National Company Law Appellate Tribunal
Bhuvan Kumar Gupta vs P & R Infraprojects Limited on 28 November, 2025
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Company Appeal (AT) (Insolvency) No. 1485 of 2023
[Arising out of order dated 10.11.2023 passed by the Adjudicating Authority
(National Company Law Tribunal, New Delhi, Court - V) in C.P. (IB)
No.387/ND/2021]
IN THE MATTER OF:
Bhuvan Kumar Gupta ...Appellant
Versus
P & R Infraprojects Ltd. & Anr. ...Respondents
Present:
For Appellant : Ms. Malvika Trivedi, Sr. Advocate with Mr.
Sanyam Kheterpal, Mr. Dhruv Suri, Ms. Vrvika
Suri, Mr. Prakhar Srivastava and Ms. Lisa Sankrit,
Advocates.
For Respondents : Mr. Arun Bansal, Mr. Raktim Gogoi, Mr. Anubhav
Bansal, Ms. Akshita Nigam and Mr. S. Vinod,
Advocates for R-1 & I.A. No. 6638 of 2025.
Mr. Abhinder Maheshwari, Advocate for R-2.
Mr. Abhimanyu Mittal, Advocate for IRP.
JUDGMENT
ASHOK BHUSHAN, J.
This appeal by the Suspended Director of the corporate debtor, OFB Tech Private Limited has been filed challenging the order dated 10.11.2023 passed by the adjudicating authority (National Company Law Tribunal, New Delhi, Court - V) admitting Section 9 application filed by the respondent herein P&R Infraprojects Limited. Aggrieved by the order dated 10.11.2023, this appeal has been filed.
2. Challenging the order dated 10.11.2023, Writ Petition was filed in the High Court of Delhi in the matter of 'Asish Mohapatra' Vs. 'P And R Infraprojects Limited & Anr.', [CM (M) 1880/2023], on which order High Court passed an order on 14.11.2023, staying the order dated 10.11.2023 till 20.11.2023 and permitting the petitioner to invoke the statutory remedy before the NCLAT. After the order dated 14.11.2023, the appeal was filed in this Tribunal on 15.11.2023, and the interim order was passed on 17.11.2023. The order dated 10.11.2023 was stayed which interim order is continuing from time to time. Appellant had also offered to deposit the amount claimed in Part IV of Section 7 application.
3. Brief facts of the case necessary to be noticed for deciding the appeal are:
i. The respondent, P&R Infraprojects Limited (hereinafter referred to as the 'operational creditor') is company dealing with sale and purchase of steel plates etc. ii. The operational creditor placed a purchase order dated 07.02.2018 on the Steel Authority of India Limited (SAIL) for steel plates amounting to ₹15,02,92,042/-.
iii. The corporate debtor, OFB Tech Private Limited is a company inter alia engaged in business to business trading of raw material for manufacturing and infrastructure industries. The corporate debtor is also parent company of a subsidiary namely M/s. OXYZO Financial Comp. App. (AT) (Ins.) No. 1485 of 2023 2 of 38 Service Private Ltd a non-Banking Finance Company (hereinafter referred to as 'OXYZO').
iv. In the year 2018, operational creditor was facing certain financial difficulties due to which it requires finance for lifting the raw material from SAIL. Operational creditor approached the corporate debtor to purchase the raw materials from SAIL.
v. The corporate debtor proposed operational creditor to provide finance through its wholly own subsidiary OXYZO. OXYZO, the subsidiary of the corporate debtor issued a sanction letter dated 20.03.2018 to the operational creditor sanctioning a purchase financing for amount of ₹1,00,00,000/- on interest of 18% per annum. Operational creditor paid upfront payment of ₹4,00,00,000/-.
vi. A Master Facility Agreement dated 29.03.2018 was entered between OXYZO and operational creditor, containing terms and condition for sanction of the Purchase Finance Facility. Schedule I of the Master Facility Agreement which provides for security for hypothecation, there was no mention of any security.
vii. After sanction of the facility, operational creditor requested the OXYZO vide letter dated 31.03.2018 to release amount of ₹7,92,00,000/- to the SAIL as a request of disbursal of Purchase Finance Facility. The OXYZO disbursed the amount of ₹7,92,00,000/- to SAIL for purchase of steel plates.
Comp. App. (AT) (Ins.) No. 1485 of 2023 3 of 38 viii. Parties agreed that the goods which will be purchased using the finance by OXYZO (a subsidiary of corporate debtor), the goods be retained with the corporate debtor and corporate debtor would charge services after from the operational creditor towards storage and release of the goods upon the operational creditor selling the goods to its buyers receivable from the buyers would be transferred by the operational creditor to OXYZO and in turn the corporate debtor would release the goods to the buyers of the operational creditor.
ix. After release of the amount by the OXYZO to the SAIL, the goods were kept in safe custody of the corporate debtor which were transported to the warehouse of the corporate debtor who was to retain the custody of the goods till such time the operational creditor sell the goods to its customers.
x. The corporate debtor has leased a warehouse at in Sonipat, Haryana for storing the goods. The goods were released by the corporate debtor to buyers, customers of the operational creditor. xi. Operational creditor also raised invoices to the corporate debtor with object to transfer ownership of goods for the logistic purpose, and the corporate debtor raised the counter invoices on the operational creditor/its customers. The amount received by the corporate debtor from customers who were sold the goods was entered in the region maintained by the corporate debtor of the operational creditor and the Comp. App. (AT) (Ins.) No. 1485 of 2023 4 of 38 amounts were also transferred to OXYZO to set off the liability of operational creditor to OXYZO.
xii. Amount of ₹7,90,00,000/- was disbursed OXYZO to the SAIL.
₹4,00,00,000/- having already been given by operational creditor to OXYZO, interest was charged by OXYZO on operational creditor on ₹3.92 crore and interest invoices were issued by OXYZO to operational creditor from time to time.
xiii. A request was made by operational creditor to OXYZO to make additional payment of ₹7,00,00,000/- to SAIL for lifting more materials, out of material picked of ₹7.92 crore from sales by the corporate debtor, amount of ₹4,00,00,000/- having already been paid, the goods was ₹4.5 crore were released to the operational creditor and remaining goods of ₹3.42 crore were kept in the custody of the corporate debtor. xiv. On request of the operational creditor, OXYZO further made a payment of ₹5.99 crore to SAIL, under the direction of the operational creditor, the corporate debtor picked up remaining goods from SAIL on behalf of the operational creditor. The transaction between the parties at the relevant time is reflected in various emails between 07.04.2018 to 19.04.2018. There being outstanding of OXYZO on the operational creditor it was decided between the parties that the remaining goods laying in the custody of corporate debtor be sold on instructions of the operational creditor.
