Jakson Engineers Ltd vs Refex Energy Ltd

Jakson Engineers Ltd. ...Appellant

Versus

Refex Energy Ltd. ...Respondent

Present:

For Appellant: Shri Krishnendu Datta, Shri Divyam Agarwal, Ms. Pallavi Kumar, Shri Raghav Sabharwal and Ms. Mehak Khurana, Advocates

For Respondent: Shri Kumarpal Chopra and Shri Siddhartha Iyer, Advocates

ORDER

20.09.2019 The Appellant - M/s. Jakson Engineers Limited

(Operational Creditor) filed an Application under Section 9 of the Insolvency

and Bankruptcy Code, 2016 (I&B Code - in short) for initiation of Corporate

Insolvency Resolution Process against M/s. Refex Energy Limited (Corporate

Debtor). However, the Adjudicating Authority (National Company Law

Tribunal, Division Bench, Chennai) by Impugned Order dated 31st October,

2018 rejected the Application under Section 9 on the ground that there is a

dispute about quantum of debt.

Learned Counsel for the Appellant submits that even if the debt is

disputed, the amount being much more than Rs.1 Lakh, it was incumbent on

the part of the Adjudicating Authority to admit the Application in absence of

any pre-existing dispute.

-2-

On the other hand, according to learned Counsel for the Corporate

Debtor, there is a dispute about quantum of payment and that the amount

as shown in the Demand Notice under Section 8(1) varied as the balance

amount payable was only Rs.75,97,141/- which the Corporate Debtor

intended to settle.

The Adjudicating Authority has noticed that there is a debt payable by

the Corporate Debtor and the same is not barred by limitation as apparent

from the Impugned Order as quoted below:-

"12. The Creditor relied upon a letter dated 08.12.2014 written by the Corporate Debtor on ₹1,73,61,691 as balance confirmation but when this Bench has gone through that letter, it appears that the Corporate Debtor wrote it to the Creditor sending cheques for an amount of ₹1,73,61,691, according to the Creditor those cheques were bounced but thereafter over a period of time, the Debtor sent emails requesting the Creditor to attend the defects and service requirement in respect of the PV Boxes supplied to the Debtor, finally on 24.02.2016 sent the mail stating that out of ₹1,73,47,141, the Debtor is to pay only ₹75,97,141, because the Debtor incurred expenditure on attending the defects on their own when the Creditor did not turned up despite being called upon the attend the defects and service required to be given by the Creditor. Since warranty coverage is there for about five years, Company Appeal (AT) (Ins) No.12 of 2019 -3- though the Debtor admitted the debt claim in the year 2014 and sent cheques for the same, since the Creditor failed to comply with the warranty clause subsequent thereto, the Corporate Debtor sending such emails and finally saying that he is payable only ₹75,97,141 does not amount to either crystallization of debt or confirmation of debt. Out of all this correspondence, two things emanate, one is, the Creditor failed to comply with the warranty clauses, two is, the debt has not been crystalized between the parties as on the date Section 8 Notice was served upon the Debtor because the Debtor in the year 2016 itself sent email that the balance payable is only ₹75,97,141 and not the amount claimed by the Creditor as mentioned in the Company Petition.

13. Of course, as to limitation is concerned, there are continuous issues between the parties, whereby we refrain ourselves from deciding this point so that if parties go before civil court, it could be thrashed out on examining the documents available, if required on evidence being adduced."

It is observed that there being a dispute between the parties in respect

of breach of warranty and defects clause, it was observed that the dispute is

in existence. However, there is nothing on record to show that before issuance

of Demand Notice under Section 8(1), any letter was issued by Corporate

Debtor to show that there is an existence of dispute about Rs.75,97,141/-.

The learned Counsel for the Respondent referred to an e-mail dated 24th

February, 2016 which reads as follows:-

Company Appeal (AT) (Ins) No.12 of 2019 -5-

However, from the said letter dated 24th February, 2016, we find that

the Corporate Debtor in Reply to one Mr. Sandeep Gupta (Operational

Creditor) has shown amount of Rs.75,97,141 as payable.

As we find that there is no dispute with regard to the aforesaid amount

and it remaining outstanding and being more than Rs.1 Lakh, the Application

under Section 9 was fit to be admitted.

For the aforesaid reasons, we set aside the Impugned Order dated 31st

October, 2018 and remit the case to the Adjudicating Authority to admit the

Application under Section 9 after Notice to the Respondent, so that the

Respondent may get an opportunity to settle the matter prior to the admission

of the Application.

The Appeal is allowed with aforesaid observations. No cost.

[Justice S.J. Mukhopadhaya] Chairperson

[Justice A.I.S. Cheema] Member (Judicial)

[Kanthi Narahari] Member (Technical) /rs/sk

Company Appeal (AT) (Ins) No.12 of 2019