Kodeboyina Srinivas Krishna vs Pvm Innvensys Pvt Ltd & Anr

(Arising out of Impugned Order dated 23rd January, 2020 passed by the Adjudicating Authority/National Company Law Tribunal, Delhi Bench, in Company Petition No (IB) No.295 (ND)/2019)

IN THE MATTER OF:

Kodeboyina Srinivas Krishna CGB 284, DLF Capital Greens, Shivaji Marg, New Delhi 110015 ... Appellant

Versus

1. PVM Innvensys Pvt. Ltd. Plot No. C-5, Road No. 2, Vikrampuri Colony Kakaguda, Secunderabad Hyderabad 500001 ...Respondent No. 1

2. C-Tel Infosystems Pvt. Ltd. DSM 361-362, DLF Towers, Shivaji Marg New Delhi 110015 Through Shyam Arora Insolvency Resolution Professional Registration no. IBBI/IPA-002/IP-N00546/2017-18/11073 ... Respondent No. 2

Present:

For Appellant: Mr. Rakesh Kumar, Ms. Preeti Kashyap and Mr. Yogesh Gupta, Advocates.

For Respondents: Mr. Nagaraj Kumar, Ms. Aishwarya Mohan Gahrana and Ms. Anuradha, Advocates for R-1. Mr. Vinod Chaurasia and Mr. Shyam Arora, Advocates for R-2.

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 1 of 24 JUDGMENT

(Through Virtual Mode) (Dated 25.09.2020)

[Per: Dr.Alok Srivastava, Member (Technical)]

1. This appeal has been filed by Appellant under Section 61 of

the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to

as IBC) against the Impugned Order dated 23.01.2020 of the

Appellate Authority, National Company Law Authority, Delhi Bench

V.

2. The Ld. Adjudicating Authority has, through judgment dated

23.1.2020,admitted the application under Section 9 of the IBC filed

by the Respondent no. 1. Consequently, CIRP of the Appellant

(Corporate Debtor) has been initiated.

3. The Impugned Order was delivered on 23.1.2020 and the

appeal has been filed on 5.2.2020. Therefore, the appeal has been

filed within limitation.

4. The brief facts of the case are as hereunder:

(1) The Operational Creditor M/s. PVM Innvensys Private

Limited (Respondent no. 1 in this appeal) is a supplier of

Global Positioning System (GPS) equipment, who also

manages and provides professional services to the

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 2 of 24 Corporate Debtor M/s. C-Tel Infosystems Private Limited

with respect to Hedonic Path Finder System (HPFS)

projects in the State of Andhra Pradesh and Telangana

pursuant to Master Service Agreement dated 02.05.2014

and Managed Services Agreement dated 01.09.2014.

(2) The Appellant Company is a company working in HPFS

Project for the Excise Department of the Government of

Telangana. As part of the project, the Appellant works with

several vendors for the supply and installation of GPS

trackers among other things. Respondent No.1 is one such

vendor, who used to work with the Appellant (Corporate

Debtor) in accordance with the Master Service Agreement.

(3) As a result of work assigned to the Respondent No. 1

Operational Creditor, various transactions took place

between the Appellant Corporate Debtor and the

Operational Creditor. These transactions related to

payment for supply and installation of GPS vehicle

trackers. The transactions in question are as follows:

(1) One such transaction in this case relates to supply and

installation of 804 vehicle trackers and managing their

services for which an amount of Rs.50,32,028/- was

payable to the Operational Creditor by the Corporate

Debtor as claimed by the Operational Creditor. This

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 3 of 24 transaction is confirmed by Corporate Debtor vide e-

mail dated 15.10.2015 which has statement of account

attached mentioning payment due for 804 vehicle

trackers.

(2) Another transaction in question relates to 30 nos. Hippo

GPS vehicle trackers (without SIM) including

installation, configuration and setup for which purchase

order vide Corporate Debtor's e-mail dated 11.12.2015,

later amended by Corporate Debtor 's e-mail dated

12.12.2015, was sent to the Operational Creditor. A

payment of Rs.3,67,200/- for this transaction is claimed

to be due by the Operational Creditor.