Comp. App. (AT) (Ins.) No. 1485 of 2023 5 of 38 xv. In the above reference, operational creditor issued several invoices in respect to different quantities of steel, which was issued in the name of corporate debtor. Corporate debtor, after receipt of above invoices from operational creditor sold the goods to one GC Steels and Rajesh Sales Corporation as instructed by operational creditor and certain invoices were further issued in name of operational creditor. xvi. Out of the amount received from sale to GC Steel and Rajesh Sales Corporation and the operational creditor, amount of ₹4.8 crore was paid by corporate debtor to OXYZO to set off the liabilities of operational creditor to OXYZO.
xvii. The corporate debtor has also issued various invoices on the operational creditor towards site hiring service charges, etc., due to keeping the good in safe custody as agreed by the parties. xviii. The sale by the corporate debtor of goods on the instructions of operational creditor were completed in September 2018. xix. The operational creditor issued a demand notice dated 13.02.2020 to the corporate debtor, claiming default of amount of ₹1,63,54,418/- as principal and amount of ₹58,00,87,590/- as interest totalling to ₹2,22,42,008/- as on 31.01.2020.
xx. The demand notice referred to invoices issued by operational creditor to the corporate debtor and it was claimed that total amount due is ₹1,63,54,418/-. After receipt of the notice of demand under Section 8 Comp. App. (AT) (Ins.) No. 1485 of 2023 6 of 38 of the IBC, the corporate debtor replied by notice of dispute dated 27.02.2020. Corporate debtor in its reply to demand notice denied any liability of corporate debtor of any operational debt. It was pleaded that demand notice is baseless and misleading and no amount is due. It was further pleaded that there exists a dispute within meaning of IBC. Reply notice also stated that operational creditor has issued demand notice suppressing the full facts.
xxi. The corporate debtor has picked up material worth ₹13.98 crore for operational creditor from SAIL under instruction which are in custody of corporate debtor. Huge losses were suffered by corporate debtor. It was pleaded that finance was provided to operational creditor by subsidiary company OXYZO and corporate debtor was constrained to sell the material kept by operational creditor in safe custody, due to loss being suffered and material was sold in losses. It was pleaded that there was pre-existing dispute between the parties and there is no operational debt.
xxii. Section 9 application was filed by the operational creditor dated 22.07.2021. In Section 9 application, the amount claimed in Part IV was of ₹1,09,73,880/- as principal and interest of ₹59,25,895/- as on 31.03.2021. Reply was filed by the corporate debtor to Section 9 application pleading that operational creditor has suppressed material facts. In the reply, the background facts pertaining to transaction between the parties was detailed regarding Master Facility Agreement Comp. App. (AT) (Ins.) No. 1485 of 2023 7 of 38 executed between OXYZO, the subsidiary of the corporate debtor and detail was given and mode and manner and details of transaction were given relevant invoices and other materials were filed along with the reply. Rejoinder was also filed by the operational creditor. Operational creditor also filed an application dated 10.05.2023 to bring certain document on the record. Adjudicating authority heard the parties and by impugned order dated 10.11.2023, admitting Section 9 application. xxiii. Adjudicating Authority held that corporate debtor used to place orders for required supply and goods with operational creditor from time to time and operational creditor supplied the goods as per the purchase order and the outstanding amount of ₹1,68,99,775/-. Adjudicating authority also held that although plea of pre-existing dispute has been raised in the reply to demand notice, but there is no supporting document to corroborate the same. It was held that defence of corporate debtor with respect to pre-existing dispute, appears to be a moonshine defence. Adjudicating authority after taking the above view of the matter admitted Section 9 application by its order 10.11.2023, which is in challenge in the present case.
4. We have heard learned Sr. counsel Ms. Malvika Trivedi appearing for the appellant as well as learned counsel Mr. Arun Bansal appearing for the respondent.
5. Ms. Malvika Trivedi, learned Sr. counsel appearing for the appellant challenging the order submits that operational creditor was going through a Comp. App. (AT) (Ins.) No. 1485 of 2023 8 of 38 financial crunch, hence it was not in a position to lift purchase goods from the SAIL. A Master Facility Agreement was entered by operational creditor and OXYZO, wholly owned subsidiary of the corporate debtor, which granted Purchase Finance Facility. Operational creditor having nothing to offer security by way of mortgage or hypothecation to OXYZO, it was agreed that as security the goods would be held in custody of corporate debtor for disbursement to the customers of operational creditor which were introduced by operational creditor itself. Goods were kept in warehouse hired by corporate debtor. The cost incurred for site hiring charges and logistic was to be borne by operational creditor, for which invoices were raised by corporate debtor to operational creditor. It is submitted that operational creditor had also issued invoices on corporate debtor. The only purpose for raising such invoices was that goods to be transferred and transported from one place to another and to avoid any miss statement in the way bills when the material is being sent from custody of corporate debtor to customers. Amount received from customers by corporate debtor was required to transfer to OXYZO in order to settle the accounts, in light of the Master Facility Agreement. It is submitted that in the demand notice as well as Section 9 application, the operational creditor had not disclosed the complete material facts regarding transaction between the parties and has concealed the relevant facts. The goods were received by the corporate debtor from SAIL on behalf of the operational creditor and kept in the custody of the corporate debtor as security for amount disbursed by OXYZO, subsidiary of corporate debtor for lifting the materials from SAIL. The demand notice was immediately replied Comp. App. (AT) (Ins.) No. 1485 of 2023 9 of 38 by notice of dispute where it was pleaded that there is a pre-existing dispute between the parties since it was the corporate debtor which had suffered the loss. It is submitted that the invoices have been raised by corporate debtor on operational creditor for site charges which have not yet been paid. The threshold of ₹1,00,00,000/- is not met since as per reply given in this appeal, only amount due and payable from the corporate debtor is ₹78,67,066/- as per the pleadings of operational creditor. It is submitted that corporate debtor was not purchaser of the goods from operational creditor, and at no time any purchase order was issued by corporate debtor to operational creditor. Invoices which were issued by operational creditor in the name of corporate debtor, which are the basis of demand notice were invoices for felicitating sale of goods by corporate debtor in the name of customer of the operational creditor and counter invoices were issued after receipt of the above invoices and the amount which was received was duly reflected in the ledger of corporate debtor and amount was transferred to the OXYZO i.e., ₹4.8 crores. No amount was to be paid by the corporate debtor to operational creditor since the invoices which was issued on corporate debtor by operational creditor were in turn to be sold to the parties i.e., the customers of the operational creditor, for which counter invoices were issued. The adjudicating authority failed to examine the true transaction between the parties. Observation of the adjudicating authority that there are no materials to prove the transaction between the parties and that the goods with the corporate debtor were towards security, which findings are without consideration of relevant materials. Emails, entered between the operational creditor and corporate debtor from Comp. App. (AT) (Ins.) No. 1485 of 2023 10 of 38 07.04.2018 to 19.04.2018, which are part of the record clearly reflected the nature of transaction between the parties and prove that goods were in the custody of corporate debtor as security for the amount disbursed by OXYZO to operational creditor. Adjudicating authority committed error in observing that there are no supporting documents to corroborate the above. There was pre-existing dispute between the parties, since the goods which was received by invoices issued by operational creditor were sold at a loss, which fact was pleaded both in reply to demand notice as well as reply to Section 9 application. Reply to Section 9 application were made by corporate debtor, which have not been adverted to all relevant materials, including contemporaneous communication between the parties, ledger account invoices were part of the record which had not been adverted to. The finding of the adjudicating authority that defence of corporate debtor for pre-existing dispute is a moonshine defence is unsustainable. There was sufficient material on the record which clearly prove that there was a pre-existing dispute between the parties and the corporate debtor was not purchaser of goods from the operational creditor. Goods were purchased by the operational creditor from SAIL for which amount was disbursed by OXYZO on purchase financing granting by OXYZO, a subsidiary of the corporate debtor and goods were in custody of the corporate debtor as security for payment and goods were released to the customer of operational creditor as per directions of the operational creditor from time to time. Whatever amount corporate debtor received from sale of the goods were transferred to OXYZO towards liability of operational creditor. No dues are payable by corporate debtor to operational Comp. App. (AT) (Ins.) No. 1485 of 2023 11 of 38 creditor and the Section 9 application was filed mischievously to avoid the liability of operational creditor towards the corporate debtor. It is submitted that the corporate debtor is a running concern, which is as a profit-making company which has earned profit of ₹460 crore in financial year 2023. Corporate debtor has substantial assets of thousands of crores. It is submitted that Section 9 application which was filed by the operational creditor deserves rejection and adjudicating authority without adverting to material on record has committed error in admitting Section 9 application.
