Castrol India Ltd vs Cargomotors Pvt Ltd

(Arising out of judgement and order dated 20.06.2022 passed by the Adjudicating Authority, National Company Law Tribunal, New Delhi, New Delhi in CP (IB)877/ND/2020) IN THE MATTER OF:

Castrol India Ltd. Technopolis Knowledge Park, Mahakali Caves Road, Chakala, Andheri (East), Mumbai 400093 ...Appellant

Versus

Cargo Motors Pvt. Ltd. 1/9-B, Jindal House, Asaf Ali Road, New Delhi-110002 ...Respondents

Present: For Appellant : Mr. P. Nagesh, Sr. Advocate with Mr. Shivam Shukla, Ms. Geetika Sharma, Advocates. For Respondent : Mr. Darpan Wadhwa, Sr. Advocate with Mr. Rohan Jaitley, Mr. Akshay Sharma, Mr. Dev Pratap Shahi, Mr. Prabhakar Yadav, Advocates

JUDGEMENT

(12th APRIL, 2023)

JUSTICE RAKESH KUMAR, MEMBER (JUDICIAL)

The present appeal has been preferred under Section 61 of

Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as Code)

against an order dated 20.06.2022 passed by the Adjudicating 2

Authority, National Company Law Tribunal, New Delhi (hereinafter

referred to as NCLT) in IB-877/ND/2020. By the said order the

Learned NCLT has rejected the application filed under Section 9 of

Code and Rule 6 of the Insolvency & Bankruptcy Code (Application

to Adjudicating Authority) Rules, 2016. The appellant, Castrol India

Ltd, had filed application under Section 9 of the Code before the NCLT

for initiation of Corporate Insolvency Resolution Process (CIRP)

against Respondent (Cargo Motors Pvt Ltd/alleged Corporate

Debtor). The appellant before the NCLT had claimed that there was

total outstanding debt of Rs.2,80,00,000/- after invoking the bank

guarantee for Rs.1,40,00,000/- otherwise total outstanding claimed

by the appellant before NCLT was to the tune of Rs.4,20,00,000/-.

However, after adjusting amount of bank guarantee the appellant

had claimed that there was outstanding debt of rs.2,80,00,000/-.

The Learned NCLT after hearing both the parties has dismissed

the petition by the impugned order. Before the NCLT the Respondent

herein (alleged Corporate Debtor) raised the objection on the petition

filed by the appellant mainly on two grounds. First ground which

was taken by the Respondent before the NCLT was that the claimed 3

debt was not operational debt under the provisions of Code. Second

objection was raised that the application was fit to be rejected since

there was pre-existing dispute between the parties. However, learned

NCLT disapproved the first objection raised by the Respondent and

recorded that there was operational debt. However, accepting the

second objection regarding pre-existing dispute the Learned NCLT

dismissed the application filed under Section 9 which has been

assailed in the present appeal.

At the time of hearing of the appeal Mr. P. Nagesh, learned

senior counsel taking us to number of documents placed on record

submitted that there was operational debt against the Respondent to

the tune of Rs.2,80,00,000/- and also there was no pre-existing

dispute. However, learned NCLT has rejected the application. Mr.

Darpan Wadhwa, learned senior counsel appearing on behalf of the

Respondent (alleged Corporate Debtor) besides making submissions

on the point of pre-existing dispute has also argued that considering

the nature of agreement in between the parties i.e. "Castrol Advance

Rebate Agreement dated 10th August, 2017 and also considering the

termination of the agreement by the appellant prior to expiry of three 4

years the claimed debt was not required to be considered as

operational debt. However, we are of the opinion that since the issue

regarding the operational debt has already been decided by the NCLT

against the Respondent we may not examine this issue due to the

reason that against part of the order dealing with the issue i.e.

operational debt the respondent has not filed any appeal nor same

has been assailed by the Respondent, it would not be appropriate for

us to examine and decide this issue. Accordingly we are confining

this appeal to examine only second issue as to where there was pre-

existing dispute in between the parties or not.