(3) The Operational Creditor sent a Demand Notice in Form

3 under Rule 5 of the Insolvency and Bankruptcy

(Application to Adjudicating Authority) Rules 2016 on

20.11.2018 to the Corporate Debtor. The total amount

due/un-paid debt was shown as Rs.50,32,028/-

(Rupees Fifty Lakh, Thirty Two Thousand and Twenty

Eight only) plus interest calculated @ 18% per annum

therein. This amount has been shown in Column 1 and

Column 2 of the particulars of the operational debt in

the demand notice. Through this demand notice, the

Operational Creditor requested re-payment of the

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 4 of 24 unpaid operational debt within 10 days from the date of

receipt of the notice.

(4) In response, the Corporate Debtor sent a reply dated

3.12.2018, wherein it raised dispute about supplying

804 vehicle trackers. He also admitted to have placed

purchase order for only 30 nos. of GPS vehicle trackers

and having received the same in terms of his purchase

order dated 11.12.2015. He categorically mentioned in

his reply that apart from the 30 nos. GPS vehicle

trackers, the Operational Creditor has not supplied

anything more to Corporate Debtor which are mentioned

in the Demand Notice. He also mentioned that any

invoice for 804 number of GPS vehicle trackers is not

enclosed with the demand notice and he has not

acknowledged any debt to the Operational Creditor. He

clarified that e-mail dated 15.10.2015, which was

enclosed by the Operational Creditor with the Demand

Notice was only a statement of account for review and

not an acknowledgment of debt or proof for supply of

equipment.

(5) On receipt of the reply from Corporate Debtor, the

Operational Creditor filed an application under Section

9 of the IBC 2016 and has raised the issue of non-

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 5 of 24

payment of operational debt of Rs.50,32,028/- for

supply and installation of 804 vehicle trackers and

Rs.3,67,200/- for supply and installation of Hippo 30

GPS vehicle trackers. He has mentioned in the

application that as on 12/12/2015, an amount of Rs.

53,99,228/- (Rupees Fifty Three Lakh, Ninety Nine

Thousand, Two Hundred and Twenty Eight only) is

outstanding payable by the Corporate Debtor to the

Operational Creditor against these supplies. The

Operational Creditor has also given details of certain

TDS deductions for Assessment Year 2015-16 of an

amount of Rs.4,89,073/- and a copy of Form 26AS of

the Operational Creditor for the Assessment Year 2016-

17 confirming TDS deduction of an amount of

Rs,1,01,455/-.

5. The case was heard by the Adjudicating Authority (NCLT, New

Delhi, Bench V) which delivered its judgment on 23.1.2020. In brief,

the Adjudicating Authority has inferred that an amount of

Rs.3,67,200/- in respect of payment for supply and installation of

30 nos. of vehicle trackers has not been paid by the Corporate

Debtor, which is evident from the certificate issued by Axis Bank.

The Adjudicating Authority has also found that the application

under Section 9(2) of IBC 2016 is complete and at least a default of

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 6 of 24 Rs.3,67,200/- is admitted by the Corporate Debtor that has not

been paid which is in limitation. On this basis, the Appellate

Authority has admitted the application of the Operational Creditor

and directed for initiation of CIRP of the Corporate Debtor and the

Interim Resolution Professional has also been appointed vide the

same judgment.

6. We have heard the detailed arguments of the Appellant and

the Respondents. We have also considered the averments of both

the parties in the appeal memo, reply of Respondent No.1 and status

report filed by Interim Resolution Professional as well as written

submissions filed by Appellant and Respondent No.1.

7. The Appellant has claimed in the appeal memo about raising a

dispute in the light of Section 9(5)(ii)(d) of the IBC 2016. He has also

stated that the application filed by the Operational Creditor was not

maintainable since the amount claimed as operational debt due in

the demand notice issued by it under Section 8(1) of the IBC 2016

and the amount eventually claimed by it in its application dated

9.1.2018 are different and the Appellate Authority did not appreciate

this difference while accepting the application.