6. Learned counsel appearing for the operational creditor refuting the submission of the counsel for the appellant submits that demand notice which was issued on 13.02.2020 relates to invoices which were issued by operational creditor on corporate debtor dated 29.08.2018 and 30.08.2018, in which invoices the corporate debtor was shown as recipient as well as consignee. The abovesaid were tax invoices. The corporate debtor was liable to make payment to the operational creditor to the above invoices. In the demand notice, the operational creditor has made deduction of the amount of ₹443,28,807/- which was paid by the corporate debtor to OXYZO on behalf of the operational creditor. Amount of ₹1,63,54,408/- was due as per demand notice. It is submitted that the demand notice pertained to transaction which took place on 29.08.2018 and has nothing to do with earlier transactions between the parties. Learned Counsel for the operational creditor submitted that although earlier certain goods were kept as security with the corporate debtor belonging to operational creditor, which was lifted from SAIL, but the demand notice was only with regard to transaction which took place on Comp. App. (AT) (Ins.) No. 1485 of 2023 12 of 38 29.08.2018, which has no relation to the earlier transaction between the parties under which certain goods were with the corporate debtor as security. It is submitted that corporate debtor is trying to mix the transaction dated 29.08.2018 with earlier transaction, which are independent and separate. With effect from 29.08.2018 separate and new transaction commenced between the parties in which corporate debtor was fully liable to make payment of invoices which were drawn on the corporate debtor. It is submitted that in Section 9 application, the principal amount has been reduced to ₹1,09,73,880/- since certain debit notes were not noticed in the demand notice which under Section 9 which were duly given credit. It is submitted that purchase financing by OXYZO by Facility Agreement 29.03.2018 is separate transaction and has nothing to do with the transaction between operational creditor and corporate debtor. The corporate debtor itself in its reply has admitted that it has sold the goods laying in the custody of corporate debtor, thus, the goods which were invoiced to the corporate debtor were sold by corporate debtor, hence, corporate debtor was liable to make payment of goods and there being default in payment by corporate debtor, notice of demand was issued. Reply to demand notice was misleading. There was no dispute between the parties and although in the reply to demand notice corporate debtor mentioned that there are several charges leviable on operational creditor which are mentioned in the reply to demand notice in paragraph 7 but neither any details of the said charges or liabilities has been communicated nor they are payable. It is submitted that adjudicating Comp. App. (AT) (Ins.) No. 1485 of 2023 13 of 38 authority has rightly admitted Section 9 application and appellant is not entitled for any relief.
7. We have considered the submissions of the counsel for the parties and perused the records.
8. Before we enter into respective submissions of the parties, we need to first notice the true nature of the transaction which took place between the parties. The operational creditor has obtained purchase OXYZO finance facility from subsidiary of the corporate debtor, which had sanctioned a purchase financing vide letter dated 20.03.2018 by which purchase finance facilities subject to condition mentioned in sanction letter were granted to operational creditor. Sanction was granted at the rate 18% per annum and upfront payment was ₹4 crore made by the operational creditor. Master Facility Agreement was entered on 29.03.2018 between OXYZO and M/s. P&R Infraprojects Limited, the operational creditor. The Master Facility Agreement indicates that Schedule I which provided for security for hypothecation was blank and no security for hypothecation was provided. Clause 10 dealt with set off and lien. Clause 10 (i) which is relevant is as follows:
"10. SET-OFF AND LIEN i. The Financed Party(s) hereby authorize the OXYZO to apply any credit balance to which the Financed Party(s) may be entitled to, on any account of the Financed Party(s), with the OXYZO or any of its subsidiary/associate, in satisfaction of any sum due and payable by the Financed Party(s) to the OXYZO with respect to the Facility, from time to time (i.e. with respect to any amount outstanding for any month or months and/or with respect to the whole of the amount outstanding under the Facility). However the OXYZO Comp. App. (AT) (Ins.) No. 1485 of 2023 14 of 38 shall not be obliged to exercise any right given to it herein."
9. It is admitted fact that OXYZO is subsidiary of the corporate debtor from whom the finance was arranged to the operational creditor. It is also on the record that operational creditor has made a request to the OXYZO for disbursement of amount to the SAIL and the amount of ₹7,92,00,000/- was released by OXYZO to the SAIL in pursuance of request dated 31.03.2018 from operational creditor. Subsequently on a further request received from operational creditor amount of ₹5,99,67,662/- was further released by OXYZO in April 2018.
