Suristh Tiwary vs Jms Steel & Power Corporation & Anr

[Arising out of Order dated 21.02.2022 passed by the Adjudicating Authority/National Company Law Tribunal, New Delhi Bench - IV, in Company Application No. IB-1049/ND/2019]

IN THE MATTER OF: Suristh Tiwary S/o Late Shri I.D. Tiwari R/o D-106, Sector - 26 Noida, Gautam Buddh Nagar, Uttar Pradesh - 201301 E-mail : stcstiwary@gmail.com ...Appellant

Versus

1. JMS Steel & Power Corporation C-206 Gautam Nagar Hanuman Nagar Jaipur 302021, Rajasthan

Also at: Khasra No. 374 Village Dhundaheda Pargna Ghaziabad 201102. Uttar Pradesh Through its Authorized Signatory Mr. Sudhanshu Bihani E-mail : sudhanshu.bihani@gmail.com ...Respondent No. 1

2. S.T. Constructions Pvt. Ltd. Through Mr. Anshuman Kaushik, Interim Resolution Professional IBBI/IPA-001/IP-P-02523/2021-22/13825 Office at: P-93, 1st Floor, C.R. Park, New Delhi - 110019. Email : anshumanksk@gmail.com ...Respondent No. 2

Present: For Appellant : Mr. Adarsh Tiwari, Mr. Vineet Pathak, Adv.

For Respondents : Sr. Adv. Sanjoy Ghose, Adv. Baasir Aziz, Adv. Alok Ranjan Jha, Adv. Mohd. Anas.

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 1 | 23

(27.07.2023)

NARESH SALECHA, MEMBER (TECHNICAL)

1. The present appeal has been filed under Section 61 of the Insolvency

& Bankruptcy Code, 2016 (in short 'Code') against the Impugned Order

dated 21.02.2022 in Company Application No. IB-1049/ND/2019 passed by

the Adjudicating Authority (National Company Law Tribunal, New Delhi

Bench, - IV), whereby the 'Adjudicating Authority', allowed application filed

by the Respondent No. 1 - JMS Steel & Power Corporation an Operational

Creditor under Section 9 of the Code.

2. The Appellant- Suristh Tiwary holds 56.42% equity in the Corporate

Debtor and he is one of the Suspended Director of the Corporate Debtor.

Aggrieved by the Impugned Order he has filed the present appeal.

3. Heard the Counsel for Parties and perused the records made available

including cited judgments.

4. Learned Counsel for the Appellant gave overall background of the case

and alleged that the Impugned Order was passed wrongly as the evidence

produced by the Corporate Debtor showing that claims by Operational

Creditor were bogus on the basis of 12 fake invoices, were not considered

suitably by the Adjudicating Authority.

5. Learned Counsel for the Appellant further alleged that the

Respondent No. 1 has shown fake sale being declared using GSTR-1 return

and for the same, notice was issued to the Respondent No. 1 by GST

Department.

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 2 | 23

6. Learned Counsel for the Appellant stated that the Respondent No.1

filed an application under Section 9 of the Code for initiation of the

Corporate Insolvency Resolution Process (in short 'CIRP') on account of

alleged default of Rs. 1,56,31,219/- which was refuted by the Corporate

Debtor.

7. Learned Counsel for the Appellant mentioned that the Corporate

Debtor was incorporated on 25.06.2004 with paid up equity of Rs. 320.65

Lakhs and is having reserves of Rs. 3059.05 Lakhs and net worth of the

Corporate Debtor was Rs. 3380 Lakhs as on 31.03.2021 and was a solvent

Company. Learned Counsel for the Appellant submitted that the Corporate

Debtor has been doing business of construction and completed several

government construction projects.

8. Learned Counsel for the Appellant stated that the Corporate Debtor

approached Respondent No. 1 in the year 2015 for supply of TMT Bars to

the various projects being executed by the Corporate Debtors mainly in

Noida Area. Learned Counsel for the Appellant further stated that the

Corporate Debtor used to issue purchase orders specifying the requirements

and Respondent No. 1 used to supply material on the basis of said

requirements. Learned Counsel for the Appellant admitted that after doing

considerable business with the Respondent No. 1, on certain occasions the

site attendant/ project engineer of the Corporate Debtor used to ask

Respondent No. 1 to supply TMT Bars without any formal purchase order

and Respondent No. 1 would supply the same to the Corporate Debtor and

the same were also been paid by the Corporate Debtor to Respondent No. 1.