8. The Learned Counsel for Appellant has submitted that the

Operational Creditor has a two-fold claim against the Corporate

Debtor. One claim was related to supply and installation of 804

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 7 of 24 GPS vehicle trackers for an amount of Rs.50,32,028/-. The second

claim related to purchase, supply and installation of 30 GPS vehicle

trackers for an amount of Rs.3, 67,200/-. Thus the total amount in

two claims was stated by the Operational Creditor to be

Rs.53,99,228/-. He has submitted that the Operational Creditor

had stated in the Demand Notice that there was a default of non-

payment of an amount of Rs.50,32,028/- relating to supply and

installation of 804 GPS vehicle trackers whereas the Learned

Adjudicating Authority has admitted the petition with respect to the

default of Rs.3,67,200/- relating to 30 GPS vehicle trackers vide the

Impugned Order. The relevant para 37 of the Impugned Order dated

23.1.2020 is reproduced hereunder for ready reference:-

"37. Therefore, in the light of the aforesaid decisions, when I

shall consider the case in hand, then I find that the application

under section 9(2) of the Code is complete, at least default of

Rs. 3,67,200/- is admitted by the Corporate Debtor and that

has not been paid. It is established by the certificate issued by

the Axis Bank which is at page number 280 Annexure 19.

Hence, there is no payment of unpaid operational debt, the

demand notice has been delivered by the Operational Creditor,

notice of dispute has been raised and the amount is more than

1 Lakh. Since these contentions are fulfilled then the

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 8 of 24 Adjudicating Authority has no option but to admit the

application of the Operational Creditor."

He has also contended that an amount of Rs.3,67,200/- has already

been paid by the Corporate Debtor to the Operational Creditor after

the order dated 03.02.2020 of Hon'ble NCLAT and insofar as the

claim of Rs. 50,32,028/- is concerned it is barred by limitation. It is

claimed by the Learned Counsel for Appellant that the application

under Section 9 of IBC was filed on 12.12.2018, whereas

purportedly the claimed debt amount in default is based on e-mail

dated 15.10.2015. Therefore, the petition is also barred by

limitation with respect to the default amount claimed in the demand

notice.

9. The Ld. Counsel of Appellant has argued that while the

demand notice relates to the default in respect of Rs.50,32,028/-

with respect to the supply of 804 GPS Vehicle Trackers, there is no

whisper of default of Rs.3,67,200/- with respect to the supply of 30

Hippo GPS Vehicle Trackers in the demand notice. He has also

controverted the claim of the Operational Creditor that both the

claims were part of the continuous business dealing between the

Operational Creditor and Corporate Debtor, though the demand

notice sent by Operational Creditor does not refer to the said fact.

He has adverted to the judgment in the matter of Neeraj Jain Vs.

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 9 of 24 Cloudwalker Streaming & Anr. In Company Appeal (AT)

(Insolvency) No.1354 of 2019, wherein it has been held that the

demand notice would be defective if the invoices are not enclosed.

The relevant portion of the said judgment has been referred by the

Learned Counsel for the Appellant which is reproduced hereunder:-

"44. The use of the phrase, 'deliver a demand notice of

unpaid operational debt or copy of an invoice demanding

payment of the amount involved' in Section 8(1) does not

provide the Operational Creditor, with the discretion to

send the demand notice in Form 3 or Form 4 as per its

convenience. Rather, it depends directly on the nature of

the operational debt and applicability of Form 3 or Form 4

as per the nature of the transaction.

45. It is important to mention that legislative provisions

are made with a larger perspective to deal with all the

eventualities that may arise in the implementation of the

said provisions, Therefore, the use of the word "OR" in

Section 8 cannot be interpreted as such, that the

Insolvency and Bankruptcy Code provided a choice or a

discretion to an Operational Creditor, to provide an

escape route from submission of the invoice, which can

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 10 of 24 be treated as the most relevant document to prove the

debt and amount in default."