10. In the reply to Section 9 application, the corporate debtor has in detail given the background facts and mode and manner of transaction. As per pleading in the reply to Section 9 application, it is useful to notice paragraphs 4 & 5 of the reply, which is as follows:
"4. In effect, there are four parties involved in the transaction which was carried out. It is further submitted that the transaction was carried out in the following manner/steps:
Firstly, OC had placed the Purchase Order on SAIL, however, owing to financial crunch, OC could not take the delivery of the goods. Hence, OC approached the Respondent requesting the Respondent to finance the purchase of the raw material from SAIL on OC's behalf. Respondent being a trading company proposed to the OC to provide the financing through its wholly owned subsidiary Oxyzo in the form of a 'Purchase Finance Facility', solely on OC's requests, representations and assurances to repay the financed amount.. The price of the goods being purchased was transferred by Oxyzo to SAIL under the 'Purchase Financing Facility' and the goods were transported to the warehouse of the Comp. App. (AT) (Ins.) No. 1485 of 2023 15 of 38 Respondent (who was to retain custody of the goods till such time that the OC would sell the goods to its customers).
Secondly, the OC received orders from its customers for purchase of the goods. The consideration received by the OC from its customers was transferred to Oxyzo towards repayment under the "Purchase Financing Facility'.
Thirdly, the Respondent would release the goods to the OC.
5. With a view to reduce logistics costs and delays in delivery to the customers; it was mutually accepted and agreed that Respondent would transport the goods directly to the customers of the OC. It was for this very purpose that the Respondent had leased a warehouse in Sonipat, Haryana for storing the goods. Thus, the OC raised an invoice on the Respondent (merely to transfer ownership of goods for the aforesaid logistic purpose) and the Respondent raised a counter - invoice on the OC/ its customer. The Respondent has raised invoices on the OC for logistic charges in view of the aforesaid arrangement."
11. Details of transaction between the parties has also been noticed and elaborated in reply. Paragraphs 8 & 9 of the reply where details have further been pleaded, are as follows:
"8. In the first week of April, 2018 the OC met with the officials of Oxyzo and explained that OC is going through a financial crunch. The OC requested that Oxyzo makes the payment of additional Rs. 7.00 Crores to SAIL.
Independent of the transaction between the OC and Oxyzo in respect of the Purchase Finance Facility, the OC approached the Respondent to keep the safe custody of the 'goods', which is evident from a combined reading of various e-mails exchanged in the first and second week of April, 2018, and so that the same could be treated as a security for Oxyzo as well for the Purchase Financing Facility availed from Oxyzo.
Comp. App. (AT) (Ins.) No. 1485 of 2023 16 of 38 The email dated 07.04.2018 sent by the Respondent to OC clearly records the circumstances at the relevant time and the future plan of action. As per the said email the following position emerges:
(a) On the instructions of the OC the Respondent had picked up material worth Rs. 7.92 Crores from SAII., and the payment of the same was made by Oxyzo.
(b) As a result of the payment of Rs. 4.00 Crores and the 'Purchase Financing Facility'; the Respondent had released 'goods' worth Rs. 4.50 Crores to the OC and the remaining 'goods" worth Rs. 3.42 Crores were kept in the custody of the Respondent.
(c) OC had already received orders from one BBJ in respect of goods" worth Rs. 7.92 Crores. It was expected that BBJ would make part payment (upto 50% i.e. Rs. 3.96 Crores) to OC.
(d) When the payments were not received in time by the OC from its customers, it was decided that OC would issue two bank guarantees one in favour of BBJ and the other one in favour of Oxyzo. The bank guarantees in favour of BBJ would enable it to make the payment of Rs. 7.46 Crores (Le. 50% of the total goods purchased). The bank guarantee in favour of Oxyzo would enable it make the additional payment of Rs. 7.00 Crores towards the purchase of the remaining "goods' from SAIL. Accordingly, Mr. Pavaljeet Singh made a request to the Respondent to lift more material from SAIL.
(e) However, the OC was not able to get a bank guarantee issued in favour of Oxyzo.
(f) On 17.04.2018, the OC requested Oxyzo to pay a further sum of Rs. 7.00 Crores to SAIL for the remaining goods under the Purchase Order No. PRIL/17-
18/SO/001. OC further represented that it is going to receive payments from BBJ and Gammon in some days and would pay to Oxyzo from those payments.
(g) Believing the said representation of OC; Oxyzo made a further payment of Rs. 5.99 Crores to SAII. (on behalf of OC).
Pursuant to above, the OC directed the Respondent to pick up the remaining 'goods from SAIL on behalf of OC. Comp. App. (AT) (Ins.) No. 1485 of 2023 17 of 38 True copy of the disbursal letter dated 18.04.2018 is annexed herewith and marked as ANNEXURE R-6.
True copy of the trail mail dated 07.04.2018, 13.04.2018, 17.04.2018 and 18.04.2018 exchanged between Oxyzo and OC are annexed herewith as ANNEXURE R-7.
True copy of the email dated 19.04.2018 written by Oxyzo to SAIL alongwith the attachment appended to the mail is annexed herewith as ANNEXURE R-8.
(h) The OC failed on all its commitment to pay the outstanding dues of Oxyzo. Realising that the dues of OC towards Oxyzo will keep on compounding, as such, and as per the agreement with the OC, the remaining 'goods' lying in the custody of the Respondent were sold, which were kept in custody of the Respondent, on instructions of the OC and as a security for Oxyzo. The aforesaid sale was made to clients/customers as suggested by the OC. In all 'goods' worth Rs. 5.30 Crores were sold. The amount received from the sale of the 'goods' was transferred to Oxyzo who in turn set it off against the payables of OC under the "Purchase Financing Facility".
True copy of the ledgers of Respondent showing sale of material worth approximately Rs. 5.30 Crores and the credit of the receivables to the Applicant are annexed herewith as ANNEXURE R-9.
(i) Upon sale of the 'goods' to the above terms, the amount received by the Respondent was paid to Oxyzo and the account outstanding of the OC was closed, with a credit balance of Rs. 806, which is still due and payable.
9. As stated above, the OC was unable to reimburse the advances to Oxyzo paid by it on OC's behalf to SAIL towards the purchase of material. As such, it was agreed by the OC that the material kept in the custody of Respondent be sold to mitigate any losses and to realise the dues.
To give effect to the aforesaid, the OC in order to transfer the ownership of the goods to Respondent raised invoices on the Respondent and the Respondent raised counter invoices on the customers (suggested by the OC). The customers to whom the material was sold Comp. App. (AT) (Ins.) No. 1485 of 2023 18 of 38 i.e. GC Steel India Pvt. Ltd., Rajesh Sales Corporation were suggested by the OC itself.
The whatsapp chat between Mr. Arvind Guliani-Admin (OFB official), Mr. Lokesh Garg (OFB), Mr. Ankush Jain (OFB), Mr. Asish Mohapatra (OFB), Mr. Nitin Jain (OFB), Mr. Indermal (P&R), Mr. Paveljeet Singh (P&R), Mr. Pratyush Nalla (OFB), Ms. Ruchi Kalra (OXYZO) and Mr. Vikram Singh (OFB) clearly depicts the aforesaid position.
