Mr. Shyamsunder Biyani Proprietor M/S ... vs Etc Agro Processing India Pvt Ltd

IN THE MATTER OF: Shyamsunder Biyani Proprietor of Tirupati Dall Udyog ...Appellant Versus ETC Agro Processing (India) Pvt. Ltd. ...Respondent Present: For Appellant : Mr. Manu Aggarwal and Ms. Ishita Pandey, Advocates For Respondent : Ms. Seema Jagnani, Advocate ORDER

(Hybrid Mode)

08.01.2024 Heard Learned Counsel for the parties.

This appeal has been filed against the order dated 20.10.2023 passed

by Adjudicating Authority rejecting Section 9 Application filed by the

Appellant on the ground that there was pre-existing dispute. There was a

contract between the parties regarding polishing of pulses. The Appellant was

engaged in the business of processing/polishing and packaging of raw

materials such as Tur Dal, Chana Dal, Moong Dal etc. The goods were given

by the appellant for which he has raised invoices and claimed amount of

Rs.9,09,693/- which is due from the aforesaid invoices.

2. The contract between the parties was cancelled / terminated by the

Corporate Debtor on 25.05.2019. The demand notice was issued by the

Operational Creditor on 11.12.2019, which was also replied by the Corporate

Debtor on 18.12.2019 denying the liability. Reply to Section 9 was also filed

opposing the claim of the Appellant. Adjudicating Authority dismissed the

application holding that there was pre-existing dispute.

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

the dispute raised was moonshine dispute since they have not raised a claim

as per contract.

4. We have considered submission of Counsel for the Appellant and

perused the record in para 6 of the order, where Adjudicating Authority has

returned following findings:

".....6. A perusal of the record reveals that the Petition has been filed on 06th January, 2020. There are two invoices i.e. Invoice No.02 dated 26/04/2019 of INR 6,87,038/- and Invoice No.03 dated 09/05/2019 of INR 2,22,655/- total amounting to Rs.9,09,693/- are outstanding and remaining unpaid. The Corporate Debtor in its detailed reply to the Demand Notice dated 18.12.2019 as well as in its Affidavit-in Reply has disputed the liability and asserted the existence of dispute between the Operational Creditor and the Corporate Debtor in respect of the claim made in the aforesaid demand notice. The Corporate Debtor through its Notice dated 25th May, 2019 to the Operational Creditor for termination of Third-Party Processing Contract had stated in Para 5 as follows:

"My clients state that as per above stated contractual agreement dated 25.12.2018, your job requirements were conversion/processing of raw material i.e. Tur, Chana and Moong supplied by my clients into Finished Goods with agreed yield rate and also packing the said finished goods. However, my clients have observed that you have not fulfilled these responsibility satisfactorily on account of adverse differential in the yield rate/recovery stated in the contract and therefore, my clients do not wish to continue the aforesaid contract."

Company Appeal (AT) (Insolvency) No. 1712 of 2023 2 of 3 In the said notice, the Corporate Debtor had also asked the Operational Creditor to compensate for the differential in yield rate for the conversion carried out till date and in case of failure to comply with the above, the Corporate Debtor had reserved its right to levy penalty on the Operational Creditor."

5. When the contract was cancelled the dispute between the parties was

very much there at that time. In the notice, cancelling the contract Corporate

Debtor had reserved its right to levy penalty on the Operational Creditor. The

outstanding was noted, in the order terminating the contract and it was also

noted that there is a differential in yield rate. The demand notice was also

replied refuting the claim. In the facts of the case, there was pre-existing

dispute between the parties and Adjudicating Authority did not commit any

error in rejecting Section 9 application. However, it shall be open for the

appellant to take remedy under the contract with regard to his dues in

accordance with law.

With these observations, appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Mr. Barun Mitra] Member (Technical)

[Mr. Arun Baroka] Member (Technical) pks/nn

Company Appeal (AT) (Insolvency) No. 1712 of 2023 3 of 3