National Company Law Appellate Tribunal
Smt. Paleti Padmaja vs M/S. Chevuri Enterprises on 13 July, 2022
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
AT CHENNAI
APPELLATE JURISDICTION
Company Appeal (AT) (CH) (INS) No. 195 of 2022
In the matter of:
Paleti Padmaja
(Suspended Director)
M/s. Sindhura Paper Private Limited
R/o. D. No. 6-3-603,
Flat No. 504, Girishikara Enclave
Hilltop Colony, Khairthabad
Hyderabad, Telangana - 500004 ..... Appellant
V
Chevuri Enterprises
Rep. by its Sole Proprietor
Mr. Lakshmi Narayana
H. No. 29-30-6, Tobacco Barrens Street
Suryaraopet, Vijayawada - 520002
Krishna District, Andhra Pradesh ..... Respondent No. 1
Narala Varalakshmi
Interim Resolution Professional
of M/s. Sindhura Paper Private Limited
Office: No. 113, 1st Floor,
Manjeera Trinity, Corporate,
KPHB Phase III, Kukatpally, Hyderabad,
Telangana - 500072 ..... Respondent No. 2
Present:
For Appellant : Mr. V. Raghunath, Advocate
For Respondent No.1/
Operational Creditor : Mr. Viswaraj Maharshi, Advocate
Company Appeal (AT) (CH) (INS) No. 195 of 2022
Page 1 of 26
JUDGMENT
(Virtual Mode) Justice M. Venugopal, Member (Judicial) :
Background:
The Appellant (Suspended Director) of the Corporate Debtor M/s. Sindhura Paper Private Limited, Hyderabad, Telangana has filed the present Company Appeal (AT) (CH) (INS) No. 195 of 2022 before this Appellate Tribunal as an `Affected Person' against the `impugned order' dated 07.03.2022, passed by the `Adjudicating Authority', `National Company Law Tribunal' (`NCLT'), Amaravati Bench, Hyderabad in C.P. (IB) No. 60/9/AMR/2020.
2. The `Adjudicating Authority', (`National Company Law Tribunal'), Amaravati Bench, Hyderabad, while passing the `impugned order' dated 07.03.2022 in C.P. (IB) No. 60/9/AMR/2020, among other things at paragraph I, had observed the following:
I. ``Whether the Operational Creditor could prove that the Corporate Debtor has failed to discharge the debt that is due to the Operational Creditor and whether CIRP can be initiated against the Corporate Debtor.
There is no dispute that the Operational Creditor used to supply goods to the Corporate Debtor and there is a clear admission Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 2 of 26 in the counter that the Corporate Debtor made the purchases covered by the 284 invoices pertaining to the period from 14.11.2017 to 30.11.2019. The Counsel for the Operational Creditor draws the attention of this Tribunal to the mail dated 26.02.2019 addressed by the Operational Creditor to the Corporate Debtor stating that they have sent their account copy from 01.04.2018 to 26.02.2019 in M/s. Vaishnavi Impex and M/s. Sindhura Papers Limited and called upon them to send their account copy. The said mail was addressed to the Corporate Debtor / Sindhura Paper Limited. In response to the said mail a reply mail was issued on 21.03.2019 stating that they have attached the account copy from 2017 to 2018 and 2018 to 2019. The four attachments with the mail are the statements of M/s. Vaishnavi Impex for the years 2017-2018 and 2018-2019 and the statements of M/s. Sindhura Paper Limited for the years 2017-2018 and 2018- 2019. A perusal of the same would show that the accounts are separately and clearly maintained for both the Corporate Debtor and M/s. Vaishnavi Impex. The account of the Corporate Debtor would show the closing balance as on 31.03.2018 is Rs.2,38,88,424.50/-. The ledger account of the Operational Creditor which is duly acknowledged by the Corporate Debtor would also show the same amount as a closing balance as on 28.02.2019. Hence, it is clear that by 28.02.2019 there was due of Rs.2,38,86,424.50/- to the Operational Creditor from the Corporate Debtor. With regard to the remaining amount of the claim, invoices pertaining to the said period and also to the period prior to that are filed which are 284 in number and the same are categorically admitted by the Corporate Debtor in its counter. It also can be noted that the Corporate Debtor did not reply for the demand notice and for the first time it is raising the defences as raised in the counter after this application is filed. The account statement filed by the Operational Creditor would show that the amounts paid by the Corporate Debtor are adjusted and the claim is only with regard to the amount remaining after such adjustment. As rightly contended, there is no evidence with regard to the certificate issued by the Auditor and that the auditor has issued the said certificate based on proper evidence and that he is the auditor of the Corporate Debtor Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 3 of 26 at all. Hence, no value can be attached to the said statement made in the counter for the first time.