Copy of the entire whatsapp chat amongst the group members representing the Petitioner and the Respondent is annexed herewith and marked as ANNEXURE R-10."
12. Adjudicating authority in paragraph 5 has noticed the case set up by the corporate debtor with respect to transaction between the parties. Paragraph 5 of the impugned order in detail captures all relevant pleading made by the corporate debtor and further in the analysis and findings in paragraph 14, the contention of the corporate debtor that instant case does not have any operational debt and the corporate debtor was merely acting as a facilitator in the Purchase Finance Facility which was entered between the operational creditor and M/s. OXYZO has been noted. However, the said submission was rejected in following words:
"However, there is no supporting documents to corroborate the same".
13. In the reply which was filed under Section 9, the corporate debtor has referred to the contemporaneous correspondence which took place between the parties. The emails have been referred to in paragraph 8 of the reply, which emails were also filed as Annexure - 7 to the reply. We need to notice the above emails which have been referred to in the reply and which reflected the nature of transaction between the parties. The email was sent from Comp. App. (AT) (Ins.) No. 1485 of 2023 19 of 38 Ashish Mohapatra of the corporate debtor, which email captures the steps in the transaction, which email is as follows:
"On Sat, Apr 7, 2018, 7:50 PM Asish Mohapatra <[email protected]> wrote:
Dear All, Firstly, thanks to Paveljeetil for coming to the office for settling out the issue on PNR. There is a bit of a cash trap that PNR is facing and we have to help in the best possible way so that no parties are harmed. Context for everybody is the following -
1. OFB has picked up material worth INR 7.92 cr from SAll on behalf of PNR.
2. PNR has paid OFB a sum of INR 4 cr.
3. OFB has already offered an unsecured limit of INR 1 crore to PNR.
4. OFB has sent material worth INR 4.5 cr to PNR.
5. Material worth INR 3.42 cr lies in the safe custody of OFB.
6. PNR has already raised the bill of INR 7.92 cr on BBJ (Anchor) on April 5th.
7. BBJ is expected to make the payment of INR 3.96 or (50% of 1st lot invoice) on April 16th. The next steps are the following -
1. PNR will have to submit a BG of 4.75 or to BBJ to make his account live. Thsi will be from regular payments that PNR gels.
2. PNR will try to clear a 5 cr BG in the name of Oxyzo (5 cr BG is our ask, while PNR will try to give whatever he gets, definitely in excess of INR 3 crores). This BG will be from an ad-hoc limit promised by the PNB bank manager at Ludhiana which he will release right after the current bank audit at PNB large corporate branch in Ludhiana is over.
3. Basis the above BG, we will pick up the balance 7 cr material that will be with us. Thus, material available to OFB will be INR 10.42 cr for a brief period of 4-5 days.
Comp. App. (AT) (Ins.) No. 1485 of 2023
20 of 38
4. PNR thus will get the bills from SAIL on target Thursday (Apr 12th) so that Paveljeet can try to get BJJ to give the whole 7.46 cr (50% of 7.92 and 7, both lots) on 16th April.
5. After getting the INR 7.46 cr from BBJ, PNR will transfer the same to OFB. Thus, OFB will be left with say 3.3-3.4 crores worth of material.
For the balance 3-3.4 cr material, the above BG should suffice.
7. Once OFB gets this deal completed, property papers of the farm land will be handed over by OFB to PNR.
The larger next steps are the following -
1. PNR has applied for a 65 crores BG limit for its current projects.
2 . PNR has close to 8-10 projects in hand, >20,000 T of steel.
3. PNR will give OFB a BG of INR 10 crores to start with and explore project financing with Oxyzo/ OFB.
Thanks and regards, Asish Mohapatra Co-founder & CEO, +91-99870-98793 OFB Tech Pvt. Ltd.
Corporate Office: Unit-101, Vipul Agora Mall, MG Road | Gurgaon, Haryana"
14. The above email was acknowledged by operational creditor and operational creditor wrote following:
"On Fri, Apr 13, 2018 at 1:18 PM, P&R Infraprojects Ltd <[email protected]> wrote: Dear Ashishji, Thanks for the timely support extended by your team. Today we are giving the BG to BBJ. They have assured to release the payment promptly after their representative's visit which is scheduled on Tuesday next week. We are hopeful to get 3 to 4 cr by Wednesday from BBJ and will transfer it immediately to OFB.
Comp. App. (AT) (Ins.) No. 1485 of 2023 21 of 38 We have been awarded another new job from Gammon and they have assured to make a payment of 3 cr next week. We can make a payment of 2 cr to OFB. Order copy is attached for your reference please. P&R will source this material from sail through ofo in 2 lots @ 750 MT each.
We request OFB to arrange the lifting of balance plated from Sail so that we can get another 3-4 or and clear OFB's dues substantially.
The same has been conveyed to Arvindji today morning.
PL advise further action.
Warm regards Paveljeet Singh"
15. On 13.04.2018, corporate debtor wrote to operational creditor:
"On Fri, Apr 13, 2018, 1:19 PM Asish Mohapatra <[email protected]> wrote:
Dear Pavaljeetji, thanks for the mail. As Arvindji would have said, pls take an extension from SAIL. The moment we receive the 5-6 cr, we will pick up the entire 7 or from SAIL. But SAIL needs to hold the material for you. So. pls tell them that. Pls do it till the month end to be safe.
Thanks and Regards AM Thanks and regards.
Asish Mohapatra Co-founder & CEO, +91-99870-98793"
16. Operational creditor wrote on 17.04.2019 to the corporate debtor, which is very relevant and is as follows:
"On Tue, Apr 17, 2018, 20:56 Pril. <[email protected]> wrote:
Dear Ashishji As per cur earlier confirmation, tomorrow, BBJ will make a payment of 2.70 or against the steel plates Comp. App. (AT) (Ins.) No. 1485 of 2023 22 of 38 lifted as we had given them the part performance guarantee of 3 cr.
Please note Sail has allowed us time till tomorrow only. We propose to remit the 2.70 or to ofb with a request to lift the balance lot from Sail worth about 7er by tomorrow itself and keep the material in their custody. Gammon payment of 3cr is also expected in this week or latest by next week which will be utilized for giving balance PBG to BBJ and part payment to ofb.
After giving the balance PBG to BBJ, and on ofb lifting the fresh lot from Sail, BBJ will release the difference amount of 5.30 or to us immediately. We will give 5.30 cr to ofb and ofb will release the material.
Please support us in this matter.