10. The Ld. Counsel for appellant has argued that in the light of

the judgment above and since the invoices were not attached with

the demand notice, the demand notices are defective resulting in

improper and inappropriate application under Section 9 of IBC

2016. He has also claimed in the appeal memo that the arguments

were heard by the Division Bench on 07.11.2019 and after hearing

part arguments the Division Bench fixed the case for further

arguments on 06.12.2019. It is his claim that on 06.12.2019 a

Bench comprising of single member heard the case. Since the

senior counsel for appellant was busy in another case he requested

for a passover which was not granted and the arguments were heard

by a single judge who pronounced the order. This, he has claimed,

is against the principle of natural justice and the Impugned Order

should be set aside on this account too.

11. The Ld. Counsel for Respondent no. 1 has argued that the

transactions between the Appellant and the Respondent no. 1 have

been maintained as a running account wherein the Respondent no.

1 has supplied a total of 834 GPS vehicle trackers pursuant to the

MOU dated 21.05.2013 for the HPFS project. He has contended that

the last supply was of 30 vehicle trackers vide purchase order dated

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 11 of 24 12.12.2015. The Appellant Corporate Debtor has admitted the

supply of 30 vehicle trackers and also the receipt of invoice for the

same vide his reply to the Demand Notice. Regarding the existence

of a dispute in connection with supply of 804 vehicle trackers the

Ld. Counsel for Respondent No. 1 has claimed that the Corporate

Debtor has raised a dispute for the first time after receipt of demand

notice dated 20.11.2018 and has not produced any evidence before

the Adjudicating Authority regarding pre-existence of this dispute.

It is the claim of the Learned Counsel for Appellant that the

application under Section 9 of IBC was filed on 12.12.2018, whereas

the claimed amount of debt in default is based on e-mail dated

15.10.2015. Therefore, the petition is barred by limitation with

respect to the default amount claimed in the demand notice. He has

placed reliance on the judgment of Hon'ble Supreme Court in

Mobilox Innovations Pvt. Ltd. vsKirusa Software Pvt. Ltd 2018

(1) SCC 353 to emphasize that the dispute must be pre-existing and

not merely mentioned in the counterclaim and in the absence of any

evidence in support of the same, the application cannot be rejected.

He has also cited judgment in Ahluwalia (Contracts) India Limited

vs Raheja Developers Limited Company Appeal no. 703 of 2018

dated 23.07.2019 in support of his contention.

12. With regard to the limitation issue, the Ld. Counsel for

Respondent no. 1 has stated that the Respondent no. 1 has been

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 12 of 24 supplying GPS vehicle trackers to the Appellant pursuant to an

MOU dated 02.05.2013 which was valid for a period of 5 years and a

running account of payments is maintained for the supply and

payments thereof. He has alluded to a number of emails exchanged

between the Corporate Debtor and the Operational Creditor to show

the existence of a business relationship between the two parties and

the purchase and supply of GPS vehicle trackers. He has further

contended that among many supplies of GPS vehicle trackers the

last one was of 30 nos. GPS vehicle trackers made vide purchase

order dated 12.12.2015 which is acknowledged by the Corporate

Debtor. He has further submitted that the statement sent by the

Corporate Debtor vide email dated 15.10.2015 acknowledges the

supply of 804 trackers. He has also mentioned in his arguments

that the supply of vehicle trackers is corroborated by Tax Invoices

bearing No. 1016 dated 16.03.2015, No. 1017 dated 16.03.2015 and

No. 1122 dated 14.12.2015 for 30 nos. vehicle trackers. He has

claimed that the acknowledgement of 804 GPS vehicle trackers by

the Corporate Debtor implies that the Respondent no. 1 (Operational

Creditor) was aware that the total amount claim raised by the

Respondent no. 1 was for an amount of Rs. 53,99,228/- and not Rs.

50,32,028/-. Further he has claimed that the attached statement of

account sent by the Corporate Debtor in email dated 15.10.2015 for

review by the Operational Creditor acknowledges purchase and

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 13 of 24 supply of 804 vehicle trackers. Therefore, the claim of the Appellant

of the existence of different amounts of operational debt in the

demand notice and the application under section 9 of IBC, 2016 is

devoid of any merit. He has denied being in any discussion of

settlement with the Corporate Debtor and has not accepted

Rs.3,67,200/- as settlement amount from the Corporate Debtor.