The contention that both the accounts of the Corporate Debtor and M/s. Vaishnavi Impex having been maintained in the same premises, an error occurred does not receive any support and moreover is stands contradicted by the fact that the e-mail given by the Corporate Debtor along with the two separate statements of Corporate Debtor and M/s. Vaishnavi Impex would show that the two accounts were properly maintained without any mincing. The contention of the Operational Creditor that the two companies are managed by the same person is not refuted. In the said circumstances, any collusion between M/s. Vaishnavi Impex and the Operational Creditor as alleged cannot be assumed. Hence, it is clear from the material on record that the Corporate Debtor has incurred a debt of Rs.3,60,11,075/- and defaulted in discharging the same inspite of the demand notice. Hence, the petition is liable to be admitted and as such it is admitted.'' and resultantly `admitted the Company Petition', by appointing Ms. Narala Varalakshmi, as `Interim Resolution Professional' and declared `Moratorium', etc., assailing the propriety, legality and validity of the impugned dated 07.03.2022 in C.P. (IB) No. 60/9/AMR/2020, passed by the `Adjudicating Authority', (NCLT), Amaravati Bench, Hyderabad.
Appellant's Submissions:
3. The Learned Counsel for the Appellant submits that it is the specific case of the `1st Respondent/Operational Creditor' that the claim of Rs.3,60,11,075/- in relation to the period from 14.11.2017 to 30.11.2019 Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 4 of 26 arises out of 284 Invoices and that the 2nd Respondent/Corporate Debtor had made the aforesaid purchases. In fact, the `1st Respondent/Operational Creditor' had not mentioned the payments made by the `2 nd Respondent/Corporate Debtor' and that so far, for the period from 01.04.2017 to 31.03.2020, the Corporate Debtor had paid a sum 8,64,28,304/- to the `1st Respondent/Operational Creditor' on different dates through bank transactions.
4. According to the Appellant, the `2nd Respondent/Corporate Debtor' for the last several years has been manufacturing and supplying the Kraft Papers and had given its part of the industrial premises on `Lease' to `M/s.
Vaishnavi Impex' for carrying on the similar business operations that of the Corporate Debtor during the Year 2018. In 2018, the 2nd Respondent / Corporate Debtor and M/s. Vaishnavi Impex had received the supplies from the Operational Creditor and that the purchased Bills / Invoices of both the Parties were handed over to the Corporate Debtor as `M/s. Vaishnavi Impex' had no separate office staff.
5. It is the stand of the Appellant that the Account's team had erroneously clubbed all the purchases belonging to the `Corporate Debtor' as well as M/s. Vaishnavi Impex and recorded them into the Corporate Debtor's Books of Accounts. Subsequently, the `Auditor had rectified Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 5 of 26 those accounting mistakes by passing the necessary Journal Entries in respect of the Year 2019 - 2020 during the Audit and further issued a Certificate vide UDIN: 20029857AAAALG4400 mentioning that the debit balance of Rs.2,47,97,175.50 was in excess over the credit balance.
6. The Learned Counsel for the Appellant points out that the `1st Respondent/Operational Creditor' had made the `2nd Respondent/Corporate Debtor' liable based on the letter issued by the Managing Partner in the capacity of Authorized Signatory of M/s. Vaishnavi Impex and that it is alleged by the 1 st Respondent/Operational Creditor' that the Authorised Signatory / Partner of M/s./ Vaishnavi Impex had issued a letter dated 13.07.2018 to the `1st Respondent/Operational Creditor' informing that they have instructed their Sister Concern M/s. Sindhura Paper Private Limited (Corporate Debtor) to make the payments on its behalf to the Operational Creditor.
