Rajeev K. Aggarwal vs Panipat Taxo Fabs Pvt. Ltd. & Anr

[Arising out of order dated 26th October, 2018 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi Bench in Company Petition No. (IB)-1106(ND)/2018]

IN THE MATTER OF:

Rajeev K Aggarwal R/o E-38, FF, Greater Kailash Part-1, New Delhi - 48. ...Appellant

Vs

1. Panipat Texo Fabs Pvt. Ltd. Having its Registered Office at G-3, Industrial Area, Saraswati Vihar, Panipat, Haryana - 132103.

2. Exclusive Overseas Pvt. Ltd. 31/3203, Beadonpura, Karol Bagh, New Delhi - 110005. ....Respondents

Present: For Appellant: Mr. Sanjoy Ghose and Mr. Akshay Goel, Advocates.

BANSI LAL BHAT, J.

Appellant - shareholder of Respondent No.2 namely 'Exclusive

Overseas Pvt. Ltd.' (Corporate Debtor), being aggrieved of the impugned

order dated 26th October, 2018 passed by the Adjudicating Authority

(National Company Law Tribunal) New Delhi Bench in (IB)-1106(ND)/2018

by virtue whereof petition filed by Respondent No. 1 - 'M/s Panipat Texo

Fabs Pvt. Ltd.' as an 'Operational Creditor' under Section 9 of the Insolvency -2-

and Bankruptcy Code, 2016 (hereinafter referred to as 'I&B Code') has been

admitted, moratorium slapped and Interim Resolution Professional

appointed with certain directions, has assailed the impugned order on

certain grounds incorporated in the memo of appeal.

2. The factual matrix surrounding the well contoured features of the case

reveals that the Operational Creditor supplied polyester staple fibre to the

Corporate Debtor in first half of the year 2018 with an amount of

Rs.6,56,788/- lying outstanding against the Corporate Debtor as on

31.03.2018 as per the account books maintained by the Operational

Creditor. According to the Operational Creditor, the Corporate Debtor paid

Rs.1,50,000/- and Rs.1,06,788/- holding back Rs.4,00,000/- which

remained unpaid. The Operational Creditor slapped a demand notice

contemplated under Section 8(1) of the I&B Code on the Corporate Debtor

demanding the outstanding amount of Rs.4 lakhs together with interest.

However, the Corporate Debtor failed to comply with the demand of the

Operational Creditor paving the way for initiation of Corporate Insolvency

Resolution Process at the instance of Operational Creditor, who filed the

petition under Section 9 of I&B Code resulting in passage of the impugned

order admitting the petition.

3. The Appellant did not question the factum of the 'operational debt'

being payable in law. In so far as 'default' is concerned, the only ground

urged in this appeal is that the Adjudicating Authority failed to consider that

the goods corresponding to the invoice/ bill forming basis of the purported

Company Appeal (AT) (Insolvency) No. 715 of 2018 -3-

debt were defective and of inferior quality. It is contended that the factum of

quality of goods supplied being defective and substandard was

communicated to the Operational Creditor. However, the Appellant could

not lay hands upon any communication to substantiate its contention that

the Operational Creditor was apprised of the goods supplied being

substandard and defective. Even during the course of arguments learned

counsel for the Appellant, when asked to refer to any relevant document on

record to demonstrate that the Operational Creditor was served with any

communication in regard to quality of goods supplied allegedly being

substandard or defective, expressed his inability to point out any such

communication. In the face of e-mails dated 26.04.2018, 01.05.2018,

05.05.2018, 07.06.2018 and 14.06.2018 emanating from the Operational

Creditor besides other relevant documents and there being nothing on

record to prima facie demonstrate that the Corporate Debtor has raised the

issue of the goods supplied being substandard or defective prior to the

service of demand notice upon the Corporate Debtor, the dispute raised

before the Adjudicating Authority and even before this court at a belated

stage cannot be termed as a pre-existing dispute in terms of the dictum of

the Hon'ble Apex Court in "Innoventive Industries Ltd. Vs. ICICI Bank and

Ors."- (2018)1 SCC 407. The learned Adjudicating Authority has rightly

observed that the dispute raised as defence to the triggering of the Corporate

Insolvency Resolution Process at the instance of Operational Creditor is just

a sham designed to defeat the petition under Section 9 of I&B Code. In

absence of even a whisper from the Corporate Debtor suggesting that the

goods supplied were defective or did not conform to the agreed standard and

Company Appeal (AT) (Insolvency) No. 715 of 2018 -4-

his failure to show any communication emanated from his side intimating

the Operational Creditor that the goods supplied were defective or

substandard, it should not lie in his mouth that he had raised a dispute

which did not warrant admission of the Operational Creditors petition under

Section 9 of the I&B Code. Raising of dispute in regard to quality of goods

being inferior/substandard or defective for the first time in reply to demand

notice or in response to notice served by the Adjudicating Authority would

not constitute a prior and pre-existing dispute contemplated under law as a

defence to the initiation of Corporate Insolvency Resolution Process, more so

when the contemporary record in regard to transactions between the

Corporate Debtor and the Operational Creditor at the time of delivery of

goods or immediately thereafter does not demonstrate raising of any dispute

with respect to quality of goods supplied by the Operational Creditor.

4. In view of the foregoing discussion I am of the considered opinion that

the Corporate Debtor has failed to demonstrate that there was a pre-existing

dispute in regard to quality and standard of goods supplied by the

Operational Creditor rendering the impugned order unsustainable. I find no

infirmity in the impugned order. The appeal deserves to be dismissed. The

appeal is accordingly dismissed. There shall be no order as to costs.

[Justice Bansi Lal Bhat] Member (Judicial) NEW DELHI 27th November, 2018 AM

Company Appeal (AT) (Insolvency) No. 715 of 2018