National Company Law Appellate Tribunal
Mascot Petrochem Pvt. Ltd vs Midaas Construction Company Pvt. Ltd on 3 February, 2022
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI.
Company Appeal (AT) (Ins) No. 1399 of 2019
IN THE MATTER OF:
Mascot Petrochem Private Limited,
Having its registered office at:
4, BBD Bag,
(56E, Hemanta Basu Sarani),
4th Floor, Room No. 56E,
Kolkata-700001. ...Appellant
Versus
Midaas Construction Company Private Limited,
Having its registered office at:
P-74, Ramaswaroop Khettry Road,
New Alipore, Kolkata-700053. ...Respondent
Present
For Appellant:- Mr. Vikas Baisya, Mr. Ritoban Sarkar and Mr.
Sourojit Das Gupta, Advocates.
For Respondent:- Mr. R.K. Tandon and Mr. Kundan Agrawal,
Advocates
JUDGMENT
(Date: 03.02.2022) (VIRTUAL MODE) [Per.: Dr. Alok Srivastava, Member (Technical)] This appeal has been filed under section 61 of the Insolvency and Bankruptcy Code, 2016 (hereinafter called „IBC‟) assailing the judgment dated 20.8.2019 of NCLT, Kolkata Bench (Adjudicating Company Appeal (AT) (Ins) No. 1399 of 2019 Page 1 of 9 Authority) in CP(IB) No.1692/AB/2018, by which the Adjudicating Authority has dismissed section 9 application filed by the Appellant on the basis of discrepancies found in the claim of Appellant/Operational Creditor and objections raised by the Respondent/Corporate Debtor.
2. According to the Appellant, it is engaged in business of manufacturing and trading of various types of bitumen, Light Density Oil (LDO) and its allied products (hereinafter called "goods") and the Respondent-Corporate Debtor is engaged in the business of road construction and civil engineering projects. The Respondent approached the Appellant for supply of "goods" and thereafter, on the basis of verbal orders, the Appellant supplied the said goods and raised invoices from time to time. The Appellant has further stated that the period of supply of goods was between February 22, 2016 to June 22, 2016 and goods were delivered at the sites where Respondent‟s projects were going on, and the goods were used by him without raising any demur and/or protest. The Appellant has further added that the total cost of goods supplied was Rs.48,76,136/- out of which the Respondent/Corporate Debtor has paid Rs. 34,72,214/- and the principal amount of Rs.14,03,922/- along with an interest @ 18% per annum is outstanding for payment by the Corporate Debtor. The Appellant has also claimed that the last payment was received by him on April 10, 2017 whereafter he sent several communications through e-mails as reminders for release of Rs.14,03,922/- as principal amount along with interest. Upon receiving no payment despite regular follow-up, the Appellant issued a demand notice dated 9.10.2018 under section 8 of IBC, which was duly received by the Respondent on 10.10.2018. In the reply to the demand notice Company Appeal (AT) (Ins) No. 1399 of 2019 Page 2 of 9 dated 18.10.2018 sent by Respondent, he has denied any liability except a claim of Rs. 2,17,438/- disputing the receipt of said goods at his project sites.
3. The Appellant has further stated that three invoices are disputed by the Respondent- Corporate Debtor though the disputes were raised for the first time in reply to the demand notice sent by the Respondent/Corporate Debtor on 18.10.2018. According to the Appellant, the Respondent has disputed delivery of goods relating to invoice No. MPPL/062/16-17, dated June 1, 2016 (attached at page 155 of the Appeal paperbook Vol. I) claiming that no goods were delivered, whereas the Appellant has claimed that the delivery of goods was confirmed by the Respondent through an e-mail dated 11.4.2017 and also that the Appellant filed quarterly return with the statutory VAT Authority which evidence the sale of these goods. In connection with invoice No. MPPL/405/15-16 dated March 7, 2016 (attached at page 139 of Appeal paperbook Vol. I), the Respondent/Corporate Debtor has claimed that two invoices - one handwritten and the other a computerized one - were issued by the Appellant and the price rates mentioned in both the invoices are different. Regarding the third invoice No. MPPL/080/16-17 dated 22.6.2016 the Respondent/Corporate Debtor has alleged that the invoice is forged and fabricated as the signature on the left bottom of the invoice is disputed and such goods were never received by him and moreover Appellant has not been able to show any receipt about the delivery of goods.