7. It is represented on behalf of the Appellant that the 1 st Respondent/Operational Creditor had made the 2nd Respondent/Corporate Debtor (M/s. Sindhura Paper Private Limited) liable based on the reason that the 2nd Respondent/Corporate Debtor had acknowledged the debt on the Ledger Account Statement of the 1st Respondent/Operational Creditor and the same was duly signed and stamped by the Corporate Debtor. Apart Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 6 of 26 from that, it was also alleged by the 1st Respondent/Operational Creditor that the 2nd Respondent/Corporate Debtor had acknowledged the arrangement between M/s. Vaishnavi Impex and the Corporate Debtor in the Ledger Accounts.
8. The Learned Counsel for the Appellant comes out with a plea that the 1st Respondent/Operational Creditor had not filed their Bank Account Statements earlier to 16.03.2020 i.e., the period from where the Invoices were raised or even before.
9. Furthermore, the transactions present in the Bank Account Statements clearly shows that the 1st Respondent/Operational Creditor had received the excess payments from the 2nd Respondent/Corporate Debtor, in respect of the Invoices raised. That apart, the payments made by the 2nd Respondent/Corporate Debtor either in the Accounting period of 01.04.2017 to 31.03.2020 (or) in respect of the claim period from 14.11.2017 to 30.11.2019, both satisfies the value of dues claimed by the 1st Respondent/Operational Creditor.
10. Continuing further, it is the stand of the Appellant that the 2 nd Respondent/Corporate Debtor had stopped the Bank transactions after Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 7 of 26 21.03.2020 with the Operational Creditor as the excess Debit balance had appeared in the Accounts Book.
11. The Learned Counsel for the Appellant submits that Mr. AMV Prasad, Authorised Signatory and Managing Partner of M/s. Vaishnavi Impex was not an Authorised Signatory of the 2nd Respondent / Corporate Debtor had no authority to sign and stamp on the records belonging to the Corporate Debtor.
12. As a matter of fact, the 2nd Respondent/Corporate Debtor had never nominated him as an Authorised Signatory and that he is neither a Director nor any Member of the Corporate Debtor and on that Account, the 2 nd Respondent/Corporate Debtor technically never acknowledged the debt on the Ledger Account Statement, as it was not signed and stamped by the Corporate Debtor. Indeed, the 1st Respondent/Operational Creditor had failed to produce any tri-parte agreement among the 2nd Respondent/Corporate Debtor, 1st Respondent/Operational Creditor, M/s. Vaishnavi Impex in respect of authorisation for effecting payment to other concerns, on its behalf.
13. Advancing his arguments, the Learned Counsel for the Appellant proceeds to point out the Managing Partner of M/s. Vaishnavi Impex Mr. Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 8 of 26 AMV Prasad has wrongly singed as an Authorized Signatory of the Corporate Debtor on the Ledger Account Statement. More importantly, the Ledger Account Statements of the 2nd Respondent / Corporate Debtor and M/s. Vaishnavi Impex were sent to the 1st Respondent/Operational Creditor through email of the 2nd Respondent/Corporate Debtor dated 21.03.2019 as alleged by the 1st Respondent/Operational Creditor and therefore, the mistake was not noticed by the Corporate Debtor.
14. In fact, later, the Auditor had rectified those accounting mistakes and separated the entries by passing the necessary `Journal Entries' by way of `Reconciliation of Accounts' for the Year 2019-2020 and issued a Certificate dated 03.12.2020 mentioning that the Debit Balance of Rs 2,47,97,175.50 was in excess over the Credit Balance.
15. The Learned Counsel for the Appellant takes a plea that the `Adjudicating Authority' should have observed `the Bank transactions shown by the 2nd Respondent/Corporate Debtor which indicates that the 1st Respondent/Operational Creditor had received the payment and that satisfies the claim of Rs. 3,60,11,075.
16. The other submission made on behalf of the Appellant is that the `Adjudicating Authority' should have made an observation that the Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 9 of 26 Authorised Signatory Mr. AMV Prasad is the Managing Partner of M/s. Vaishnavi Impex and is limited only to its operations. In fact, the said Authorised Signatory is a `third party' and nowhere connected to the business of the 2nd Respondent/Corporate Debtor, as he is neither a Director / Authorised Signatory nor any related person specifically nominated or appointed by the Corporate Debtor.
