Amar Prakash Agarwal vs Evergreen Corporation

IN THE MATTER OF: Amarprakash Agarwal ...Appellant

Versus

Evergreen Corporation ...Respondent

Present: For Appellants : Mr. Mily Ghoshal, Advocate For Respondent : Mr. Amit Pai, Mr. Rahat Bansal, Advocates Mr. Akhil Ahuja, Adv for IRP

ORDER

Per: Justice Rakesh Kumar Jain: (Oral)

16.03.2023 This appeal is directed against the order dated

23.12.2022, passed by the Adjudicating Authority (National Company Law

Tribunal, Mumbai Bench - I) by which an application filed under Section 9

of the Insolvency and Bankruptcy Code, 2016 (in short 'Code') by the

Respondent (Operational Creditor) has been admitted, IRP was appointed

and moratorium was imposed.

2. Shorn of unnecessary details, the petition under Section 9 of the

Code was filed on 17.12.2019 by the Operational Creditor for resolution of

a debt of Rs. 25,88,608/- which constitutes principal amount of Rs.

16,97,448/- and interest amount of Rs. 8,91,160/- calculated at the rate of

21% p.a in terms of the amount mentioned in the invoices. The Operational

Creditor mentioned the date of default as 12.05.2017 alleging that it is a

stockist of engineering tools, measuring ins, hardware and general

merchants based in Mumbai. The said engineering tools etc were being sold

by the Operational Creditor to the Corporate Debtor raising invoices from time to time. Since, the principal amount as alleged was not paid and the

interest was also not serviced, the Operational Creditor thought of filing the

application under Section 9 of the Code and as it is a pre-requisite under

Section 8 of the Code to serve an advance notice, the Operational Creditor

sent a notice dated 08.08.2019 to the Corporate Debtor on 13.08.2019 to

which reply was also filed by the Corporate Debtor on 21.08.2019.

3. Counsel for the Corporate Debtor/Appellant has submitted, while

referring to the submission made and noticed by the Adjudicating Authority

in the impugned order, that the Appellant has raised pre-existing dispute

between the parties in regard to the quality of the goods sold and in this

regard various emails have been referred to starting from 19.04.2018.

However, the Adjudicating Authority while admitting the application while

recording its finding in Para 22 which are reproduced as under:-

"It is observed that the Notice under Section 8(1) of the Insolvency and Bankruptcy Code, 2016 dated 08.08.2019 issued to the Corporate Debtor and was served on 13.08.2019. It is also noted that the Corporate Debtor replied to the said Demand Notice on 21.08.2019, however, in the reply to demand notice the Corporate Debtor raised defence that there is dispute regarding the claim. It is observed that defence raised by the Corporate Debtor is illusory disputes which were raised first time with an intention to fraudulently evade the liability, on the contrary the Operational Creditor brought to our attention that amounts for which the Corporate Debtor states that there is dispute, in fact the Corporate Debtor already received Credit Note for the same therefore the amount claimed by way of this present petition is over and above the disputed amount."

4. Counsel for the Appellant has vehemently argued that the finding

recorded in Para 22, in order to admit the application and denying the

presence of pre-existing dispute, does not deal with the evidence led by the

Appellant, therefore, the order is totally non-speaking and without reasons.

She has submitted that the Hon'ble Supreme Court in the case of State of Orissa Vs. Binapani Dei, (1967) 2 SCR 625, has held that not only the

judicial order but also an administrative order should be passed by

following the principle of natural justice if those orders affects a person in

his civil life. It is thus submitted that the impugned order may be set aside

and the matter may be remanded back to the Adjudicating Authority for

taking a decision afresh after considering evidence led by the Appellant to

substantiate the existence of a pre-existing dispute.

5. On the other hand, Counsel appearing on behalf of Operational

Creditor/Respondent has submitted that the finding recorded in Para 22 of

the impugned order does not call for any interference because reasons have

been recorded.

6. We have heard Counsel for the parties and after examining the

record are of the considered opinion that the cause shown by the Appellant

is justified because on the one hand the Adjudicating Authority is referring

to the pleadings coupled with the evidence led by the Appellant in the

impugned order, reply and rejoinder and on the other hand while recording

the finding, it does not deal with any of the evidence led by the Appellant by

which the Appellant could have proved that there is a pre-existing dispute

between the parties and therefore, the application under Section 9 of the

Code was not maintainable. It is needless to mention that a reasoned order

is the heart and soul of the principle of natural justice whereas in the

present case the same is conspicuous by its absence.

7. In view of the aforesaid discussion, we have no alternative but to set

aside the order much less the finding recorded in Para 22 and in further

paragraphs where by not only IRP has been appointed but also the

moratorium has been imposed as well.

8. Thus, the appeal is allowed and the impugned order is set aside. The

appointment of the IRP is set aside and the rigours of moratorium is

removed. The matter is remanded back to the Adjudicating Authority to

decide the matter again after taking into considerations the evidence led by

the Appellant and Respondent and then pass a reasoned speaking order.

9. With these observations, the appeal is allowed. The parties are

directed to appear before the Adjudicating Authority on 17th April, 2023.

10. The amount which has been deposited by the Appellant in terms of

the first order dated 03.01.2023 shall be refunded to the Appellant on

production of the certified copy of this order within 15 days. The said

amount shall be paid to the person, authorised by the Appellant, after due

verification.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

Sheetal/RR