Warm regards Paveljeet Singh"
17. The corporate debtor was to lift the material from SAIL and keep in their custody. The amount was to be given to corporate debtor for releasing the material in its custody. On 18.04.2018 again, corporate debtor wrote to the operational creditor, which is as follows:
"Asish Mohapatra <[email protected]> Wed, Apr 18, 2018 at 11:52 PM Reply-To: [email protected] To: "Pril." <[email protected]> Cc: P&R Infraprojects Ltd <[email protected]>, [email protected], Nitin Jain <[email protected]>, Gurte) Singh <gurtej.singh@ofbusiness. In>, Dhaval Radia <[email protected]>, Nalla Pratyush <[email protected]>, Arvind Guliani <[email protected]>, Finance <[email protected]>, ΟΧΥΖΟ <[email protected]>, Steel Ops <[email protected]>, Fulfilment <[email protected]> Comp. App. (AT) (Ins.) No. 1485 of 2023 23 of 38 Dear Paveljeetji, as committed to PNR we have picked up the balance of 7 cr materiał from Sail. Thus, now we have inventory worth 10.6 cores in safe custody. For this, PNR has already paid 2 cr already. Thus, we can ship 2 cr worth material and hence we will be left with 8.6 cr worth Inventory. We understand that from the mail below that 1.3 cr will be released from Gammon (Since 1.7 cr will be needed by BBJ for the full P8G) and that will help release 1.2 cr from the first lot billed to BBJ and also 3.5 cr in the second lot. Thus, OFB will get a payment from PNR through the payments from BBJ. That will leave 2.6 credit worth of material with us after Gammon and BBJ, which OFB will expect on the clearance from NBFC or the new BG before 30th April (kindly keep the BG to a minimum of INR 5 crores. Thanks"
18. The above emails which are contemporaneous documents reflecting the transactions between the parties are relevant email, which were relied and part of the reply of the corporate debtor. The above correspondence between the parties clearly supports case of the corporate debtor that material were to be lifted by corporate debtor from SAIL which has to be kept in the custody of the corporate debtor and to release the material after receiving the payments from customers of the operational creditor. The case of the corporate debtor which was pleaded before the adjudicating authority that corporate debtor was only facilitator for the transaction which consisted of release of the money by the OXYZO to the SAIL and lifting of the material by the corporate debtor from SAIL and the release of the material by corporate debtor on receipt of the payment from customers of the operational creditor. The operational creditor has placed order on the SAIL of purchase of the steel and it is the SAIL which has sold the steel to operational creditor, for which payments have been released by OXYZO under Finance Purchase Facility extended by OXYZO. There being no security for Purchase Finance Facility. it was agreed between Comp. App. (AT) (Ins.) No. 1485 of 2023 24 of 38 the parties that corporate debtor will keep the goods in its custody and release to the customers.
19. Thus, the finding of the adjudicating in paragraph 14 that there are no supporting documents to corroborate that the corporate debtor was only facilitator in the Purchase Finance Facility cannot be sustained. The corporate debtor has clearly proved the nature of transaction between the parties which clearly proved that corporate debtor, was facilitating the sale of the goods which was purchased from the SAIL by the operational creditor. SAIL has released the goods on disbursement made by OXYZO, a subsidiary of the corporate debtor. As noted above OXYZO's payment were to be made by operational creditor and the corporate debtor after receiving the payment from customers had released the payment to OXYZO which is reflected in the ledger of the corporate debtor, which is on the record. The operational creditor itself has admitted the release of the amount of ₹4.4 crore to the OXYZO by the corporate debtor. Thus, the very case set up by the corporate debtor in its demand notice that the invoices which were raised on the corporate debtor were required to be paid to the operational creditor are unacceptable. The corporate debtor in its reply has stated that after receipt of the invoices which were received from the operational creditor in the name of the corporate debtor, the corporate debtor was to facilitate the transport of the goods directly to the customers, and all invoices raised by the operational creditor in the name of the corporate debtor and counter invoices issued by the corporate debtor in favour of customer of operational creditor were brought in Comp. App. (AT) (Ins.) No. 1485 of 2023 25 of 38 the reply. It is useful to notice paragraph 11 of the reply where following has been pleaded:
"11. The OC has relied upon certain invoices to allege the sale of 'goods' to the Respondent. It is submitted that the said invoices only bring about a half baked picture of the transaction. The following table depicts the complete chain of events / invoicing:
Step Event I. Oxyzo pays to SAIL on behalf of the OC. An invoice is raised in the name of OC by SAIL. The material is kept in the custody of Respondent, upon a request made by the OC and simultaneously, it was treated as security against the purchase financing facility availed by OC from Oxyzo. In other words, the Respondent was acting merely as a custodian of the goods on behalf of Oxyzo; where the goods constituted the security against the loan.
II. OC receives an order for material from its customers and tells the Respondent or its associate to release the material in favour of the customer.
However, since the material was in custody of the Respondent, and that SAIL had transferred the ownership of the 'goods' to the OC, Invoices were raised by OC in the name of Respondent to transfer ownership of the material, and it was agreed that the Respondent would then transfer the goods to the customer of the OC.
This was done to avoid any misrepresentation / mis-statement in the E-Way Bills when the material is being sent from the custody of Oxyzo / Respondent (its affiliate) to the customer of the alleged OC.
Comp. App. (AT) (Ins.) No. 1485 of 2023
26 of 38 III. Respondent raises an invoice in the name of OC with shipping details of the Respondent.
The shipping details are that of the customer of the OC.
In simple words, every time an invoice has been raised by OC in the name of the Respondent; a counter invoice has been simultaneously raised by. the Respondent in the name of the OC or with the shipping details of the customer of the OC.
True copy of the invoices raised by SAIL in the OC are annexed herewith as ANNEXURE R-14(Colly).
True copy of the invoices raised by the OC in the name of the Respondent along with the table depicting the counter invoicing are annexed herewith as ANNEXURE R-15(Colly)."
20. In the end of paragraph 11, corporate debtor has brought on the record the invoice raised by the operational creditor in the name of corporate debtor along with the table depicting counter invoices, which were annexed as Annexure R-15. The invoices which are basis of demand notice i.e., invoices 232 to 268 & 273 and the amount of the said invoices dated 29.08.2018 and 30.08.2018 have been tabulated in and brought on the record, whereas the sale which was made by the corporate debtor to GC Steels and Rajesh Sales Corporation and to the operational creditor are also on record, which is of different dates from 08.09.2018 to 20.09.2018. Thus, the comparative table of invoices which was issued by operational creditor to corporate debtor and the counter invoices which was issued by corporate debtor to third parties including operational creditors are at page 989 & 988 of the Volume V of the paper book which was part of the record of the NCLT. When we look into the page 989, it is clear that total value of the invoices which was drawn on the corporate debtor were ₹6,90,20,447/- and the total sale made by the Comp. App. (AT) (Ins.) No. 1485 of 2023 27 of 38 corporate debtor was of ₹6,31,23,755/-. It is on that basis, the corporate debtor has pleaded that corporate debtor suffered a loss of ₹58,96,692/- by sale of steels, which was in its custody, as compared to the value of invoices, which was raised by operational creditor on the corporate debtor.