17. Furthermore, it is untrue that the 2nd Respondent/Corporate Debtor is a Sister Concern to M/s. Vaishnavi Impex as stated by its Authorised Signatory, the Corporate Debtor never recorded or declared that M/s. Vaishnavi Impex is its Sister Concern.
18. It is the contention of the Learned Counsel for the Appellant that the `Adjudicating Authority' should have examined that the Corporate Debtor technically never acknowledged the debt on the Ledger Account Statement, as it was not signed and stamped by the Authorised Signatory of the Corporate Debtor and that the signatures present in the said letter and Ledger Statement belongs to Mr. AMV Prasad, Managing Partner / Authorised Signatory of M/s. Viashnavi Impex who is technically not connected to the Corporate Debtor.
Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 10 of 26
19. It is the submission of the Appellant, that there was no Board Resolution passed by the Corporate Debtor in respect of advancing the payments to the 1st Respondent/Operational Creditor on behalf of M/s. Vaishnavi Impex. When minor decisions are taken, the Board shall pass a `Resolution' in respect of such payments and as the 1 st Respondent/Operational Creditor is to respond with the authenticity of such Board Resolution.
1st Respondent/Operational Creditor's Contentions:
20. According to the 1st Respondent/Operational Creditor, the 1st Respondent/Operational Creditor had preferred C.P. (IB) No. 60/9/AMR/2020 on 25.07.2020 before the `Adjudicating Authority', (NCLT), Amaravati Bench, Hyderabad against the 2nd Respondent / Sindhura Paper Private Limited (Corporate Debtor), among other things mentioning that the 2nd Respondent/Corporate Debtor had committed default as regards the payment of Rs.3,60,11,075 which is due to the 1 st Respondent/Operational Creditor, payable by the 2nd Respondent/Corporate Debtor, in relation to the Invoices raised against the supply of Goods.
21. It comes to be known that the 1st Respondent/Operational Creditor was issuing the despatch particulars / details of the supply of waster paper Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 11 of 26 and invoices and that the 2nd Respondent/Corporate Debtor had received the goods of the 1st Respondent/Operational Creditor in good condition and that no complaint or shortcomings in respect of the supplies was received by the 1st Respondent/Operational Creditor. In fact, for the Demand dated 16.03.2020 issued by the 1st Respondent/Operational Creditor to the 2nd Respondent/Corporate Debtor, no reply was issued.
22. The clear cut stand of the 1st Respondent/Operational Creditor is that in respect of the Invoices raised upon the 2nd Respondent/Corporate Debtor in respect of the supplies made, no payments were effected by the 2 nd Respondent/Corporate Debtor to the 1st Respondent/Operational Creditor, relating to the Invoices which commenced from 14.11.2017 to 30.11.2019.
23. According to the Learned Counsel for the 1st Respondent/Operational Creditor, the 2nd Respondent/Corporate Debtor had paid Rs.13,63,22,059 from 01.04.2017 to 31.03.2020 to the 1 st Respondent/Operational Creditor on different dates.
24. This `Tribunal' has heard the Learned Counsel appearing for the Appellant and the Learned Counsel appearing for the 1 st Respondent/Operational Creditor at the stage of `admission' itself and noticed their contentions. Apart from that, the Auditor of the 2nd Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 12 of 26 Respondent/Corporate Debtor had declared the Debit balance of Rs.2,47,97,175.50 and issued a Certificate dt. 03.12.2020 mentioning that the debit balance Rs.2,47,97,175.50 was in excess of the credit balance.
25. The stand of the 1st Respondent/Operational Creditor is that the 2nd Respondent/Corporate Debtor had miserably failed in making payments to it for the Invoices commencing from 14.11.2017 to 30.11.2019 and the `Operational Debt' fell due from 14.11.2017 and that the amount of `Default' was Rs.3,60,11,075/- (Rupees Three Crores Sixty Lakhs Eleven Thousand and Seventy Five Only).
