Apl Apollo Tubes Limited vs Tanisha Scaffolding (India) Private ...

NATIONAL COMPANY LAW APPELLATE TRIBUNAL AT CHENNAI (APPELLATE JURISDICTION) TA (AT) No.206/2021 (Company Appeal (AT) (Ins) No.1285/2019) In the matter of: APL Apollo Tubes Limited ... Appellant V Tanisha Scaffolding (India) Private Limited ...Respondent Present : For Appellant : Mr. Rishab Singh, Advocate For Respondent : Mr. Gaurav Kumar Singh, Advocate

ORDER

(Hybrid Mode) 11.06.2024:

The Company Appeal (AT) (Ins) No. 1285/2019 arises from the Impugned

Judgment, as rendered by the Learned Adjudicating Authority on 05.09.2019 by

virtue of which the Application preferred by the Appellant under section 9 of the

I & B Code for the initiation of CIRP proceedings against the Respondent has

been rejected.

The case of the Appellant is that he being the Operational Creditor, as

having been incorporated under the Companies Act on 24.02.1986, was engaged

in the business of manufacture of steel pipes and tubes. The Respondent was

engaged in marketing the products as manufactured by the Appellant. In brief it

is submitted by the Appellant that he had supplied certain manufactured products

for the purposes of marketing to the Respondent, but the amount against such

supplies was not remitted and fell due to be paid and therefore he filed the

Application under section 9 of I & B, Code on the ground that prior to the last

TA (AT) No.206/2021 (Comp App (AT) (Ins) No.1285/2019) Page 1 of 5 invoice as issued on 20.06.2017 by him, there were other three prior invoices

issued by him, which were not honoured by the Respondent by making the

remittance of the amount which was due from him and that, as a consequence

thereto it has necessitated issuance of the notice of Demand by him under section

8(1) of I & B Code on 01.02.2018 on the Respondent (Corporate Debtor). It is

the case of the Appellant that the notice dated 01.02.2018 was also served upon

the Corporate Debtor on 05.02.2018.

It is seen from the submissions that the contents of the Demand Notices

and the reasons thereof have not been objected by the Respondent in any manner

whatsoever by submission of any written reply/objection, and that the amount

thus claimed in the Demand Notice dated 01.02.2018, was never paid to the

Appellant. Consequently, as a result of non-receipt of the dues as raised in the

Demand Notice, under section 8 (1) and non-receipt of notice of dispute under

section 8(2), the Appellant has filed an Application under section 9 of I & B Code,

for initiation of the CIRP proceedings. However, the said Application has been

rejected by the Impugned Order, contending thereof that the Applicant's claim

pertaining to the amount due to be paid to the Appellant by the respondent as per

the Demand Notice and the accompanying invoices has not been supported by

the respective Purchase Orders so as to justify the amount claimed by the

Appellant.

Since, the Learned Adjudicating Authority had rejected the Application

under section 9 of I & B Code, hence, the Appeal. The Appeal was initially

TA (AT) No.206/2021 (Comp App (AT) (Ins) No.1285/2019) Page 2 of 5 preferred with a Delay Condonation Application and the respondent was served

notice on 18.11.2019. Despite the issuance of the notice and despite several orders

having been passed by this Tribunal thereafter, for exchange of pleading, it is the

admitted case that as on today, the respondent has not filed any Counter Affidavit

till date, coupled with the fact that the Respondent had not even attempted to

comply with the order of this Tribunal dated 12.04.2024 by filing the Written

Submissions as it was called for by the said order. Not even that, the Order Sheet

itself reflects dereliction on part of the Respondent, who had not diligently

participated in the proceedings.

It is argued by the Learned Counsel for the Appellant that the Impugned

Order rendered by the Learned Adjudicating Authority on 05.09.2019, has in a

way carved out the case for the Respondent, in the absence there being any

specific pleading to the contrary, to the effect as to what implication the non-

filing of the Purchase Order would have on the invoices thus issued by the

Appellant to the Respondent, which resulted in raising of the claim of demand

and ultimately led into the issuance of the notice under section 8 of I & B Code.

In fact, the reason assigned by the Learned Adjudicating Authority in holding the

amount claimed by the Appellant under section 8 and consequentially by

initiating the proceedings under section 9 of I & B Code as 'Debt not Due' is that

there was no documentary evidence which was furnished by the Appellant to

establish that the debt was due and payable. But the said inference as it has been

drawn by the Learned Adjudicating Authority has been merely on the basis of a

TA (AT) No.206/2021 (Comp App (AT) (Ins) No.1285/2019) Page 3 of 5 hypothetical interpretation given to the contents of the invoices without there

being any evidence or pleadings to the contrary. There was no occasion for the

Learned Adjudicating Authority, to draw an inference in the absence of there

being any pleading to the contrary made by the Respondent as to what

implications the Purchase Order would have over the Demand Notice and the

prior invoices which were issued by the Appellant, with regard to the amount due

to be paid by the Appellant.

Not even that, even in the Appellate proceedings, the Respondent despite

several opportunities having being granted by this Tribunal, has not filed any

objections or even a written statement to controvert pleading raised by the

Appellant in this Appeal.

It is a trite law that when the Courts/Tribunals created under a statute while

adjudicating upon a civil right between the parties before the Court or the

Tribunal concerned have to confine their finding limited to the extent of

respective pleadings and evidence laid by the parties. The Tribunals or the Courts

are not expected to substitute their own stand or finding in supporting case of

either of the parties before it in the absence of there being any pleading raised

before it to controvert the pleading raised by the other side in support of their

case. Rather the Courts/Tribunals should refrain from stepping into the shoes of

a litigating party by substituting their own finding in the absence of there being

any pleading evidence.

TA (AT) No.206/2021 (Comp App (AT) (Ins) No.1285/2019) Page 4 of 5

It is the settled law which needs no further elaboration that in a judicial

proceeding where despite orders being passed by the court or the Tribunal calling

upon the opposite side to file objection to the pleading raised by the

Appellant/Applicant, if the same is not controverted, it will be deemed to have

been accepted by the other side and would be taken as to be true. Be that as it

may, since at no point of time, the Respondent had filed any objection to the

contrary to the proceedings under section 9 of I & B Code before the Adjudicating

Authority, that is, NCLT, Bangalore Bench, we are of the view that it would meet

the ends of justice if the Impugned Order dated 05.09.2019 is quashed and the

matter is remitted back to the NCLT, Bangalore Bench to decide

CP(IB)No.116/BB/2018 afresh after providing an opportunity to the Respondent

to file their objection to the Application under section 9 and to decide the same

afresh.

Considering the fact that the proceedings drawn on dates as back as in

2016, it is hoped and trusted that the Learned Adjudicating Authority will make

all efforts to decide proceedings as expeditiously as possible. Subject to the

above, the Company Appeal would stand allowed.

[Justice Sharad Kumar Sharma] Member (Judicial)

[Jatindranath Swain] Member (Technical) RO/TM

TA (AT) No.206/2021 (Comp App (AT) (Ins) No.1285/2019) Page 5 of 5