Before proceeding we may incorporate the case which has been

formulated by the appellant in the present Memo of Appeal. It is the

case of the appellant that it was manufacturer company of

automation and industrial lubricants in Indian lubricant market.

The respondent company is involved in sale of motor vehicles

including whole sale and retail sale of new and used passenger motor

vehicles and lorries, trailers and semi trailers. In the year 2017, on

10.08.2017 an agreement was entered in between the appellant and

respondent in the form of an advance rebate agreement. It was 5

agreed that Respondent for the period commencing from 01.08.2017

to 31.07.2020 shall purchase for use at their workshops lubricants

greases and other products manufactured from the appellant. The

Respondent agreed to purchase from the appellant upon procuring

the bank guarantee of Rs.1,40,00,000/- and the appellant was to give

an advance rebate of Rs.7 crore. In terms of the agreement

repayment of advance rebate by the Respondent (customer) to the

appellant (Castrol India Ltd) was based on the target achieved by the

Respondent in purchasing castor products as agreed in the table

below:

Total Target achieved in The advance rebate repayable by the Customer Less than 20% Entire advance rebate 20 - 50% 60% of the advance rebate 51 - 70% 40% of the advance rebate 71 - 90% 20% of the advance rebate 91 - 99% 10% of the advance rebate 100% Nil

However, before the expiry of period of agreement i.e. three

years on 25.02.2019 the agreement was terminated. It is the claim

of the appellant that in terms of the agreement the services were

provided by the appellant (operational creditor) to the Respondent in

the form of an advance rebate for infrastructure of the workshop 6

owned by the Corporate Debtor. It is further case of the appellant

that as per conditions incorporated in Clause vii of advance rebate

agreement, upon termination of agreement the entire amount was to

be considered as due and payable by the Respondent in favour of the

appellant. The appellant in terms of agreement gave an advance of

Rs.7 crore to enable respondent to meet volume of target of 1500 KL.

It has been pleaded that the volume of target from 1500 KL was

subsequently reduced to 920 KL against an advance rebate of Rs.7

crore. Mr. P Nagesh, learned senior counsel during hearing besides

referring to advance agreement dated 10.08.2017 has also drawn our

attention to emails dated 19.11.2018, 24.11.2018, 27.12.2018,

23.01.2019, 24.02.2019 and finally termination letter dated

25.02.2019. He submitted that in view of aforesaid communications

it was clear cut case that there was outstanding of operational debt

to the tune of Rs.2,80,00,000/- against the respondent. Since

despite admitted operational debt it was not being cleared by the

respondent without raising any dispute the appellant on 24.12.2019

issued demand notice under Section 8 of the Code against the

respondent. The said demand notice was replied by the respondent

by its communication dated 8.1.2020. In its reply, according to Mr. 7

Nagesh, learned senior counsel, a plea was taken that Respondent

even denied the relationship of creditor and debtor and also denied

about any of operational debt outstanding against Respondent. The

learned senior counsel submits that only with a view to defeat the

right of the appellant to initiate CIRP the respondent by said reply

raised a dispute as if it was a case of pre-existing dispute. Mr.

Nagesh, learned senior counsel further submits that before the NCLT

the appellant in its application filed under Section 9 of the Code had

categorically made out a case that there was admitted corporate debt

outstanding against the respondent and there was no pre-existing

dispute. However, the learned NCLT incorrectly dismissed the

application as if there pre-existing dispute. He has also drawn our

attention to running page 89 and 90 of the memo of appeal

particularly Part IV of the application filed before the NCLT for

initiating CIRP. Part IV of form V filed before the NCLT is reproduced

herebelow:-

Part -IV PARTICULARS OF OPERATIONAL DEBTE

(1) Total amount of Debt(principal only) INR 2,80,00,000/- (Rupees Two crore Eighty lakh only) 8