13. We have perused the status report regarding the progress of

the Corporate Insolvency Resolution Process (hereinafter called

CIRP) submitted by the Interim Resolution Professional. The main

points to be noted from the report are that the constitution of the

Committee of Creditors (COC) has been put on hold in compliance of

the order dated 03.02.2020 of the Hon'ble NCLAT in the present

appeal and of the submission of claim amounting to Rs. 95,37,288/-

by the Operational Creditor which includes supply of 804 vehicle

trackers even though no documents such as purchase or delivery

order for these vehicle trackers has been submitted by the

Operational Creditor in support of its claim and another claim filed

by a financial creditor State Bank of India, Hyderabad of Rs.

12,66,000/-. These claims are yet to be considered by the Interim

Resolution Professional and the Committee of Creditors.

14. In addition to the appeal memo, the reply of the Respondent No.

1 and the Written Submissions of the Appellant and Respondent No.

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 14 of 24 1 and the Status Report of the progress of CIRP filed by the IRP, we

have also heard the parties at length in support of their contentions

and perused the Impugned Order.

15. In our view, two issues are relevant to this case as regards the

application of the Operational Creditor under Section 8 of the IBC,

2016 filed before the Ld. Adjudicating Authority. These issues are:

(i) Whether the debt mentioned in the Demand Notice is an

operational debt and whether there is default in its payment?

(ii) Whether the application filed under Section 8 of the IBC, 2016

for the relevant operational debt is within limitation?

16. We will first consider the issue stated in Para 15(i) of this

judgment. The Operational Creditor has referred to Master Service

Agreement dated 02.05.2014 and Managed Services Agreement

dated 011.09.2014 which are with respect to the HPFS projects. In

accordance with these two agreements, the Operational Creditor

used to supply, install and provide professional services for GPS

vehicle Trackers for vehicles of various distilleries in Andhra Pradesh

and Telangana on behalf of the Corporate Debtor. M/s PVM

Innvensys Pvt. Ltd. supplied GPS Vehicle Trackers and other related

services to the M/s C-Tel Infosystems Pvt. Ltd. through the two

agreements mentioned earlier in this paragraph. Therefore there

exists Corporate Debtor-Operational Creditor relationship between

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 15 of 24 them in which M/s PVM Innvensys Pvt. Ltd. is the Operational

Creditor and M/s C-Tel Infosystems Pvt. Ltd. is the Corporate

Debtor.Hence the amounts said to be due to the Operational

Creditor are "Operational Debt" as per the definition of "Operational

Debt" as per the in Section 5(21) of IBC 2016, which is reproduced

below:-

"5. Definitions:-

(21) "operational debt" means a claim in respect of the

provision of goods or services including employment or a debt in

respect of the [payment] of dues arising under any law for the

time being in force and payable to the Central Government, any

State Government or any local authority."

17. The various columns of Form 3 (prescribed under Rule 5 of

the Insolvency and Bankruptcy (Application to Adjudicating

Authority) Rules, 2016) in which the Operational Creditor has to

serve notice to the Corporate Debtor require mention of the amount

of debt, date of default and documents to be attached to the

application to prove the existence of operational debt and the

amount of default. In this light a perusal of the Demand Notice

dated 20.11.2018 sent by the Operational Creditor (Respondent No.

1) as required under Section 8 of the IBC, 2016 shows the total

amount of debt as Rs. 50,32,028/- in Column 1 of the notice which

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 16 of 24 is payable to the Operational Creditor by the Corporate Debtor for

supply and installation of 804 vehicle trackers. In the same column

1 this amount is shown as due on the basis of an email dated

15.10.2015 of the Corporate Debtor addressed to the Operational

Creditor for supply and installation of 804 vehicle trackers and

payment of commission and managed and professional services. The

entries in column 1 of the demand notice also mention issuing of

purchase order dated 11.12.2015 (revised on 12.12.2015) for 30

nos. Hippo GPS vehicle trackers without sim including installation,

configuration and setup of an amount of Rs. 12,000/-

each.Therefore, there are two amounts mentioned in Form 3. One

pertains to supply of 804 vehicle trackers and the other to supply of

30 vehicle trackers.