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 3 | 23

9. Learned Counsel for the Appellant further submitted that on supply

of the material, the Respondent No. 1 used to furnish several documents to

the Corporate Debtor even without formal purchase order which included -

lorry receipt, weight scale receipt of Dharamkata, test reports of the goods

supplied and Goods Receipt, etc., along with Invoice.

10. Learned Counsel for the Appellant submitted that the Respondent

No. 1 supplied TMT Bars to the Corporate Debtor from 2015 till 19.05.2018

when the last invoice bearing No. 227 dated 19.05.2018 for Rs. 15,90,360/-

was raised by the Respondent No. 1. Learned Counsel for the Appellant

emphasised that since he has procured material from the Respondent No. 1

worth Crores of Rupees over the period of time, all the payment made to

Respondent No. 1 in the 'Running Account Manner'.

11. Learned Counsel for the Appellant stated that he was undergoing

some financial distress at the relevant time and requested the Respondent

No. 1 for some accommodation in time for making outstanding payments

which was agreed to by the Respondent No. 1. Learned Counsel for the

Appellant further stated that the opening credit balance as on 01.04.2018 in

the Ledger Account of the Respondent No. 1 was Rs. 1,01,72,740.09/- and

the Corporate Debtor has been gradually paying the same on various dates

as per running account system of payment.

12. Learned Counsel for the Appellant stated that in background of such

cordial relationship based on trust between the Appellant/ Corporate Debtor

and Respondent No. 1, the Corporate Debtor was shocked to receive demand

notice dated 19.09.2018 demanding Rs. 1,76,10,766/- based on various

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 4 | 23 invoices mentioned in the demand notice. Learned Counsel for the

Appellant further stated that the upon receipt of such demand notice, he

sought details from the Respondent No. 1 about various invoices which were

not received by the Corporate Debtor. Learned Counsel for the Appellant

submitted that during the negotiation between the parties to settle the

matter, the Corporate Debtor received another demand notice on

20.03.2019 for Rs. 1,61,10,767/-.

13. Learned Counsel for the Appellant submitted that admittedly the

Corporate Debtor could not pay of Rs. 31,20,149.39 as on 31.03.2019

pertaining to- (a) Invoice No. 918 dated 23.03.2018 for Rs. 10,62,345/-; (b)

Invoice No. 227 dated 19.05.2018 for Rs. 15,90,360/-; (c) Remaining

amount of Rs. 4,67,449.39 out of Invoice No. 861 dated 11.03.2018 for an

amount of Rs. 12,35,793. However, the Respondent No. 1/Operational

Creditor has been demanding payment of an imaginary sum of

Rs. 1,61,31,2199/- only pertaining to the various invoices randomly

mentioned which were fabricated.

14. Learned Counsel for the Appellant submitted that the Ledger Account

Statement for the period from 01.04.2018 till 31.03.2019 reveals that

against the total liability of Rs. 1,27,59,789.09/- the Corporate Debtor has

paid Rs. 96,39,639.70/- to the Operational Creditor and only Rs.

31,20,149.39/- was remaining to be paid as on 31.03.2019.

15. Learned Counsel for the Appellant submitted that (a) invoice no. 543

dated 27.02.20 17 for amount Rs.10,13,939/-, (b) invoice no. 572 dated

15.03.2017 for the amount Rs.15,96,942/-, (c) Invoice no.582 dated

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 5 | 23 19.03.2017 for amount of Rs. 10,11,878/-, (d) Invoice No. 587 dated

28.03.2017 for amou.at of Rs.12,09,852/- (e) Invoice no. 596 dated

31.03.2017 for amount of Rs.10,09,874/-, which have been mentioned by

the Operational Creditor in his Application as not paid, had already been

paid as per the Running account system of payment.

16. Learned Counsel for the Appellant emphasised that the Corporate

Debtor has found that following are the invoices which the Corporate Debtor

has never received and the Respondent No. 1/Operational Creditor has not

supplied any material to the Corporate Debtor against these invoices.

Learned Counsel for the Appellant stated these invoices are not genuine

Invoices and the Respondent No. 1 has forged these invoices to defraud the

Corporate Debtor.