21. We first need to notice the submission raised by the counsel for the appellant that there being pre-existing dispute between the parties, Section 9 application ought not to have been admitted. In this context, we need to notice first the demand notice and reply to the demand notice. The demand notice was issued on 13.02.2020. As noted above, the demand notice relied on the invoices dated 29.08.2018 from invoice Nos. 230 to 268 and invoice dated 30.08.2018 invoice No. 273, which was the basis for alleging default.
22. Section 8(2) of the IBC provides as follows:
"8. Insolvency resolution by operational creditor.-
(2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational creditor
(a) existence of a dispute, 1 [if any, or] record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute;
(b) the [payment] of unpaid operational debt
(i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or
(ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by the corporate debtor.
Comp. App. (AT) (Ins.) No. 1485 of 2023 28 of 38
23. After receipt of the demand notice, the notice of dispute was issued by corporate debtor on 27.02.2020. It is useful to notice first three paragraphs of the reply to demand notice which are as follows:
"1. At the outset, your Demand Notice levels unfounded and absolute false allegations. The alleged claims raised by you are neither maintainable nor tenable in law. It is pertinent to mention here that vide your alleged demand notice, you have allegedly claim an amount of Rs. 1,63,54,418/- (Rupees One Crores Sixty Three Lacs Fifty Four Thousand Four Hundred Eighteen Only) alongwith interest of Rs. 58,87,590 (Rupees Fifty Eight Lacs Eighty Seven Thousand Five Hundred and Ninety Only) i.e.@24% per annum till January 2020, towards an operational debt which is neither maintainable nor the same is payable. That your Demand Notice under Rule 5 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 is defective and does not conform to the mandatory requirements of law as the same has not been registered with the Information Utility.
2. The contents of the Demand Notice are false, baseless, misleading and no amount whatsoever is due from our client and that there exists a dispute within the meaning of Section 5(6) of the insolvency and Bankruptcy Code, 2016 ("Code") between you and Company as set out in the proceeding paras.
3. That there is no relationship between our client and you within the purview of being an operational creditor in terms of the provision of insolvency and bankruptcy Code, 2016 and be made out in the current scenario."
24. Thus, reply notice was clearly notice of dispute which refuted the claim and clearly pleaded that there exists a dispute within meaning of Section 5(6) of the IBC. In the reply to demand notice, it was pleaded that as per arrangement, the corporate debtor has picked up the material worth ₹13.98 crore for operational creditor from SAIL, which was kept in the custody of the Comp. App. (AT) (Ins.) No. 1485 of 2023 29 of 38 corporate debtor. In paragraphs 6, 7, 10, 11 & 12 of reply to demand notice, following was stated:
"6. That you made tall claims to our client with regard your reputation, goodwill and credit worthiness. You misrepresented to our client and thus persuaded our client to pick up material worth Rs. 13.98 Crores for you from SAIL under your instructions. In accordance with the settled terms and conditions the entire material was kept in our custody at Sonipat Warehouse and as per agreed arrangement our client has arranged for space, staff, security etc. (refer para 6 below), on account of this, our client has suffered huge losses, charges and expenses and the same has already been duly informed to you. The details of these charges/expenses/losses can be shared with you on your specific request
7. That in accordance with above para 5, you were required to discharge your liability towards our client on account of following:
S. No. Particulars Quantification/Losses 1 Service Fees by OFB High for monitoring inventory for more than 3 months 2 Interest Charges High upto 90 days 3 Delayed interest on High outstanding beyond 90 days 4 Site Hiring Charges High (accumulated) 5 Site Security High Charges 6 Site Protection High Charges Comp. App. (AT) (Ins.) No. 1485 of 2023
30 of 38 7 Electricity Charges High 8 CCTV Charges Low 9 Salary of Medium Warehouse in-
charge
10 Inbound High
transportation to
site
11 Outbound High
transportation
charges
12 Loading and High
Unloading Charges
13 Weighment Charges Medium
14 ODC Charges Medium
15 Tax Clearance Medium
Charges
16 Charges for High
protection of internal
policy on financing
17 Clearance Charges Medium
of SAIL
18 Demurrages at Medium
railway yards
19 Temporary Shades Medium
20 Settlement Charges High
- for holding the
Rates and
Quantities for long
time
Comp. App. (AT) (Ins.) No. 1485 of 2023
31 of 38
21 Travel Expenses of Medium
Internal Staff
22 Book keeping Medium
charges
23 Tax Consultation Medium
Charges
24 Brokerage on site Low
Hiring
10. That vide an email dated 2 September, 2018 our client was constrained to sell the material kept by our client in its safe custody due to loss being suffered by our client, which was duly informed to you. However, no reply till date was sent by you with regards to sale of goods and loss suffered by our client.
11. That due to the goods being not purchased by you, our client had to bear grave difficulty in selling off the goods, as the goods purchased by our client on behalf your client, were sold in losses.
12. It is submitted that due assurance made by you, our client booked huge amount of materials for you. But due to loss being suffered by our client, our client was left with no other option rather than selling the goods kept in its custody in loss."
25. It was further pleaded that at no point of time from September 18, till issuance of demand notice at no demand, no email or letter was sent pertaining to any amount due on corporate debtor which has been pleaded in paragraph 15, which is as follows:
"15. It is relevant to point out at this juncture that at no point any email, letter whatsoever, has been sent by you pertaining to any amount due by our client towards you, before sending the Demand Notice, which clearly indicated that the Demand Notice sent by you is an afterthought just to escape your liability of clearing out dues pending on your part towards our client and illegally using demand notice as a mode to extort money out of a going concern. On the contrary Comp. App. (AT) (Ins.) No. 1485 of 2023 32 of 38 there are several emails which have been exchanged prior to issuances of Demand Notice which clearly reflects an existence of pre-existing disputes and we reserve our right to rely upon the same as the contents of the same are not repeated herein for the sake of brevity."
26. From the facts brought on the record, it is clear that at no point of time after 30.08.2018, operational creditor made any claim of any dues from the corporate debtor as against the invoices date 29.08.2018 and 30.08.2018, which has been claimed in the demand notice. There was complete silence from operational creditor till issuance of demand notice dated 13.02.2020 from about over a half year, which substantiate the case of corporate debtor that at no point of time any amount was due on corporate debtor.