26. Moreover, according to the 1st Respondent/Operational Creditor, the obligation of the 2nd Respondent/Corporate Debtor to pay the Operational Debt as per the Invoices raised by the 1st Respondent/Operational Creditor is governed by Section 37 of the Indian Contract Act, 1872. Apart from this, the 2nd Respondent/Corporate Debtor according to the 1st Respondent/Operational Creditor had not given any notice pertaining to a `Dispute' of the `Unpaid Operational Debt'
27. It is represented on behalf of the 1 st Respondent/Operational Creditor, the management and employees of the 2nd Respondent/Corporate Debtor and M/s. Vaishnavi Impex are one and the same and both are Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 13 of 26 managed by the Managing Director Mr. P. Nageshwara Rao of the 2nd Respondent/Corporate Debtor. Before the Adjudicating Authority', the 2nd Respondent/Corporate Debtor in its Counter had tacidly admitted that the part of the premises which belongs to the Corporate Debtor was leased out to M/s. Vaishnavi Impex.
28. On behalf of the 1st Respondent/Operational Creditor, it is brought to the notice of this `Tribunal' that the Managing Director of the 2 nd Respondent/Corporate Debtor Mr. P. Nageshwara Rao is also the Managing Partner of the Partnership Firm namely M/s. Vaishnavi Impex and during the Year 2017 the Managing Director of the Corporate Debtor Mr. P. Nageshwara Rao had approached the 1st Respondent/Operational Creditor and requested to supply the Goods to the Corporate Debtor as well as to its Firm M/s. Vaishnavi Impex. In fact, the said Mr. P. Nageshwara Rao, the Managing Director of the 2nd Respondent/Corporate Debtor in the capacity of Managing Partner of M/s. Vaishnavi Impex had addressed a communication dated 17.07.2019 to the Operational Creditor making a request with the said Creditor to supply the waster papers (Goods) to M/s. Vaishnavi Impex.
29. The Learned Counsel for the 1st Respondent/Operational Creditor points out that the Authorised Signatory of M/s. Vaishnavi Impex had Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 14 of 26 approached the 1st Respondent/Operational Creditor and informed that they had instructed their Sister Concern Viz. the 2nd Respondent/Corporate Debtor (M/s. Sindhura Paper Private Limited) to make payments to the Operational Creditor from the Account of the Sindhura Paper Private Limited, on behalf of M/s. Vaishnavi Impex and the Authorised Signatory of M/s. Vaishnavi Impex also issued a Letter dated 13.07.2018.
30. It is the version of the 1st Respondent/Operational Creditor that the 2nd Respondent/Corporate Debtor used to make payments on behalf of the M/s. Vaishnavi Impex for the goods supplied by the Operational Creditor to the M/s. Vaishnavi Impex and the Operational Creditor used to credit the amount of M/s. Vaishnavi Impex in respect of the payments made by the Corporate Debtor and this fact is well known to the Corporate Debtor.
31. The Learned Counsel for the 1st Respondent/Operational Creditor points out that in respect of the period from 11.02.2018 to 21.12.2019, the 1st Respondent/Operational Creditor had supplied goods worth Rs.8,36,00,143/- to M/s. Vaishnavi Impex and that the Operational Creditor received part payments to the tune of Rs.8,26,48,867/- towards supply of goods and ultimately, M/s. Vaishnavi Impex fell in due of Rs.9,51,276/- to the Operational Creditor.
Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 15 of 26
32. The Learned Counsel for the 1st Respondent/Operational Creditor adverts to the fact of particulars of the payments made by the 2 nd Respondent/Corporate Debtor on behalf of M/s. Vaishnavi Impex to the Operational Creditor under:
Total Amount of Goods Total Amount received by Total Amount received by Supplied by the the Operational Creditor the Operational Creditor Operational Creditor to from the bank account of from the bank account of the M/s. Vaishnavi Impex M/s. Vaishnavi Impex Corporate Debtor on behalf of M/s. Vaishnavi Impex Rs.8,36,00143/- Rs.2.27,69,299/- Rs.5,88,23,078/-
33. Besides the above, according to the 1st Respondent/Operational Creditor, the details of payments effected by the Corporate Debtor to the Operational Creditor for the Goods supplied to the 2nd Respondent are described as under:
Total Amount of Goods Total Amount received by Balance Due from the Supplied by the the Operational Creditor Corporate Debtor to the Operational Creditor to from the Corporate Operational Creditor for the M/s. Corporate Debtor the supplies made to the Debtor Corporate Debtor Rs. 11,25,51,454.3/- Rs.7,65,40,378/- Rs.3,60,11,075/- (Rupees during the period from Three Crore Sixty Lakh 01.04.2017 to 30.11.2019 Eleven Thousand and Seventy Five Only)
34. It is the plea of the 1st Respondent/Operational Creditor that the 2nd Respondent had acknowledged the debt on the Ledger Account Statement of the 1st Respondent/Operational Creditor maintained by the 2nd Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 16 of 26 Respondent/Corporate Debtor and the same was stamped and signed by the Corporate Debtor. Moreover, the 2nd Respondent/Corporate Debtor had acknowledged the Debt under the cover of email dated 21.03.2019 and the Ledger Statements were attached to the email. In fact, the 2nd Respondent/Corporate Debtor had acknowledged the arrangement between the M/s. Vaishnavi Impex and the Corporate Debtor in the Ledger Statements attached to the email.
