M/S Neha Luharuwala [Neha Tech ... vs M/S Fireshield Engineers [India] Ltd

IN THE MATTER OF: Neha Luharuwala ...Appellant Proprietor of M/S Neha Tech Industries

Versus

Fireshield Engineers (India) Ltd. ...Respondent

Present: For Appellant : Mr. Anuragh Kalavatiya, Advocate For Respondent : Mr. Anvsuya S Sinha, Advocate

ORDER

12.04.2023: This appeal has been filed against an order dated

03.01.2023 by which order the Adjudicating Authority (NCLT, Kolkata) has

rejected Section 9 (IBC) application filed by the Appellant on the ground that

there was pre-existing dispute between the parties.

2. The Operational Creditor has issued notice under Section 8 IBC on

14.12.2019. Thereafter, the application under Section 9 IBC was filed. Detailed

reply to the Section 9 Application has been filed by the Corporate Debtor where

different correspondences including letters, which were issued prior to

issuance of Demand Notice, have been referred to prove that there was pre-

existing dispute.

3. Learned Counsel for the Appellant challenging the order contended that

the two letters, which have been relied upon by the Corporate Debtor dated

14.04.2017 and 28.11.2017 were never received by the Operational Creditor

and there is no proof of service of those letters, hence the dispute raised by the

Corporate Debtor was moon-shine dispute and ought to have been rejected.

4. We have directed Appellant to file a copy of the Reply filed by the

Corporate Debtor as well as Rejoinder Affidavit which have been brought a

record by means of an Additional Affidavit.

5. Learned Counsel for the Corporate Debtor has referred to the Reply

which has been filed under Section 9 IBC and submitted that Legal Notice was

given to the Corporate Debtor by the Operational Creditor dated 07.02.2018

demanding the claim of Rs. 26,67,930/- which Legal Notice was replied in

detail on 23.02.2018 which is the documents filed as Annexure-F to the Reply

filed by the Corporate Debtor, where detailed facts have been mentioned which

clearly indicates pre-existing dispute.

6. We have heard learned Counsel for the parties and perused the records.

Even for the sake of argument, the letters which the Corporate Debtor claims to

have been sent to the Operational Creditor, as noted above, were not received.

There is no dispute that Legal Notice was issued by the Operational Creditor to

the Corporate Debtor which was replied on 23.02.2018. It is sufficient to notice

the following averments in the Reply Notice:

" Further to your kind notice please note that my client has from 30th May, 2014 to 27.06.2016 cleared all bills and was always making prompt payments for all the materials

Company Appeal (AT)(Insolvency) No. 321 of 2023 Page 2 of 5 delivered and received. Since June 2016 there was dispute in the materials supplied in its quality, my clients had raised objections and intimated your client, and that your client had assured to adjust Rs 2,00,000/- against the quality issue and shall adjust in the future bills the claims of our clients to the tune of Rs. 2,00,000/-. Your client was requesting my client to co-operate since he was in long standing relationship with my client and my client agreed to accept the said request.

Subsequently after mutual discussion your client had adjusted Rs. 50,000/- as my clients first claim, and my client had hence made payments accordingly of Rs. 8,86,360/- out of Rs. 9,36,360/-. From 2016 March your client had given discount of Rs. 50,000/- and promised to adjust the balance of Rs. 1,50,000/- as due claims amount in future bills to adjust my clients claims against your client.

That thereafter your client had further adjusted Rs. 1,10,880/- on 20th November 2016, out of the claim of Rs. 2,00,000/- of my client. That during this supply my client had raised strong objection with the quality of material supplied and your client had assured to lift the same. My client had categorically denied to accept any of the said goods supplied against the bill invoice dated 29th November, 2016. Also my client was assured that a sum total of Rs. 20% discount will be given to adjust the previous claim, but your client had with malafide intention mentioned 20% in the bill but adjusted only 16.67%, kindly see the conduct of your client. Hence since your client's intentions were malafide since inception, he has supplied inferior quality of goods, made false adjustments to make unjust gains, and also tried to make false adjustments. That subsequently further two supplies were made by your client on 23rd December, 2016 and 2nd February 2017 which

Company Appeal (AT)(Insolvency) No. 321 of 2023 Page 3 of 5 were again Sub-standard goods, and my clients had categorically over the phone intimated that they are not going to accept the inferior quality of goods sent by your client. That since all transactions from day one was done verbally my client could not anticipate the malafide intention of your client making false and vexatious claim over the mail. No orders were placed on mail.

It is further brought to your kind notice that since November 2016 my client has been running immense loss for non supply of materials to its clients against the commitments as Sub-Standard goods were supplied by your client. That further to your notice my client is running a loss due to stocking of Sub-Standard material of your client, lying with my client, which your client is liable to collect, but he has deliberately in-stead of not lifting his Sub-Standard goods made this false and fabricated claim. That your client had requested my client, that your client shall lift the same in the upcoming deliveries of his other clients in Kolkata but he did not lift, and my client had though since there was a long standing business relationship, your client will keep his words but he did not on the contrary your client made a false and fabricated case against my client."

7. Aforesaid averments made in the Reply to Notice, which was made much

before Section 8 Demand Notice was issued by the Appellant, clearly show that

the dispute pre-existed between the parties regarding the claim of the

Appellant. The Reply dated 23.02.2018 was Reply to the Legal Notice which is

notice of dispute, hence, we are of view that the Adjudicating Authority did not

Company Appeal (AT)(Insolvency) No. 321 of 2023 Page 4 of 5 commit any error in rejecting Section 9 Application holding that there was pre-

existing dispute. There is no error in the impugned order.

The Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Mr. Barun Mitra] Member (Technical) akc/nn

Company Appeal (AT)(Insolvency) No. 321 of 2023 Page 5 of 5