18. It is now to be seen whether both or any of the two purported

supplies of 804 vehicle trackers and 30 vehicle trackers are

'operational debt/s' which are in default of repayment.It would be

instructive to peruse Sections 8 and 9 of the IBC which are

reproduced below to examine this issue.

Section 8. Insolvency resolution by operational creditor.

(1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed.

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 17 of 24 (2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational creditor

(a) existence of a dispute, if any, or record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute;

(b) the 2 [payment] of unpaid operational debt

(i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or

(ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by the corporate debtor. Explanation--For the purposes of this section, a "demand notice"

means a notice served by an operational creditor to the corporate debtor demanding 2[payment] of the operational debt in respect of which the default has occurred.

Section 9. Application for initiation of corporate insolvency resolution process by operational creditor (1) After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment under sub-

section (1) of section 8, if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under sub-section (2) of section 8, the operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process.

(2) The application under sub-section (1) shall be filed in such form and manner and accompanied with such fee as may be prescribed.

(3) The operational creditor shall, along with the application furnish--

(a) a copy of the invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor;

(b) an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt;

(c) a copy of the certificate from the financial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt by the

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 18 of 24 corporate debtor; if available;

(d) a copy of any record with information utility confirming that there is no payment of an unpaid operational debt by the corporate debtor, if available; and

(e) any other proof confirming that there is no payment of an unpaid operational debt by the corporate debtor or such other information, as may be prescribed.

19. It is clear from a reading of Section 8(1) that the demand notice or

copy of invoice has to be sent by the operational creditor in the

prescribed format for unpaid operational debt on occurrence of default

in repayment or copy of an invoice demanding payment of the amount

involved in the default. The Explanation with Section 8 explains

Demand Notice to mean a notice demanding payment of the operational

debt in respect of which the default has occurred. Thus is it clear that

the demand notice and later the application under Section 9 of IBC

should pertain to the operational debt that is in default alongwith the

date of default and documents in proof of the purchase and supply of

the items for which the operational debt is said to exist. This is

necessary to enable the Ld. Adjudicating Authority establish and

adjudicate on the existence of operational debt which is in default and

the date of default. The Demand Notice in Form 3 also requires the

date of default to be explicitly mentioned in the notice so that on the

basis of documents the debt amount and the date of default could be

ascertained.

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 19 of 24

20. A perusal of the Demand Notice dated 20.11.2018 shows the

amount of one debt as mentioned in the column 1 of the Demand

Notice to be Rs.50,32,028/-. This amount pertains ostensibly to the

cost of supply and installation of 804 nos. vehicle trackers even though

no invoice has been attached with the demand notice to unambiguously

ascertain this amount. There is neither any purchase order nor

delivery challans produced by the Operational Creditor in support of his

contention regarding supply and installation of the 804 vehicle trackers

which are signed by the Corporate Debtor and Operational Creditor.

The delivery challans that are produced much later (not in the Demand

Notice) by the Operational Creditor do not contain the signature of the

receiving party i.e. the Corporate Debtor and, therefore, cannot be

taken as unmitigated proof of delivery of 804 vehicle trackers. The only

document in support of this amount of debt, i.e. Rs.50,32,028/- is an

e-mail dated 15.10.2015 sent by the Corporate Debtor to the

Operational Creditor which is basically an account statement for

review. A conjoint reading of Sections 8 and 9 of the IBC makes it

incumbent on the operational creditor to show the amount of debt in

default and the date of default clearly and should also provide credible

proof about the purchase and supply of goods and services as claimed.

Hence the operational creditor's claim of debt of Rs.50,32,028/- and

default in payment of the cost relating to supply and installation and

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 20 of 24 managed professional services is not established as required in

Sections 8 and 9 of the IBC.

21. The Operational Creditor has also mentioned supply of 30 nos.

GPS vehicle trackers vide purchase order dated 12.12.2015 issued by

the Corporate Debtor. He has mentioned this as a second debt of

supply and installation of 30 nos. GPS vehicle trackers. He has

produced the purchase order, supply and installation of 30 nos. Hippo

GPS vehicle trackers as part of ongoing business transactions between

the Corporate Debtor and the Operational Creditor. The Corporate

Debtor, in his reply dated 03.12.2018 to the Demand Notice, has

accepted placing purchase order of 30 nos. GPS vehicle trackers and

receiving the supply. Since the Corporate Debtor has accepted the

supply pending payment relating to these 30 vehicle trackers; hence it

is an admitted Operational Debt.