35. The emphatic submission made on behalf of the 1st Respondent/Operational Creditor is that the 2nd Respondent/Corporate Debtor had received and accepted the Invoices raised by the 1 st Respondent/Operational Creditor against the supply and reaped benefits out of the Invoices in the form of availing `Input Tax Credit'.
36. The Learned Counsel for the 1st Respondent/Operational Creditor raises a legal arguments that in terms of the ingredients of Section 16 (2) of the Central Goods and Services Act, 2017, a person is not entitled to claim Input Tax Credit benefit, unless he has received the Goods and Services.
37. The Learned Counsel for the 1st Respondent/Operational Creditor submits that the 2nd Respondent/Corporate Debtor after receiving the Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 17 of 26 Demand Notice dated 16.03.2020 issued by the 1st Respondent/Operational Creditor had failed to furnish any `Reply' to the said Notice and had not raised any Dispute, in regard to the Goods Supplied and the Due Amount to the 1st Respondent/Operational Creditor prior to and after issuance of Demand Notice. Even after, taking sufficient time to clear `Debt', as promised, the 2nd Respondent/Corporate Debtor had not paid the admitted `Due Amount'.
38. The clear cut stand of the 1st Respondent/Operational Creditor is that the 2nd Respondent/Corporate Debtor is a heavy debt owned company and the numerous Petitions are pending before the Adjudicating Authority and its `Solvency Ratio' is much below the `Potential Solvency Ratio'. Furthermore, according to the 1st Respondent/Operational Creditor it has proved the `Existence of Debt' as well as the `Occurrence of Default' and the `Amount' so claimed by the 1st Respondent/Operational Creditor is payable in `Law' by the 2nd Respondent/Corporate Debtor. Acknowledgement of Liability:
39. It is to be pointed out that in `Law', an `acknowledgement' is to be an `unqualified one'. An `acknowledgement' must be an `existing liability', as per decision Kandasami V Suppammal 45 Madras Page 443. An Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 18 of 26 `acknowledgement' must point out the jural relationship as that of `Debtor' and `Creditor' between the `Parties'.
40. An `unconditional acknowledgement', is held to imply a `promise to pay' as per decision Hiralal V Badkulal, reported in AIR (1953) SC, Page
225. In short, an `acknowledgement', must relate to `definite liability'. An `acknowledgement', does not create a `new contract'. To put it precisely, an `acknowledgement to whomsoever made', is a `valid acknowledgement', if it points out with reasonable certainty in respect of the liability in `dispute'.
41. An `acknowledgement' of `debt' can be through a `counter affidavit' in earlier `litigation', amounting to an `admission' of an `outstanding debt' and would not be considered as `mere pleading'.
Admission:
42. An `admission', being a voluntary acknowledgment made in unequivocal term, is a tangible evidence, against a `Maker', which can be received by a `Tribunal' / `Court of Law', as a `Waiver of Proof'. Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 19 of 26 Evaluation:
43. An `Application' before the `Adjudicating Authority', (National Company Law Tribunal), Amaravati Bench in C.P. (IB) No. 60/9/AMR/2020 filed by the 1st Respondent/Operational Creditor as an `Applicant' under Section 9 of the Insolvency and Bankruptcy Code, 2016, read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, under Part IV, had mentioned the amount of `default' committed by the 2nd Respondent/Corporate Debtor as Rs.3,60,11,075/-. In fact, the `Operational Debt', fell due from 14.11.2017 as averred by the 1st Respondent/Operational Creditor.
