Biltech Building Elements Limited vs Citadel Eco-Build Private Limited

Biltech Building Elements Limited vs Citadel Eco-Build Private Limited on 5 March, 2024 Author: Ashok Bhushan Bench: Ashok Bhushan NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Ins.) No.1298 of 2023 IN THE MATTER OF: Biltech Building Elements Ltd. ...Appellant Versus Citadel Eco-Build Pvt. Ltd. ...Respondent Present: For Appellant: Mr. Sujoy Datta, Ms. Nishtha Khuranna, Ms. Aarsheya Sharda, Advocates. For Respondent: Mr. Anuj Tiwari, Ms. Aroshi Pal, Advocates. ORDER (Hybrid Mode) 05.03.2024: This Appeal has been filed against order dated 07.08.2023 by which order Section 9 application filed by the Appellant was dismissed on the ground of pre-existing dispute. When the appeal was taken by this Tribunal, the Appellant prayed that the appeal be adjourned as the Appellant is taking steps for settlement with the Respondent. On the said statement Appeal was adjourned on 06.10.2023, 01.11.2023, 23.11.2023 and 24.01.2023. Same statement was made by the Appellant today seeking adjournment. 2. We are of the view that in so far as negotiation and settlement with the Respondent, Appellant is free to carry on his process of settlement.

However, it cannot be a ground to not argue the appeal. The Adjudicating Authority rejected the Section 9 application on the ground of pre-existing dispute. The Cont'd.../ -2- findings of the Adjudicating Authority recorded in Para 6.6, 6.7 and 6.8 are as follows: "6.6. From the material available on record, it is observed by the Bench that, vide Email dated 07.08.2019, the Corporate Debtor informed the Operational Creditor about the rejection of goods by the clients of the Corporate Debtor. Further, the Corporate Debtor vide its Email dated 27.08.2019, had informed the Operational Creditor that the material sent by the Operational Creditor under Invoice No. 1458 dated 10.08.2019 has been rejected by the client of the Corporate Debtor for the reason compressive strength less than 2 N/mm. The relevant extract of the Email dated 07.08.2019 and 27.08.2019 is as under: "From: Citadel Eco-Build Pvt Ltd info@citadaigi.com Date: Wed, Aug 7, 2019 at 4:51 PM Subject Rejected Material of size 300 mm To: Mr Dnyandeo Kadam CC: SS SHITOLE , Narendra Arya , Amol S. Shitole , Pratik babar , Ganesh Adhav Dear Sir, As per the below trial email, we have requested the client to use AAC blocks of 300 mm size but they are not willing to use.

Gmall - FW: Rejected Material of size 300 mm This is to inform you that they are arranging the transportation for lifting rejected blocks tomorrow. Kindly accept the truckload and our purchase debit note. Company Appeal (AT) (Insolvency) No.1298 of 2023 -3- Regards, Ganesh Adhav Sr Sales Executive" -----------------Forwarded message---------------- From: Citadel Eco-Build Pvt Ltd Date: Tue, Aug 27, 2018 at 10:33 AM Subject: Material Rejection To: Narendra Arya , Dnyanded Kadam , Pratik babar , Jaisingh Kadambande Dear Sir, This is to inform you that the material of AC Blocks (Invoice no: 1458 dated 10.08.2019, Size 200 x 250 x 625 mm(6"), QTY 1170 nos 36.5620 Cu.m) has been rejected by the client for the reason compressive strength less than 2 N/mm 2. Kindly note that this is happening often. Another issue is in Thin Dry Mortar bags client has found stones we have attached the image of the same. 3/30/23, 2:14 PM Gmail-FW: Material Rejection Please see this matter very seriously. Regards, Malvika Sales Coordinator" 6.7 It is observed by this Bench that, all the correspondence by the Corporate Debtor were sent prior to issuance of the Demand Notices dated 16.03.2021 and 01.07.2021.

Hence, there did exist a Company Appeal (AT) (Insolvency) No.1298 of 2023 -4- Dispute between the parties. Further, as the Operational Creditor did not rectify the defects in the goods, the Corporate Debtor issued a Debit Notes upon the Operational Creditor vide its E-mail dated 09.05.2020. The Email dated 09.05.2020 is annexed as Annexure "4" to the Reply of the Corporate Debtor. 6.8 The Learned Counsel for the Operational Creditor further contended in its Written Submissions dated 25.05.2023 that all the Purchase Orders issued by the Corporate Debtor were part of the Sales Distributor Agreement dated 21.03.2018. It is further observed by this Bench that, the term of the Sales Distributor Agreement dated 21.03.2018 was mentioned to be one year as per clause 18 of the Agreement. The said Clause 18 is as under: "18. Term - This Agreement shall come in to effect on 01.03.2018 and shall continue to be effective for a period of 1 (One) year unless terminated earlier as provided herein in clause 24."" 3. We are of the view that there is no ground to entertain this appeal. Appeal is dismissed.

However, it shall be open for the Appellant to take steps as required for settlement with the Respondent, if any. [Justice Ashok Bhushan] Chairperson [Barun Mitra] Member (Technical) [Arun Baroka] Member (Technical) Archana/nn Company Appeal (AT) (Insolvency) No.1298 of 2023