(2) Details of Transactions on account of which debt fell due:

i. Cargo Motors Private Ltd (Proposed Corporate Debtor) entered into an Agreement dated 10.08.2017 with Castrol India Limited (Operational Creditor) which was in the form of an Advance Rebate Agreement. ii. In accordance with Clause 1 of the said Agreement, at the request of the proposed Corporate Debtor, the Operational Creditor had agreed to provide an advance rebate of Rs.7.00,00,000/- (Rs. Seven Crores only) TOTAL AMOUNT OF DEBT, provided that the DETAILS OF TRANSACTIONS ON proposed corporate ACCOUNT OF WHICH DEBT Debtor would provide a FELL DUE, AND THE DATE bank guarantee in FROM WHICH SUCH DEBT FELL favour of the 1 DUE Operational Creditor to secure 20% of the advance rebate. Clause 5 of the said Agreement read as follows: "Repayment of the advance rebate by the Customer to Castrol will be based on the Targets achieved by the Customer in purchasing the Castrol products as agreed in the Table below: Total Target The advance achieved in % rebate payable by the customer 9

Less than 20% Entire advance rebate. 20-50% 60% of the advance rebate 51-70% 40% of the advance rebate 71-90% 20% of the advance rebate 91-99% 10% of the advance rebate 100% Nil

iii. Clause 7 of the said agreement also reads as under: "The amount of the advance rebate, which will remain due and payable by the Customer to Castrol as per the table in Clause 5 above at the time of this Agreement coming to an end, either by efflux of time or termination as herein provided, will be payable by the Customer on demand by Castrol. With prejudice to their rights in recover the amount of the advance rebate, so due and payable by the customer by due process of law, Castrol will be entitled to invoke the Bank Guarantee to recover the amount of the advance rebate secured by the Bank Guarantee." A copy of the said Advance Rebate Agreement is annexed herewith and marked as Annexure -A. 10

(3) That on 25.02.2019, the Operational Creditor sent a notice to the proposed Corporate Debtor that in lieu of non-payment made, the Operational Creditor had exercised its option to terminate the said agreement under Clause 6.2 of the same agreement and thereby stating that the agreement would stand terminated at the end of the business hours on 25.05.2019. Therefore, the day on which the debt would have been said to have become due and payable would be 27.05.2019. A copy of the notice of Termination addressed to the proposed corporate Debtor by the Operational Creditor is annexed hereto and marked as Annexure B.

(1) Amount claimed to be in Default: Indian Rupees Two Crore and Eighty Lacs Only AMOUNT CLAIMED TO BE IN (INR 2,80,00,000/-) DEFAULT AND THE DATE ON (2) Date on which the default WHICH THE DEFAULT occurred: OCCURRED 27.05.2019

(ATTACH THE WORKINGS FOR (3) Workings for the computation of 2 COMPUTATION OF AMOUNT Default:

AND DATES OF DEFAULT IN 1 Total Rs.4,20,00,000/-

TABULAR FORM) amount to be refunded raised 2. Amount Rs.1,40,00,000/- claimed by the Operational Creditor through 11

invocation of Bank Guarantee 3 Total Rs.2,80,00,000/- Amount claimed to be in default

Mr Nagesh, learned senior counsel by way of referring to the

aforesaid facts submits that since the respondent had not achieved

the target as contemplated in agreement dated 10.08.2017 the

appellant rightly claimed for recovery of outstanding debt against the

respondent. In sum and substance it has been argued that without

any pre-existing dispute learned NCLT has committed error in

dismissing the application filed under Section 9 of the Code as if there

was pre-existing dispute. According to Mr. Nagesh the order

impugned is liable to be set aside.