44. Under Part V of the Application, the 1 st Respondent/Operational Creditor had averred that the `claim' of the 1st Respondent/Operational Creditor was based on the Invoices raised and materials supplied to the 2 nd Respondent/Corporate Debtor, for the period from 14.11.2017 to 30.11.2019. Indeed, the 2nd Respondent/Corporate Debtor had failed to make payments to the 1st Respondent/Operational Creditor, in respect of the Invoices commencing from 14.11.2017 to 30.11.2019. Furthermore, according to the 1st Respondent/Operational Creditor, the 2nd Respondent/Corporate Debtor had received the `Goods' despatched by the 1st Respondent/Operational Creditor in good condition and no complaint Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 20 of 26 about any shortcoming or defect in respect of the supplies effected was received by the 1st Respondent/Operational Creditor from the 2nd Respondent/Corporate Debtor.
45. It is seen from the Letter dated 13.07.2018 issued by the Authorised Signatory of M/s. Vaishnavi Impex addressed to the 1st Respondent/Operational Creditor that it was mentioned 1st Respondent/Operational Creditor was supplying waster papers to `M/s. Vaishnavi Impex', but they had instructed their Sister Concern 2 nd Respondent/Corporate Debtor M/s. Sindhura Paper Private Limited to transfer payments to the 1st Respondent/Operational Creditor's Firm directly from their Accounts and had requested the 1 st Respondent/Operational Creditor to credit their Account for receipts whichever it was received from 2nd Respondent / Corporate Debtor by the 1st Respondent/Operational Creditor.
46. Before the `Adjudicating Authority', the 1st Respondent/Operational Creditor had filed a copy of Ledger Statements of M/s. Vaishnavi Impex, maintained by it. Further, the details of payment made to the 1st Respondent/Operational Creditor from the Bank Account of Corporate Debtor and M/s. Vaishnavi Impex for the goods supplied to M/s. Vaishnavi Impex was also filed in the form of Ledger Account beginning from Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 21 of 26 01.04.2017 to 31.03.2018 (8 pages) before the `Adjudicating Authority' in CP (IB)/60/9/AMR/2020.
47. The 1st Respondent/Operational Creditor had also filed the details of payments made to the 1st Respondent/Operational Creditor from the Bank Account of the 2nd Respondent/Corporate Debtor for the goods supplied to the Corporate Debtor (vide Ledger Account 01.04.2019 to 31.03.2020 of the 2nd Respondent/Corporate Debtor (Sindhura Paper Private Limited).
48. It is evident that the 1st Respondent/Operational Creditor through Chevuri Lakshmi Narayana had addressed an email dated 26.02.2019 to the 2nd Respondent/Corporate Debtor for Accounts confirmation, attaching the Ledger Statements (Account Copy from 01.04.2018 to 26.02.2019) in Vaishnavi Impex and Sindhura Paper Private Limited.
49. The 2nd Respondent/Corporate Debtor, on 21.03.2019 had issued an email along with the Ledger Statement acknowledging the `debt' to the 1st Respondent/Operational Creditor (Account Copy for Chevuri Enterprises from 2017 to 2019). Also, that the 1st Respondent/Operational Creditor had filed a copy of the Ledger Statement signed and acknowledged by the Corporate Debtor for the period from 01.04.2018 to 08.03.2019. Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 22 of 26
50. The 1st Respondent/Operational Creditor had filed a copy of the Payment Receipts (i) dated 18.01.2018 for Rs.2,00,000/- received from the 2nd Respondent/CD amounting to Rs.2,00,000/-, (ii) dated 29.01.2018 for the Receipt of Rs.2,50,000/- (iii) dated 03.02.2018 for Rs.3,00,000/-, (iv) 28.11.2018 for Rs.2,75,000/- (v) dated 01.12.2018 for Rs.1,50,000/- (vi) dated 05.01.2019 for Rs.3,00,000/- towards Account dues and these were sent by the 1st Respondent/Operational Creditor to the 2nd Respondent/Corporate Debtor and M/s. Vaishnavi Impex. Section 9 of the I & B Code, 2016:
51. In this connection, it is not out of place for this `Tribunal' to point out that an `Adjudicating Authority' need not analyse the `dispute' in thread bear fashion or in its merits. However, the said `Authority' must evaluate, whether the `dispute' is a `plausible one'.