27. We are inclined to accept the submission of the appellant that the invoices were issued for the purpose so that corporate debtor may issue invoices in favour of the customers of the operational creditor by selling those goods so that amount can be transmitted to OXYZO. The corporate debtor and its reply have categorically referred to counter invoices, which were part of the record. The materials which was invoiced to the corporate debtor by invoices dated 29.08.2018 and 30.08.2018 were in turn sold by the corporate debtor to GC Steels and Rajesh Sales Corporation and the operational creditor, which all invoices are on the record with all the detail with comparative table of invoices received from operational creditor and invoices issued by the corporate debtor. The reason for sale of the materials which was in the custody of the corporate debtor has also been explained that is to take care of the liability of the operational creditor towards the OXYZO who Comp. App. (AT) (Ins.) No. 1485 of 2023 33 of 38 had paid for the purchase of steel from SAIL. The amount which has been received by the corporate debtor from sale of the goods received by invoices from operational creditor has been paid to OXYZO towards liabilities of the corporate debtor. Thus, corporate debtor was not to make any payment to the operational creditor with respect to goods, payment of goods was released by subsidiary of the corporate debtor, OXYZO to the SAIL from whom the goods were picked up by the corporate debtor on behalf of the operational creditor. The very basis of claim of Section 9 applicant that corporate debtor was liable to pay for invoices who has defaulted in making payment is incomplete picture of the transaction. The defence which has been taken by the corporate debtor in detail in its reply to Section 9 application has been turned down by the adjudicating authority by making following observations in paragraph 14; "however, there is no supporting document to corroborate the same. Therefore, the defence of the corporate debtor with respect to pre-existing dispute appears to be moonshine defence".
28. The judgement of the Hon'ble Supreme Court in 'Mobilox Innovations Private Limited' Vs. 'Kirusa Software Private Limited' reported in [2018 1 SCC 353], where in paragraph 51, following has been laid down:
"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)(i)(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 Comp. App. (AT) (Ins.) No. 1485 of 2023 34 of 38 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."
29. Adjudicating authority was thus required to see as to whether there is a plausible contention which requires further investigation, and the dispute is not a patently feeble legal argument or an assertion of facts unsupported by evidence. To support the transaction with the operational creditor and corporate debtor, the relevant pleadings and materials have been brought in reply to Section 9 application, adjudicating authority committed error in observing that the defence of the corporate debtor is moonshine defence. Defence raised by the corporate debtor was supported by relevant email correspondence between 07.04.2018 and 19.04.2018 as noted above. Relevant invoices which were issued by corporate debtor to GC Steels, Rajesh Sales Corporation and the operational creditor regarding the goods which was in keeping of the corporate debtor were filed by corporate debtor along with its reply. Whatever goods were received by the invoices dated 29.08.2018 and 30.08.2018 from the operational creditor to the corporate debtor have been in turn sold to GC Steels, Rajesh Sales Corporation and operational creditor, which all invoices were on record and the amount received by the corporate Comp. App. (AT) (Ins.) No. 1485 of 2023 35 of 38 debtor was paid to OXYZO towards the outstanding dues of operational creditor.
30. We, thus are of the view that adjudicating authority committed error in observing that the defence raised by the corporate debtor was a moonshine defence. We find that there were sufficient material on record to indicate the nature of transaction between the parties, under which transaction the corporate debtor was only facilitator of disposal of goods which were in custody of corporate debtor as security to the amount disbursed by OXYZO to the SAIL on behalf of the operational creditor and corporate debtor was not purchaser of the goods from operational creditor, rather goods were sold to the customers of the operational creditor and the invoices 29.08.2018 and 30.08.2018, which were issued in favour of the corporate debtor, were for purpose of issuing counter invoices which actually was issued and has been detailed in the reply and all counter invoices covering the goods which were received from corporate debtor have been brought on the record. There is no question of any default committed by corporate debtor to the operational creditor regarding any of the said invoices. The whole basis of the operational creditor was unfounded, and the application did not deserve to be admitted for more than one reason as noted above.
31. Learned counsel for the respondent, after the arguments had commenced in the appeal, filed an I.A. No.6638/2025 dated 28.10.2025, praying for dismissal of the appeal as being non-est and without jurisdiction. The ground taken in I.A.6638/2025 is that after initiation of CIRP against the Comp. App. (AT) (Ins.) No. 1485 of 2023 36 of 38 corporate debtor by impugned order dated 10.11.2023, the registered Office of the corporate debtor has been shifted from State of Delhi to State of Gujarat without any sanction or permission from this Hon'ble Tribunal. It is submitted that registered Office of the company is the jurisdictional fact and by change of registered Office of the company, the jurisdiction get change and the appeal being continuation of original proceeding, that appeal is non- maintainable. In the application in paragraphs 6 & 7, respondent has made following pleadings:
"6. That once the registered office has been shifted from the territorial jurisdiction to another State, the territorial competence of the earlier NCLT Bench at Delhi and of any appeal arising therefrom the said order ceases. The cause of action has arisen at the time when the registered office was located at New Delhi. The change of registered office would also amount to forum shopping.
7. That it is a settled position that an appeal is merely a continuation of the original proceedings. Thus, when the Appellant/Corporate Debtor's registered office changes during the pendency of appeal, the territorial foundation of the original NCLT's jurisdiction is displaced, rendering the appeal non-maintainable before this Hon'ble Appellate Tribunal in its current territorial configuration. Thus, the present appeal is rendered without jurisdiction and is liable to be dismissed."
32. Section 12 of the Companies Act, 2013 deals with the registered Office of the company and the respondent case itself is that after passing of the registered Office of the company had been changed and now in MCA data the registered address is shown as Ahmedabad city, state of Gujarat.
33. We do not find any substance in the above submission of the appellant that by change of registered Office of the company after passing of the Comp. App. (AT) (Ins.) No. 1485 of 2023 37 of 38 impugned order, this Tribunal shall have no jurisdiction to hear the appeal which was filed against the order dated 10.11.2023, initiating the CIRP against the corporate debtor. The challenge in the appeal is to the order dated 10.11.2023, and the appeal which has been filed against the order dated 10.11.2023 needs to be decided on merit and by change of the registered Office of the company, the jurisdiction of this Tribunal to decide the appeal on merit cannot be said to be lost as contended by the appellant.
34. We find that this is another vain attempt of the respondent to resist the appeal. We do not find any substance in the application I.A.6638/2025, which is rejected.
35. We, thus are of the view that impugned order of the adjudicating authority dated 10.11.2023 admitting Section 9 application cannot be sustained. The impugned order dated 10.11.2023 is set aside. Section 9 application, C.P. (IB) No.387/ND/2021 is dismissed.
Parties shall bear their own costs.
[Justice Ashok Bhushan] Chairperson [Barun Mitra] Member (Technical) NEW DELHI 28th November, 2025 himanshu Comp. App. (AT) (Ins.) No. 1485 of 2023 38 of 38