Mr. Darpan Wadhwa, learned senior counsel appearing on

behalf of the respondent at the very outset by way of referring to para

'C' of running page 41 of the Memo of Appeal which is part of the

Castrol Advance Rebate Agreement submits, that it is not a case of

operational debt. He has specifically placed reliance at Clause 'C' of

page 41 which is quoted hereinbelow:

12 "C.It is agreed that subject to the Customer purchasing for use at their workshop/s (hereinafter referred to as "the workshop" speciality products manufactured and marketed by Castrol as described in Annexure 1 annexed hereto (hereinafter referred to as "the Castrol Products"), Castrol, at the request of the Customer, has agreed to give advance rebate of INR7,00,00,000/- (Rupees Seven Crores) (hereinafter referred to as "the advance rebate") on the terms hereinafter appearing to enable the Customer to utilize lubricants, greases and other the same towards Infrastructure related to the business of the workshop provided the Customer will give a Bank Guarantee in favour of Castrol to secure 20% of the advance rebate (hereinafter referred to as "the Bank Guarantee"). The Bank Guarantee shall be valid from the commencement date of this Agreement Le from 1"Aug 2017 till 6 months from the expiry or prior termination of this Agreement."

He submits that so far as goods and services are concerned all

payments were made by the Respondent to the appellant. He

emphasized that it was not a case of corporate debt. However, we

may not entertain such submission considering the fact that Learned

NCLT has considered this issue and decided against the Respondent.

The said portion of the order has not been assailed by the

Respondent. Accordingly it would not be appropriate to entertain

such argument at this stage. Mr. Wadhwa, learned senior counsel

for the Respondent further submitted that agreement was itself for

three years and as per terms of the agreement the target was to be

achieved within three years. As per agreement the Respondent was

at liberty to achieve target upto 31st July, 2020. However, to the 13

reasons best known to the appellant the said agreement was

terminated taking aid of provisions contained in Clause 6.2 of the

agreement. It has been argued that there was no allegation of breach

of any condition of the agreement on the part of the respondent and

this was reason that the appellant while terminating the agreement

consciously had invoked provisions contained in Clause 6.2 of the

agreement. He by way of referring to termination letter i.e. at Page

61 i.e. Annexure 8 to the Memo of Appeal submits that the appellant

while terminating the agreement has referred to Clause 6.2 of the

agreement in para 3 and 4 of the termination letter for cancelling the

agreement. It would be appropriate to reproduce termination letter

dated 25.02.2019 as follows:

"CASTROL INDIA LTD

25th February, 2019

Cargo Motors Pvt Ltd, 1/9-B Jindal House, Asaf Ali Road, New Delhi-110002.

And Office at Rajpath Club Sarkhej Gandhinagar Highway Ahmedabad 380015 Gujarat

Dear Sirs, 14

1. As you are aware, you had entered into a "Castrol Advance Rebate Agreement" (herein after referred to as ('the said Agreement') dated 10 August 2017 with us. i.e. Castrol India Limited (CIL). The said Agreement was subsequently modified vide a letter dated 28 June 2018. Under the said Agreement (modified as stated hereinabove), you agreed to buy from CIL, a volume of 928Kilo litres of Castrol Products as set out in Annexure A to the said Agreement. We state that at your request, CIL gave you an advance rebate of Rs.7.00.00.000- as inore particularly stipulated under the said Agreement. We state that the said advance rebate is repayable in accordance with Clause 5 of the said Agreement which is reproduced hereinunder:

5. Repayment of the advance rebate by the Customer to Castrol will be based on the Targets achieved by the Customer in purchasing the Castrol Products us agreed in the Table below

Total Target The advance rebate achieved in repayable by the Customer Less than 20% Entire advance rebate 20 - 50% 60% of the advance rebate 51 - 70% 40% of the advance rebate 71 - 90% 20% of the advance rebate 91 - 99% 10% of the advance rebate 100% Nil

2. We further state that during the period August 2017 to February 2019. you placed orders upon CIL from time to time for purchase of goods, namely, lubricants and oils manufactured/marketed by CIL.

