In the matter of Ridham Synthetics Private Limited

IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH -V C.P. No. 534/MB/2023  On 24.07.2018, the Corporate Debtor informed the Operational Creditor about the inferior quality of goods supplied by them via whatsapp text messages.  The Operational Creditor rather than replacing the defective goods, attempted to deliver a stock of goods as a test product on 24.08.2022, however the Corporate Debtor rejected the goods with specific mark on Delivery Challan No. G S04 dated 24.08.2022 as the goods contained iron particles, which could not be used for clothes.  The Operational Creditor further sent a notice of recovery dated 24.03.2023 wherein they have mentioned about the arbitration proceeding, in case the Corporate Debtor fails to pay the claim amount of Rs. 1,36,06,646.70. /- within 7 days of receipt of the notice. This in itself reflects that the Operational Creditor has made an attempt to resolve a pre-existing dispute between the parties in relation to the purported claim amount by proposing to resolve the issue by the way of arbitration.  Further as mentioned in the additional statement of facts by the Operational Creditor that the Corporate Debtor has admitted their liability in reply to the Demand notice, The Corporate Debtor vehemently rejects the same and states that it has never

IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH -V C.P. No. 534/MB/2023 admitted any liability in their reply to the demand notice dated 26.04.23 to the purported claim amount.  The Corporate Debtor submits that this Company Petition is filed by the Operational Creditor with malafide intentions, by making a deliberate attempt to intimidate the Corporate Debtor into making payments of the purported claim amount of Rs. 1,36,06,646.70/-  The Operational Creditor is indulging in forum hunting as firstly he informed the Corporate Debtor that arbitration shall be proceeded with and then filed the present frivolous petition.

10. The Counsel for the Operational Creditor further countered the submissions of the Corporate Debtor stating that in addition to his own ledger entry which is merely to corroborate the fact of the pendency of the debt due amount, the counsel for the Operational Creditor submitted that the professional relationship between the parties has not been disputed by the Corporate Debtor. In response to the argument of the counsel for the Corporate Debtor with respect to forum hunting. The counsel for the Petitioner vehemently argued that the facts and circumstances of the present case cannot be stated to be an instance of forum hunting. The invoking

IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH -V C.P. No. 534/MB/2023 of the arbitration clause is a legally enforceable right of the Petitioner and is an accepted forum to recover the amount due. Invoking the provisions of IBC is also a legal right enshrined upon the Petitioner in view of the facts and circumstances of the case. Hence, the mandate of the recovery is entirely different from that of resolution of the Corporate Debtor. Thus, both the forums are completely independent and the Petitioner has rightly invoked the jurisdiction of this forum. Findings/Conclusion

We have heard the arguments of the Learned Counsel for Operational Creditors as well as the Corporate Debtor and have gone through the records placed before the Hon’ble Tribunal.

1. The case of the Operational Creditor is that since an amount of Rs.1,36,06,646.70. /- is the debt due on account of supply of the material and the pending amount is due and payable and in the view of the fact that the Corporate Debtor has failed to make the payment, Hence, the present petition. The date of default stated to be is 16.10.2022. The Demand Notice under Section 8 was sent by the Operational Creditor on 18.04.2023 and the same was replied to by the Corporate Debtor on 26.04.2023 to substantiate his case. The Counsel for the Petitioner has made reference to the pending invoices hereinafter reflecting the amount to be paid by the Corporate Debtor. He also made reference to the ledger entry so as to IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH -V C.P. No. 534/MB/2023 state that, it was a running ledger account. The invoices placed on record are from 30.05.2018 to 18.08.2018 which are stated to be pending and due. 2. He further made an attempt to draw the attention of the Hon’ble Tribunal to the fact that GST payment has been deducted by the Corporate Debtor. Further to substantiate his argument that the said amount was due and payable to the Operational Creditor, the attention of the Hon’ble Tribunal was drawn to the reply tendered by the Corporate Debtor to the Demand Notice, stating that an attempt has been made by the Corporate Debtor to wriggle out of his proven liability merely by a simple denial of the stated amount and to depict the same as the pre-existing dispute.

This attempt of Corporate Debtor is very flimsy and not based on any material facts. The fact of the Petitioner having mentioned in his notice dated 24.03.2023 about his intention to initiate arbitration proceeding if payment of the amount due is not done within 7 days of the receipt of the notice by the Corporate Debtor, and not actually initiating the Arbitration proceeding does not by itself prove it to be a case of any pre-existing dispute between the parties. Mere reference to the initiation of the arbitration clause does not make it a pre-existing dispute. Hence the argument of the Corporate Debtor deserves to the rejected on this ground. 3. In addition, The Ld. Counsel of the Corporate Debtor countered the argument of the Petitioner basing his case on IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH -V C.P. No. 534/MB/2023 the documented ledger entry of the Corporate Debtor stating that mere production of a ledger entry cannot prove it to be the admitted pending amount and the Petitioner cannot be permitted to make out a case on the strength of ledger provided by the Corporate Debtor so as to prove the pending debt.