52. In Section 9 Application of the I & B Code, 2016, the `Adjudicating Authority' is to examine whether a `Notice' of `Dispute' was received by the Operational Creditor or whether there is a `record' of `Dispute' in `Information Utility'. An `Existence of an undisputed Debt', is a sine quanon for `initiating the Corporate Insolvency Resolution Process'.
Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 23 of 26
53. An `Adjudicating Authority' has to adhere the mandate of Section 9 of the I & B Code, 2016, and in particular the mandate of Section 9 (5) of the Code and to `admit' or to `reject' the Application, as opined by this `Tribunal', after all, the `Adjudicating Authority' is not required to be satisfied as to whether the `Defense' is likely to succeed or not.
54. The merits of dispute are not the concern at this stage, but only an `Adjudicating Authority' is to satisfy at this stage, about the `Existence of Dispute', which is good enough to invalidate the Section 9 `Application'.
55. It is to be remembered that the `Dispute' and/or the `Suit' or `Arbitration Proceedings', must be `pre-existing', it must exist before receipt of `Demand Notice' or `Invoice'.
56. In the instant case, it is pertinently pointed out by this `Tribunal' that the 2nd Respondent/Corporate Debtor had not issued any `Reply' to the `Demand Notice' dated 16.03.2020, issued by the 1 st Respondent/Operational Creditor.
57. As a matter of fact, the 1st Respondent/Operational Creditor before the `Adjudicating Authority' had claimed only the `Balance Amount' after Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 24 of 26 the adjustment. The fact that the 2nd Respondent/Corporate Debtor and M/s. Vaishnavi Impex are managed by one and the same is not denied.
58. As long as the `Dispute' is not a `spurious' or an `illusory' or `hypothetical one', the `Adjudicating Authority' is to admit the Section 9 Application filed by the `Petitioner/Applicant/Operational Creditor'.
59. At this juncture, this Court worth recall and recollects the decision of the Hon'ble Supreme Court in N. Subramanian V Aruna Hotels Limited, reported in 2021, 164 CLA 364, wherein it is observed that ``an `acknowledgement of liability' leads to an `admission of Corporate Insolvency and Resolution Process', under the I & B Code, 2016''.
60. As far as the present case is concerned that it is latently and patently quite clear that the two Account Statements of the 2 nd Respondent/Corporate Debtor and M/s. Vaishnavi Impex were properly kept separately and in the light of foregoing detailed discussions and also this `Tribunal' considering the fact that the prior to and after issuance of `Demand Notice' dated 16.03.2020 by the 1st Respondent/Operational Creditor to the 2nd Respondent/Corporate Debtor, the 2nd Respondent/Corporate Debtor had not raised any `Dispute' in regard to the `Goods' supplied by the `Operational Creditor' and in fact, the 2 nd Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 25 of 26 Respondent/Corporate Debtor had admitted the `Debt' through emails, the 2nd Respondent/Corporate Debtor having utilised the `Goods' supplied by the 1st Respondent/Operational Creditor cannot avoid or evade its responsibility in not making the payment of `Debt' of Rs.3,60,11,075/-, because it had committed `Default' and therefore, without any hesitation, this `Tribunal' holds that the `Adjudicating Authority', (National Company Law Tribunal, Amaravati Bench), had rightly admitted the CP(IB) No./60/9/AMR/2020, which does not suffer from any `material irregularity' or `patent illegality' in the `eye of law'. Consequently, the `Appeal' fails.
Disposition:
In fine, the instant Company Appeal (AT) (CH) (INS) No. 195 of 2022 is dismissed. No costs. The connected I.A. No. 444 of 2022 (seeking stay of the `impugned order') is Closed.
[Justice M. Venugopal] Member (Judicial) [Mr. Kanthi Narahari] Member (Technical) 13/07/2022 SR/TM Company Appeal (AT) (CH) (INS) No. 195 of 2022 Page 26 of 26