Pursuant to such orders for purchase, CIL sold and delivered the ordered goods to you upon such terms and conditions as stipulated and agreed upon under the said Agreement. We state that CIL duly sold and delivered the said goods to you as per the purchase orders to your full satisfaction, thereby fulfilling its obligations with utmost diligence. We further state that the delivery of the goods was accepted by you without any demur and/or protest on any ground whatsoever.

15

3. Further, clause 6.2 of the said Agreement provides as under:

6.2 Notwithstanding what is stated in this Agreement, either party will be entitled to terminate this Agreement before the expiry of the Agreement Period by giving 3 (three months written notice to the other Party

4.We wish to inform you that CIL hereby exercises its option to terminate the said Agreement under the said clause 6.2 thereof and please note that the Agreement shall stand terminated at the end of business hours on 26 May 2019. Please note that the consequences and/or formalities post termination shall accordingly apply post 27th May 2019. We expect and request your kind co-operation in the matter.

For Castrol India Ltd.

Sd/- Rajeev Govil Vice President Workshop and OEM"

By way of referring to aforesaid termination letter learned senior

counsel emphasized that there was no allegation against the

Respondent herein regarding contravention or breach of any of the

condition of the agreement dated 10.08.2017 and as such after

terminating the agreement taking aid of Clause 6.2 of the agreement

prior to completion of three years the appellant may not be allowed

to take any advantage of such termination. It was further argued

that there are number of communications in the Memo of Appeal

itself which reflects that due to non regular supply despite repeated

requests of the respondent herein for sometime the respondent

herein have suffered adversely in immediately achieving the target. 16

However, had the agreement continued for three years there was no

difficulty for the Respondent to achieve the complete target.

According to learned counsel for the respondent since there was

no outstanding debt against the respondent herein even after

termination of agreement, the respondent did not take any step.

However, immediately after noticing the creation of demand of debt

by the appellant, after receipt of notice under Section 8 of the Code,

the respondent responded by way of giving reply that there was no

outstanding. According to him it was a clear cut case of pre-existing

dispute and as such Learned NCLT has rightly accepted the objection

raised by the respondent herein and rejected the petition filed under

Section 9 by the appellant. There is no error in the order.

Besides hearing learned counsel for the parties we have perused

the material available on record. Since nucleus of the claim of the

appellant is advance agreement dated 10.08.2017 we propose to

reproduce the relevant extract of the agreement which is at Page 40

to 42:-

"This Agreement is made at Ahmedabad on 10th day of August, 2017.

BETWEEN 17

CASTROL INDIA LIMITED, a Company registered under the Companies Act, 1956 and having its Registered office at Technopolis Knowledge Park, Mahakali Caves Road, Chakala, Andheri (East), Mumbai 400093 and having a regional office at Silver Utopia, Cardinal gracious road, Chakala, Andheri (East), Mumbai 400069 hereinafter referred to as "Castrol" (which expression shall unless repugnant to the context or contrary to the meaning thereof be deemed to mean and include its successors and assigns) of the ONE PART.

AND

Cargo Motors Private Limited, a limited/ Private Limited Company incorporated under the Companies Act, 1956 and having its Registered office at Ahmedabad, Gujrat thereinafter referred to as the "Customer") which expression shall unless it be repugnant to the context or contrary to the meaning thereof be deemed to mean and include its successors and assigns of the OTHER PART.

HEREAS:

A.Castrol is in the business of manufacturing and marketing lubricants and other speciality products.

B.The Customer is carrying on business of vehicle service workshop in various geographical parts of Maharashtra.