4. Thus, in short, the issues raised in this appeal relate to the three invoices as mentioned above, and the dispute raised by the Company Appeal (AT) (Ins) No. 1399 of 2019 Page 3 of 9 Respondent-Corporate Debtor in regard to the delivery of goods and disputed rates being charged by the Appellant for the three invoices viz (i) Invoice No. MPPL/405/15-16 dated March 7, 2016 (hereafter called "Invoice 1") (ii) Invoice No. MPPL/062/16-17, dated June 1, 2016 (hereafter called "Invoice 2") and (iii) Invoice No. MPPL/080/16-17 dated June 22, 2016 (hereafter called "Invoice 3"). The Respondent has raised a dispute regarding these three invoices in its reply dated 18.10.2018 in reply to the demand notice dated 9.10.2018. While there is no pre-existing dispute, the Respondent has basically raised non-delivery of goods and, therefore, claimed that until the demand notice was received it was not aware about the invoices for which no goods were delivered.
5. In arguments, the Learned Counsel for Appellant has claimed regarding Invoice 1 that a handwritten proforma invoice was raised at the time of loading when the approximate rate prevailing on that particular day was mentioned in the invoice. The computerized copy of the invoice which was issued later contains the correct rate and other details and according to the Appellant, it is the correct invoice applicable for payment. In reply the Learned Counsel for Respondent has said that there are two invoices raised by the Appellant for the related supply of goods and the rates of the goods mentioned in both the invoices are different. He has also raised the issue of short supply of goods against the weight mentioned in the invoice and claimed that the Corporate debtor has received the materials and made payment.
6, In respect of Invoice 2, the Learned Counsel for Appellant has argued that the Appellant filed quarterly VAT returns with the statutory authority regarding the sale of the related goods and Company Appeal (AT) (Ins) No. 1399 of 2019 Page 4 of 9 would not file such a return unless it had supplied the goods. Furthermore, he has claimed that the same was sold using Form C, being an Inter-state sale from West Bengal to Uttar Pradesh, though despite repeated requests, Respondents have failed to provide Form C to the Appellant. The Learned Counsel for Appellant has also claimed that the issue of non-delivery was raised for the first time in reply to the demand notice under section 8 sent by the Appellant and not anytime earlier. In reply the Learned Counsel for Respondent has disputed the delivery of goods and claimed that the issue was raised for the first time in reply to the demand notice under section 8 only because such goods were never received by the Respondent and he came to know of it only after receiving the demand notice.
7. With regard to Invoice 3, the Learned Counsel for Appellant has claimed that bitumen at a total cost of Rs.4,65,990/- vide invoice No. MPPL/080/16-17 dated 22.6.2016 and Emulsion at a total cost of Rs. 32, 343/- vide invoice number, MPPL/081/16-17 dated 22.6.2016 were supplied by the same lorry on the same date and time, and therefore while the Respondent has accepted the delivery of Emulsion at a total cost of Rs. 32,343/-, he has refused to accept the supply of bitumen alleging that invoice of bitumen No. MPPL/080/16-17 dated 22.6.2016 is forged and fabricated and the signature on the left bottom corner purported to show receipt of goods is forged.
8. We have considered the arguments presented by both the parties and also perused the record. Since the main issue raised in this appeal is regarding the three invoices and related delivery of goods or dispute of a price, we will confine our discussion to the Company Appeal (AT) (Ins) No. 1399 of 2019 Page 5 of 9 three invoices mentioned above.
9. Regarding Invoice 1 the Respondent's claim is that there are two invoices, one a handwritten one and other the computerized copy, and both state different price rates for the same goods. On the other hand, the Appellant has claimed that the handwritten invoice was issued at the time the goods were loaded on the lorry and the price rate mentioned in that invoice was the price rate prevailing on that particular day. The relevant invoice is the computerized invoice, which is the same as issued by the Appellant to the Respondent for many other supplies, and the price rate mentioned in the invoice is the rate prevailing on the day the supply was actually made. The Appellant has also said that the issue of short supply raised by the Respondent is basically due to the different weights recorded at different weigh bridges and the Appellant has given due credit for the short supply claimed by the Respondent. Thus the Appellant has given credit for the deficient weight which was claimed by the Respondent.
