M/S. Jindal Stainless Limited vs Singhal Strips Limited

IN THE MATTER OF: Jindal Stainless (Hisar) Ltd. ...Appellant Versus Singhal Strips Ltd. ...Respondent Present: For Appellant: Ms. Shruti Kanodia, Ms. Anuja Jain, Ms. Rishika Garg, Advocates For Respondent: None

ORDER

16.01.2023: Company Appeal (AT) (Insolvency) No. 522 of 2022 and

Company Appeal (AT) (Insolvency) No. 530 of 2022 - These two appeals filed

by the two sister concern have been heard together and are being disposed of

by this common judgement.

2. Company Appeal (AT) (Insolvency) No. 530 of 2022 has been filed

against the order dated 03.01.2022 passed by the Adjudicating Authority in

(IB) No.3148(ND)/2019 by which, application filed u/s 9 by the Appellant

has been rejected.

Company Appeal (AT) (Insolvency) No. 522 of 2022 Company Appeal (AT) (Insolvency) No. 530 of 2022

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3. Company Appeal (AT) (Insolvency) No. 522 of 2022 has been filed

against the order dated 21.12.2021 in C.P.(IB) No.313/ND/2019 by which

Section 9 application filed by the Appellant has been rejected.

4. In these appeals, notices were issued to the Respondent by order of this

Tribunal dated 13.05.2022. Notice could not be served, by subsequent order

passed by this Tribunal on 22.08.2022, the Appellant was permitted to serve

the notices by Dasti, however, Respondents could not be served.

Subsequently, the Appellant was permitted to serve through publication by

order dated 26.09.2022 in pursuance of which notices were published. An

affidavit of service has been filed on 28.10.2022. Service on the Respondent

deemed sufficient. For deciding both the appeals, it shall be sufficient to refer

to the facts and issues in Company Appeal (AT) (Insolvency) No. 530 of 2022

5. Demand notice was issued by the Appellant on 22.05.2019 demanding

an amount of Rs. 1,91,21,543.36/- from the Corporate Debtor. The

Operational Creditor is in the business of manufacture and supply of stainless

steel and its products and the Corporate Debtor has been in the business of

cold rolling of stainless steel flat products. Invoices were issued which

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2 according to the Appellant were unpaid. Copy of ledger account and invoices

were annexed alongwith Section 9 application.

6. The Corporate Debtor appeared before the Adjudicating Authority and

refuted the claim of the Appellant.

7. The Corporate Debtor in the reply claimed that several invoices as

claimed by the Operational Creditor has already been paid. With regard to

few invoices, the Corporate Debtor stated that they have not yet been paid.

In the reply, an issue was also raised regarding the adjustment of the amount

pertaining to job work, bill for Rs. 1.20 crores for the job done by the

Corporate Debtor. Adjudicating Authority after considering the aforesaid

averments came to the conclusion that there is a claim and counter claim in

respect of the amount, as referred in Part-IV, hence there is a dispute within

the meaning of Section 5(6) of the Code. On the aforesaid ground, following

has been observed by the Adjudicating Authority in paragraph 15:-

"Considering these facts that there is a

claim ad counter in respect for the amount which is

referred to in part-IV of the application. At this

juncture, we would like to refer to the definition of

Company Appeal (AT) (Insolvency) No. 522 of 2022 Company Appeal (AT) (Insolvency) No. 530 of 2022

3 dispute as referred to in Section 5(6) of the Code and

same is reproduced below:-

"dispute" includes a suit or arbitration proceedings

relating to-

(a) The existence of the amount of debit:

(b) the quality of goods or service; or

(c) the breach of a representation or warranty".

8. Learned Counsel for the Appellant has referred to the e.mail dated

04.09.2018 which e.mail is filed along with the appeal at page-224. The e.mail

has been sent by the Appellant to the Corporate Debtor which is as follows:-

"Dear Sir,

Please note that job work bills of apprx. 1.20 Crore

for competed job challan (0.64 lakhs for hisar plant and

0.56 lakhs for Jaipur plant) needs to be raised after

addressing the below mentioned points:-

10.068 MT multislit scrap to be lifted back to hisar plant.

10.568 MT Appx. multislit scrap to be lifted back to Orissa

plan (Note:- One coil is pending for dispatch and material

balancing)

Company Appeal (AT) (Insolvency) No. 522 of 2022 Company Appeal (AT) (Insolvency) No. 530 of 2022

4 So please confirm of vehicle placement for scrap lifting from

Singhal strips so that job work amount can be credited to

your accounts.

Regards,

Shirish Rathi"

9. The email sent by the Appellant noted that job works bills have to be

raised after addressing the points mentioned therein.

10. Learned Counsel for the Appellant submits that the above email was

sent by the Appellant and the bills were never raised and there was no

question of any counter claims which has been relied by the Adjudicating

Authority.

11. Adjudicating Authority itself in its order at page 53 paragraph 12 has

admitted that the bills and invoices dated 09.08.2018 for Rs. 23,928.79 and

invoices dated 26.09.2018 for Rs. 4,52,675.32/- has not been paid by the

Corporate Debtor. Even when we add the aforesaid invoices, the amount

claimed is more than threshold which was required to be fulfilled for filing

Section 9 application. When the payment of invoices is undisputed as

claimed by the Appellant, the Adjudicating Authority committed error in

rejecting the Section 9 application relying on the email dated 04.09.2018

reading it as a counter claim whereas the e.mail dated 04.09.2018 was sent Company Appeal (AT) (Insolvency) No. 522 of 2022 Company Appeal (AT) (Insolvency) No. 530 of 2022

5 by the Appellant themselves to the Corporate Debtor which cannot be said to

be raising any counter claim by the Corporate Debtor. Furthermore, as

submitted by the Learned Counsel for the Appellant, no bills with regard to

amount Rs. 1.20 crores were raised. Thus, the assumption of the

Adjudicating Authority that there was a counter claim and that there was a

dispute is wholly unfounded.

12. In Company Appeal (AT) (Insolvency) No. 522 of 2022 also same e.mail

dated 04.09.2018 has been relied and the application under Section 9 has

been rejected on the same ground.

13. In view of the above, we are of the view that order passed by the

Adjudicating Authority in both the appeals are unsustainable. In result, both

the appeals are allowed, the impugned orders dated 03.01.2022 and the

order dated 21.12.2021 are set aside. Both the section 9 applications filed by

the Appellant are revived before the Adjudicating Authority to be considered

afresh in accordance with law.

[Justice Ashok Bhushan] Chairperson

[Mr. Barun Mitra] Member (Technical) ss/nn Company Appeal (AT) (Insolvency) No. 522 of 2022 Company Appeal (AT) (Insolvency) No. 530 of 2022

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