C.It is agreed that subject to the Customer purchasing for use at their workshop/s (hereinafter referred to as "the workshop" speciality products manufactured and marketed by Castrol as described in Annexure 1 annexed hereto (hereinafter referred to as "the Castrol Products"), Castrol, at the request of the Customer, has agreed to give advance rebate of INR7,00,00,000/- (Rupees Seven Crores) (hereinafter referred to as "the advance rebate") on the terms hereinafter appearing to enable the Customer to utilize lubricants, greases and other the same towards Infrastructure related to the business of the workshop provided the Customer will give a Bank Guarantee in favour of Castrol to secure 20% of the advance rebate (hereinafter referred to as "the Bank Guarantee"). The Bank Guarantee shall be valid from the commencement date of this Agreement Le from 1"Aug 2017 till 6 months from the expiry or prior termination of this Agreement.

D.The Parties hereto have agreed to record the terms of their agreement in writing as hereinafter appearing 18

IT IS AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:

1. In consideration of the Customer agreeing to purchase for use in the workshop the Castrol Products as per the Schedule, (forming part of this Agreement) either TRA from Castrol or from a Distributor of Castrol and upon the Customer procuring or East Tower the Bank Guarantee of INR 140 lakhs, Castrol hereby agrees to give to the Plate, Prag Customer the advance rebate of INR7,00,00,000/- (Rupees Seven Crores only) to enable the Customer to utilize the same towards infrastructure related to the business of the workshop. The Bank Guarantee shall be valid from the commencement date of this Agreement Le. from 1"Aug 2017 till 6 months from the expiry or prior termination of this Agreement. The Customer shall provide to Castrol ITS latest audited P/L statement of 2 years for Castrol's Finance Department to approve and release the Advance Rebate amount.

2.This Agreement will commence from 1"Aug 2017, subject to the Customer procuring and giving to Castrol the Bank Guarantee, and will continue to be in force for a period of 3 years upto 31 July 2020. The period of this Agreement commencing from 1"Aug 2017 and ending after the expiry of 3 years is hereinafter referred to as "the Agreement Period". On Castrol giving the advance rebate to the Customer, after receiving the Bank Guarantee from the O Customer, the Customer agrees to purchase during the Agreement Period the Castrol Products in the manner stipulated in this Agreement.

3.In consideration of Castrol providing to the Customer the advance rebate for utilization towards infrastructure related to the business of the workshop as agreed in Clause 1 above, the Customer agrees and undertakes that during the Agreement Period it will use and promote the Castrol Products in the manner stipulated in this Agreement.

4.The Customer agrees:

(a) That they will utilize the advance rebate towards purchase, installation and maintenance of infrastructure related to the business of the workshop and for no other purpose.

(b) To promptly settle the invoices raised by Castrol for the purchase of Castrol products on agreed Castrol or the Distributor of terms of payments.

19 (c) Not to assign this Agreement to any person, firm or corporation without the prior written consent of Castrol

(d) To use infrastructure which the Customer has herein agreed to purchase and Install from the advance rebate, for the purpose relating to the use of Castrol Products including handling or dispensing the Castrol Products orfor the allied activities.

(e) To advertise and promote Castrol's goodwill, the Castrol Products, and

5 Repayment of the advance rebate by the Customer to Castrol will be based on the Targets achieved by the Customer in purchasing the Castrol Products as agreed in the Table below:-

Total Target The advance rebate achieved in repayable by the Customer Less than 20% Entire advance rebate 20 - 50% 60% of the advance rebate 51 - 70% 40% of the advance rebate 71 - 90% 20% of the advance rebate 91 - 99% 10% of the advance rebate 100% Nil

6.1 In the event the Customer commits breach of any of the terms of this Agreement Castrol shall give the Customer 30 (thirty) days notice specifying the breach and requiring the Customer to remedy such breach. If the Customer fails to remedy the breach within the said period of 30 (thirty) days, Castrol shall be entitled to terminate this Agreement.

6.2 Notwithstanding what is stated in this Agreement, either party will be entitled to terminate this Agreement before the expiry of the Agreement Period by giving 3 (three) months written notice to the other party.