10. With regard to Invoice 2, the Respondent has disputed the delivery of goods pertaining to the said invoice though the Appellant has claimed that vide mail dated 11.4.2017, the Respondent had confirmed the delivery of goods. On perusing email dated 11.4.2017, sent by the Corporate Debtor/Midaas Construction to the Operational Creditor/Mascot Petrochem (attached at pp. 160-161 of Appeal Paperbook Vol. I) we find that the Corporate Debtor‟s representative Sandip De asked for the Statement of Account from 01.04.2016 to 31.03.2017 for the financial year 2016-17 and the current financial year 2017-18 vide this email. This cannot be considered as proof of delivery of the Company Appeal (AT) (Ins) No. 1399 of 2019 Page 6 of 9 goods in question. The quarterly VAT returns (attached at pp. 187- 226 of Appeal Paperbook Vol. II) also cannot be considered as proof of delivery of goods. Moreover, in the reply to the demand notice dated 18.10.2018 (attached at pp. 177-178 of Appeal Paperbook Vol. I) the Corporate Debtor had called upon Operational Creditor to prove delivery and receipt of materials by Midaas with cogent and unimpeachable documents. There is no receipt confirmation on the Tax Invoice submitted by the Appellant (at pg. 155 of Appeal Paperbook Vol. I) and the consignment note of Siddhi Vinayak Road Carriers (attached at pg. 156 of Appeal Paperbook Vol. I) also does not show convincingly receipt of the said goods by the Corporate Debtor/ Midaas Construction. The Appellant has submitted the ledger account relating to the Midaas Construction for the period of 1st April 2015 to 11th September 2018 and 1st April 2016 to 31st March 2017 (attached at page 159 of the Appeal Paperbook Vol. I) to show that 2% VAT against Form C was deposited with the statutory authority. This ledger account has been disputed by the Respondent as being concocted. Since this document is from the ledger account maintained by the Appellant it cannot be taken as conclusive proof of delivery of said goods. Even if such ledger accounts can be taken as reliable, they are only indirect evidence which are related to payment of VAT and not any evidence of delivery/supply of said goods to the Respondent.
11. Therefore, we feel that Appellant had to submit unimpeachable proof of delivery of goods to establish his case under section 9 of IBC. Such evidence was also necessary since the respondent had disputed delivery of goods in his reply to the demand notice. Therefore, we are inclined to believe the claim of the Respondent that the goods were actually not delivered at the Company Appeal (AT) (Ins) No. 1399 of 2019 Page 7 of 9 site.
12. Regarding Invoice 3, the Respondent has alleged that it is forged and fabricated and has also disputed the signature on the left bottom corner of the tax invoice which is claimed by the Appellant as evidence of supply of goods to the Respondent (attached at pg. 152 of Appeal Paperbook Vol. I). The Appellant‟s claim of having paid VAT and filed the VAT quarterly return cannot conclusively prove the receipt of material by the Respondent. Though the Appellant has claimed that the same lorry carried both Bitumen and Emulsion to the site of the Respondent he has not submitted any proof of the same and moreover, in the absence of any receipt of the delivery of Bitumen at the site of the corporate debtor we are not convinced that the goods (Bitumen) claimed to have been supplied vide Invoice 3 were actually received by the corporate debtor/respondent.
13. Thus, we find that the Appellant has not been able to show convincingly that it had actually supplied materials relating to Invoice 2 and invoice 3 as claimed. We also agree with the Respondent that it could raise the dispute regarding non-supply for the first time in its reply to the demand notice under section 8 as it did not have knowledge of the said Invoices 2 and 3 before it received the demand notice. These disputes therefore relate to the dates of purported invoices and in this sense they are legitimate disputes and not sham disputes. The Hon‟ble Supreme Court in the matter Transmission Corporation of Andhra Pradesh Limited Vs. Equipment Conductors and Cables Limited [Civil Appeal No. 9597 of 2018] has also held that IBC provisions cannot be invoked whenever there is existence of real dispute. For Company Appeal (AT) (Ins) No. 1399 of 2019 Page 8 of 9 brevity and clarity the same is reproduced below -
"15. In a recent judgment of this court in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited, this Court has categorically laid down that IBC is not intended to be substitute to a recovery forum. It is also laid down that whenever there is existence of real dispute, the IBC provisions cannot be invoked."
14. In the light of detailed discussion in aforementioned paragraphs, we are of the opinion that the application under Section 9 filed by the Appellant lacked merit and was correctly rejected by the Adjudicating Authority by the Impugned Order. We, therefore, do not think there is any cogent reason to interfere with the order of the Adjudicating Authority. Consequently, we dismiss the appeal.
15. There is no order as to costs.
(Justice Ashok Bhushan) Chairperson (Dr. Ashok Kumar Mishra) Member (Technical) (Dr. Alok Srivastava) Member (Technical) New Delhi 3rd February, 2022 /aks/ Company Appeal (AT) (Ins) No. 1399 of 2019 Page 9 of 9