S.No. INVOICES DATE AMOUNT No. 01. 832 26.02.2018 Rs.7,93,988/- 02. 846 06.03.2018 Rs.12,36,920/- 03. 847 06.03.2018 Rs. 9,80,908/- 04. 35 09.04.2018 Rs.11,46,854/- 05. 155 30.04.2018 Rs. 6,23,756/- 06. 156 30.04.2018 Rs. 6,22,306/- 07. 349 16.06.2018 Rs.11,21,779/- 08. 350 16.06.2018 Rs. 12,89,749/- 09. 359 18.06.2018 Rs. 12,15,431/- 10. 360 18.06.2018 Rs. 12,71,858/- 11. 402 30.06.2018 Rs. 11,67,651/- 12. 403 30.06.2018 Rs. 12,58,708/-

17. Learned Counsel for the Appellant submitted that for the 12 invoices

attached by the Respondent No. 1/ Operational Creditor with the

Application as mentioned above, the Respondent No. 1 has neither supplied

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 6 | 23 the above said invoices nor copies of any documents to the Corporate

Debtor.

18. Learned Counsel for the Appellant submitted that the material

supplied by the Operational Creditor used to be weighed at the nearest

Dharam Kanta at the Work site of Corporate Debtor, and Dharam Kanta

used to issue a Weight Scale Receipt (DharamKanta Slip). Learned Counsel

for the Appellant further submitted that the Weight Scale Receipt of material

supplied is important for determining the quantity of material supplied and

therefore the amount payable is computed on the quantity of material

supplied and the same used to be paid to the Respondent No. 1.

19. Learned Counsel for the Appellant stated that the Respondent No. 1

has taken the plea that the Corporate Debtor has used Input Tax Credit (in

short "ITC") of GST on the invoices attached with the Application, which

cannot be basis for admission of the application under Section 9 of the

Code.

20. Learned Counsel for the Appellant submitted that during hearing

before the Adjudicating Authority on 10.07.2019, the Corporate Debtor

admittedly mentioned about the efforts for settlement between both the

parties and Rs. 25 Lakhs was paid in the month of June, 2019 and this fact

was noted by the Adjudicating Authority in order dated 10.07.2019 and

similarly another Rs. 25 Lakh was paid to the Respondent No. 1 on

10.07.2019 in interest of proposed settlement which was also duly recorded

by the Adjudicating Authority in its order dated 21.08.2019. Learned

Counsel for the Appellant further submitted that after making payment of

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 7 | 23 Rs. 50 Lakhs against the total outstanding liability of Rs. 31,20,149/-,

resulted into over payment of Rs. 18,79,851/- by the Corporate Debtor to

the Respondent No. 1 as such admission of Section 9 Application by the

Adjudicating Authority was erroneous.

21. Learned Counsel for the Appellant submitted that during pendency of

the matter before the Adjudicating Authority, the Corporate Debtor received

notice of SGST Department, where the Corporate Debtor was alleged for

purchasing material from the Respondent No. 1 which according to SGST

Department was bogus/ non-existent company. Learned Counsel for the

Appellant further stated that this indicate that 12 invoices claimed by the

Respondent No. 1 never existed.

22. Learned Counsel for the Appellant, concluding his pleadings,

requested to set aside the Impugned Order dated 21.02.2022.

23. Learned Counsel for the Respondent No. 1 denied all the averments

made by the Appellant, which according to him is based on conjunctures

and on unspecific allegations without any substance.

24. Learned Counsel for the Respondent No. 1 submitted that on

19.09.2018, the Respondent No. 1 has issued first demand notice under

Section 8 of the Code for Rs. 1,76,10,767/- for which the Corporate Debtor

requested the Respondent No. 1 not to initiate any legal proceeding with

assurance to make payments shortly and made payment of Rs. 15 Lakhs

accordingly. Learned Counsel for the Respondent No. 1 submitted that no

dispute was raised by the Corporate Debtor at that stage. Learned Counsel

for the Respondent No. 1 submitted that since the Corporate Debtor failed to

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 8 | 23 make payments post first demand notice, the Corporate Debtor issued

second demand notice dated 20.03.2019 for Rs. 1,61,10,767/-. Learned

Counsel for the Respondent No. 1 further stated that subsequent to second

demand notice, the Corporate Debtor again paid Rs. 5 Lakhs and undertook

to settle the entire liability in due course, which the Corporate Debtor again

failed to adhere to. Subsequent to all these events, the Respondent No. 1

was compelled to file an application under Section 9 of the Code and during

the course of various hearing the Corporate Debtor mentioned before the

Adjudicating Authority about intent of the Corporate Debtor to settle the

matter by payment and accordingly the Corporate Debtor made two

payments of Rs. 25 Lakhs each in June 2019 and 10.07.2019, respectively

to the Respondent No. 1.