7 The amount of the advance rebate, which will remain due and payable by the Customer to Castrol as per the Table In Clause 5 above at the time of this Agreement coming to an end, either by efflux of time or termination as herein provided, will be payable by the Customer on demand from Castrol. Without prejudice to their rights to recover the amount of the advance rebate, so due and payable by the Customer, by due process of law, Castrol 20

will be entitled to invoke the Bank Guarantee to recover the amount of the advance rebate secured by the Bank Guarantee.

8 On Castrol being satisfied that the Customer has met the Target in purchasing the Castrol Products as agreed In Clause 5 above, and upon this Agreement having completed the Agreement Period, Castrol will issue 'No due Certificate' to the Customer. 9. If the Target in purchasing the Castrol Products as agreed in Clause 5 above is

10. If the Target in purchasing the Castrol Products as agreed in Clause 5 above is achieved prior to the expiry of the Agreement P:eriod, then also Castrol will issue 'No due Certificate' to the Customer.

On examination of aforesaid extract of the agreement it is clear

that target was to be achieved within a period of three years from the

date of agreement and as per agreement last date for achieving the

target was 31.07.2020. The aforesaid agreement further entitles both

the parties for termination of agreement but agreement was to be

terminated under two situations as contemplated in Clause 6.1 and

6.2 hereinabove. It is admitted case of both the parties that before

expiry of period of three years agreement was terminated on

25.02.2019 by the appellant. It is evident from termination letter

dated 25.02.2019 which has been quoted hereinabove. Meaning

thereby that there was no allegation leveled by the appellant that

respondent had breached any of the conditions of agreement. Once

the agreement was itself terminated only after issuance of three 21

months notice in terms of Clause 6.2 the appellant was not entitled

to make any claim as if Respondent had not achieved the target. It

can be inferred that if the Respondent was allowed to continue till

the final date of achieving of target i.e. 31.07.2020 there was

possibility of achieving the entire target. Since in the mid it was

cancelled/terminated, the appellant may not be allowed to get any

advantage of such termination. However, we are not here to record

any adjudication on such claim nor our observation be taken note of

in any other proceeding but fact remain that such dispute cannot be

adjudicated in a proceeding under the Code. However, on perusal of

reply dated 08.01.2020 sent by the Respondent to the appellant to

its demand notice dated 24.12.2019 it is evident that the debt

amount was disputed by the Respondent. For examining the demand

notice one will have to interpret the agreement i.e. Castrol advance

rebate agreement dated 10.08.2017 and in view of fact of termination

before three years that too without any allegation of any breach by

the respondent it was difficult for the NCLT to adjudicate on the

issue. Apparently there was pre-existing dispute and in such

situation the Learned NCLT has rightly recorded that 22

"10. We find that the corporate debtor had replied to the demand notice dated 24.12.2019 issued by the corporate debtor vide reply dated 08.01.2020, wherein the corporate debtor had issued notice for dispute raising the disputes with regard to the achievement of targets and the amount due. Further, on a perusal of the correspondence between the operational creditor and the corporate debtor via email dated 14.12.2019 (14.02.2019), it is established beyond doubt that there was disagreement with regard to the disbursement of amount of rebate and the introduction of the quarterly targets imposed by the operational creditor which were not the part of the Advance Rebate Agreement or amended agreement thereto. Further the corporate debtor presents e-mails dated 19.11.2018 and 24.11.2018 which recorded the dispute with regard to delay in supply of goods by the operational creditor to the corporate debtor."

We have also examined emails dated 14.02.2019, 19.11.2018

and 24.11.2018 and we too are of the opinion that it was a specific

case of pre-existing dispute. There is no error in the impugned order

warranting interference. Accordingly, the appeal stands dismissed

without costs.

(Justice Rakesh Kumar) Member (Judicial)

(Dr. Alok Srivastava) Member (Technical) bm