22. Now turning to the issue of limitation as mentioned in Para 15(ii) of

this judgment (supra). The application filed by the operational creditor

under Section 9 of the IBC claims an operational debt of Rs.

53,99,228/- which comprises of two orders viz. for 804 vehicle trackers

for Rs. 50,32,028/- and for 30 vehicle trackers for Rs. 3,67,200 (total

amount Rs. 53,99,228/-). The claim of the Operational Creditor

(Respondent No. 1) that there were continuous business dealings

between the Corporate Debtor (Appellant) and Operational Creditor

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 21 of 24 (Respondent No. 1) and therefore the payments are also a continuous

process and hence the date of default should be taken as 12.12.2015

appears credible as the Corporate Debtor and Operational Creditor

were working in HPFS projects in accordance with valid Master Service

Agreement and Managed Services Agreement which was current at the

time of the said transactions. The unpaid amount relating to supply

and installation of 30 vehicle trackers which is an operational debt

relates to purchase of 30 nos. Hippo GPS vehicle trackers vide email

dated 12.12.2015. The application under Section 9 of IBC was filed by

the Operational Creditor on 08.12.2018 which is within three years of

the issue of purchase order on 12.12.2015. Hence the application

under Section 9 of IBC has been filed within three years of the

purchase of 30 vehicle trackers and is, therefore, within limitation.

23. It is also noted that during the pendency of this appeal, the Hon'ble

NCLAT vide its order dated 03.02.2020, had accorded liberty to the

Corporate Debtor and Operational Creditor to settle the amount of

operational debt between them. The status report dated 15.07.2020

filed by the Resolution Professional also mentions that, in response to

the Information Memorandum, only two claims have been filed for

consideration. These relate to PVM Innvensys (P) Ltd. which has

claimed Rs.95,37,288/- as Operational Creditor and State Bank of

India, Hi-Tech City Branch, Hyderabad which has claimed

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 22 of 24 Rs.12,66,000/- as a Financial Creditor. Out of this amount, the

Corporate Debtor has apparently paid Rs. 3,67,200/- to the

Operational Creditor though the Operational Creditor has protested

against this payment. It is for the Resolution Professional and the

Committee of Creditors to consider all these claims received in the

process of CIRP. We also hope that the stakeholders as well as the IRP

and COC shall keep in mind that the IBC is a beneficial legislation

which is not meant to put going concerns/entities in resolution for

small acts of commission or omission which can be rectified.

24. The Corporate Debtor has raised the issue of not been accorded an

opportunity to advance oral arguments by the Ld. Adjudicating

Authority on the date of final hearing i.e. 06.12.2019. It is seen by us

that the Ld. Adjudicating Authority has, in the interest of adhering to

timelines given in IBC, considered the oral arguments made by the Ld.

Counsel of the Corporate Debtor made on the previous date of hearing.

He has decided to close the arguments on 06.12.2019 and pass the

final judgment in the case after taking into account all the

submissions, which include written and oral submissions, and hence it

cannot be said that the Corporate Debtor was denied reasonable

opportunity to be heard.

25. In the result, and on the basis of detailed discussion in the

aforementioned paragraphs, we find no infirmity in the order of the

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 23 of 24 Learned Adjudicating Authority. The interim stay order relating to non-

constitution of the Committee of Creditors passed by this Tribunal on

03.02.2020 is hereby vacated and the Interim Resolution Professional

shall take further action with regard to the Corporate Insolvency

Resolution Process. There is no order as to costs.

(Justice Bansi Lal Bhat) Acting Chairperson

(Dr. Alok Srivastava) Member (Technical)

(Ms. Shreesha Merla) Member (Technical)

New Delhi 25th September, 2020

/aks/

Company Appeal (AT) (Insolvency) No. 205 of 2020 Page 24 of 24