightly sent to the respondent.
21. As we have noted that the appellant is relying on the ledger account maintained by the respondent. In this ledger account the amount of disputed invoices are not shown. Therefore, we hold that there is no dispute between the parties in regard to the aforesaid invoices. Thus, we do not agree with the finding of ld. Adjudicating Authority that there is a pre-existing dispute between the parties.
22. Now, we have considered the objection of ld. counsel for the respondent that the claim is barred by limitation. The ledger account is a running account which shows that on 05/11/2015, the respondent has made payment of Rs. 12 lacs to appellant and from this date of acknowledgment within three years, that is on 15/01/2018 the application is filed. Thus, the application is within period of limitation. We agree with the finding of the Adjudicating Authority that the application is filed within the period of limitation.
23. Ld. Adjudication Authority while examining the application under Section 9 of I&B Code has not considered the ledger account filed by the appellant. The statement shows that there is an outstanding due of Rs. 19,89,130/- on 31/03/2017. There is no pre-existing dispute. The Adjudicating Authority erroneously rejected the claim on the ground that the claim raised by the appellant falls within the ambit of disputed claim.
24. From the record, as we find that the respondent has failed to pay more than Rs. 1 lac and in absence of any pre-existing dispute and the record being Company Appeal (AT) (Ins) No. 527 of 2020 17 complete, we hold that the application under section 9 of I&B Code preferred by the appellant was fit to be admitted.
25. For the reasons aforesaid, we set aside the impugned order dated 12/02/2020 and remit the case to the Adjudicating Authority for admitting the application under Section 9 of I&B Code after notice to the Corporate Debtor to enable the Corporate Debtor to settle the matter prior to admission.
26. The appeal is allowed with the aforesaid observations and directions. No costs.
[Justice Jarat Kumar Jain] Member (Judicial) [Balvinder Singh] Member (Technical) NEW DELHI 22nd January, 2021.
SC Company Appeal (AT) (Ins) No. 527 of 2020