Otherwise also the case of the Corporate Debtor is that quo two alleged invoices the material was never supplied and the material once sent was of low quality thus was sent back, thus merits no payment. Hence the debt amount is not crystalized and the same is disputed by the Corporate Debtor in his reply to the petition.

4. In addition, the Ld. Counsel vehemently argued and disputed the invoices having been placed on record and particular reference was made to the invoices no. 207 & 228 of the petition. These two invoices were though raised by the petitioner, but no material was ever supplied qua invoice No. 207 & 228 to the Corporate Debtor. No mention of these invoices are made in the Demand Notice. These are false and frivolous documents. On this basis itself it can be contended that the invoices placed on record are not reliable, correct and authenticated documents and are thus disputed. To counter the arguments of the payment of the GST, she vehemently contended that the payment made of GST by no means can be said to be admission of the liability on the part of the Corporate Debtor. To prove the fact that there exists pre-

IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH -V C.P. No. 534/MB/2023 existing dispute, the Counsel drew the attention of the Hon’ble Tribunal to some whatsapp messages exchanged between the parties. The attempt of the Counsel of the Corporate Debtor is to show from these messages that there was a quality issue with respect to the material supplied by the Operational Creditor, so as to prove that there was a dispute. She further contended that it was because of this unsatisfactory supply of the material, which was sent back to the Operational Creditor along with the remarks on the challan forms further proves the existence of pre-existing dispute. With that, the Counsel concluded her argument. In response to the arguments of the Respondent, the counsel for the Petitioner made an attempt to dislodged, the issue of pre-existing dispute stating that the perusal of all the invoices makes it abundantly clear that, in the case of any discrepancy in the material, the same was required to be intimated within 72 hours of receipt of the material. The counsel drew the attention to clause 5 of the declaration of the tax invoice. He further submitted even if the case of the Corporate Debtor with respect to the whatsapp text messages, regarding the material not of proper tensile strength is taken to be correct then also the date on the said whatsapp text messages is 24.07.2018 whereas the documents being relied upon by the Corporate Debtor to further substantiate that the material was sent back are of the year 2022. Hence it is not plausible on the one hand to connect the same and on the other to IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH -V C.P. No. 534/MB/2023 connect these with the pending invoice of the Operational Creditor qua which the claim is made in the present petition and thus deserve no merit. In response to the submissions of the Corporate Debtor regarding the ledger entries not to be taken as to substantiate as a due amount, the counsel contended that he has placed on record all the invoices so as to prove the pendency of the amount. He has also placed on record the GST deduction enjoyed by the Corporate Debtor.

5. We have taken into consideration the invoices No RT/207/17- 18 and RT/228/17-18, dated 1.03.2018 and 31.03.2018 respectively placed on record. As per the contention of the Respondent, material was never supplied by the Operational Creditor against these invoices but the amounts of these invoices have been added in the claim amount by the Petitioner. Additionally, the goods supplied against the invoice no. RT044 dated 21.05.2018 by the Operational Creditor was of inferior quality and the same was conveyed to the Operational Creditor via whatsaap messages dated 24.07.2018. The Operational Creditor rather than taking remedial action tried to deliver test products, the same was rejected by the Respondent with specific mark on Delivery Challan No. G S04 dated 24.08.2022. The challan is reproduced below: -

IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH -V C.P. No. 534/MB/2023

Hence, this bench is of considered view that there exists a pre-existing dispute with regards to the due amount and otherwise also there is no proper crystallization of the debt as the respondent have disputed the amount claimed in the present petition.

6. In addition, the counsel for the Corporate Debtor also submitted that the petition is not filed by duly authorized person and the authority placed on record is not a proper and legal authorization of Mr. Jaisukh Salot. By taking into view the above submission and the fact that the submitted

IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH -V C.P. No. 534/MB/2023 Authority letter is neither properly attested nor notarized makes it clear that there is no proper authorization given to the Operational Creditor to file this petition. Hence, this petition deserves dismissal on this ground as well.

7. Further this Tribunal has thoughtfully considered the fact that the Corporate Debtor is a Financially Solvent Company with the ability to discharge its lawful debt. The Hon’ble Supreme Court in M/S S.S. Engineers V. Hindustan Petroleum Corporation Ltd & Ors., Civil Appeal No. 4583/2022 has held “The NCLT, exercising powers under Section 7 or Section 9 of IBC, is not a debt collection forum. The IBC tackles and/or deals with the insolvency and bankruptcy. It is not the object of the IBC that CIRP should be initiated to penalize solvent companies for non-payment of disputed dues claimed by an operational creditor”

8. In the view of the above stated C.P. No. 534/MB/2023 deserves to be dismissed.

SD/- SD/- MADHU SINHA REETA KOHLI MEMBER (TECHNICAL) MEMBER (JUDICIAL) /Aakansha/