25. Learned Counsel for the Respondent No. 1 submitted that it is

admitted fact that the Corporate Debtor elaborated his intention to settle the

amount before the Adjudicating Authority and alleged defence now being

taken is only moonshine defence to avoid his liability. Learned Counsel for

the Respondent No. 1 further submitted that the Corporate Debtor never

raised any dispute of whatsoever nature prior to issuance of demand notices

regarding outstanding payments.

26. Learned Counsel for the Respondent No. 1 stated that the outstanding

amount was duly admitted by the Corporate Debtor which can be

established by the fact that the Corporate Debtor had claimed the input of

said amount i.e. Input Tax Credit (ITC) in its monthly GST return which is

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 9 | 23 sufficient to indicate the liability of the Corporate Debtor towards the

Respondent No. 1.

27. Learned Counsel for the Respondent No. 1 submitted that the validity

of Respondent No. 1 registration with GST Department is valid and

continuing till date and no coercive action, whatsoever, has been taken by

GST Department against the Respondent No. 1. The Appellant/ the

Corporate Debtor, in order to prejudice the case of the Respondent No. 1 has

tried to use some internal communication between two divisions of GST

Department, which has no impact on genuine claims of the Respondent No.

1.

28. Learned Counsel for the Respondent No. 1 submitted that in relation

to the allegations pertaining to the non-existence status of the Respondent

No. 1, the Respondent No. 1 is effectively performing its business from its

registered place of business and the same is evident from the GST records,

which as on date clearly mentions the Respondent No. 1 as a Normal

Taxpayer in its Records and as per the GST Records, the annual aggregate

turnover of the Respondent No. 1 for the Financial Year 2019-20 was in

relevant slab: 100 Crore to 500 Crore. Learned Counsel for the Respondent

No. 1 submitted emphatically that it is a matter of fact that the GST

Department has never initiated any action against the Respondent No. 1.

29. Learned Counsel for the Respondent No. 1 submitted that the GST

Notice/orders filed and relied by the Appellant itself reveals the fact that the

Appellant has claimed the input tax credit for the invoices raised by the

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 10 | 23 Respondent No. 1, but denied the said invoices before the Adjudicating

Authority to run away from its liability for payment of invoices.

30. Learned Counsel for the Respondent No. 1 submitted that he had

supplied materials to the Appellant even after 19.05.2018 and accordingly

raised various invoices during that period and the last invoice issued by the

Operational Creditor against the supply of material to the Corporate Debtor

was for an amount of Rs. 12,58,708/- dated 30.06.2018. Learned Counsel

for the Respondent No. 1 stated that the Respondent No. 1 had duly paid

the VAT and GST amount (as the case may be) for each and every invoices

being raised against the supply of material to the Corporate Debtor.

31. Learned Counsel for the Respondent No. 1 submitted that he had

supplied various "lots of material" to the Corporate Debtor during the course

of their business relationship and accordingly issued invoices for the said

"lots of material" supplied to the Corporate Debtor and after adjusting all the

amount received from the Corporate Debtor in the running account

maintained by the Respondent No. 1 claimed outstanding amount is dues

from the Corporate Debtor which the Appellant had failed to settle.

32. Learned Counsel for the Respondent No. 1 mentioned that on the

basis of order placed by the Corporate Debtor, the Respondent No. 1 used to

supply the goods to the place of the Corporate Debtor against which the

corresponding Invoices were issued and sent to the Corporate Debtor.

Learned Counsel for the Respondent No. 1 further submitted that the

Respondent No. 1 was never required to submit Dharam Kanta Receipt as it

is an obligation on the part of the Buyer i.e., Appellant herein to get the

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 11 | 23 products weighted at its end, if so desires, and to report and communicate

discrepancy, if any, to the Respondent No. 1. However, since there was no

occasion of such discrepancy therefore, the Appellant never raised any issue

in context of the weight of the products being supplied to it. Learned

Counsel for the Respondent No. 1 mentioned that even for the Invoices,

which are specifically admitted by the Corporate Debtor, there is no Dharan

Kanta Receipt being supplied by the Respondent No. 1 to the Corporate

Debtor.

33. Learned Counsel for the Respondent No. 1 submitted that the

Notices/Order of GST Department to the Corporate Debtor itself establishes

the malafide of the Corporate Debtor that on one hand the Corporate Debtor

denies the invoices and on the other hand the Corporate Debtor claims

Input Tax Credit on the said invoices. Learned Counsel for the Respondent

No. 1 submitted that the GST on the said invoices was deposited by the

Respondent No. 1 and Input Tax Credit on the said invoices was claimed by

the Appellant.

34. From the order dated 07.03.2022 passed by this Appellate Tribunal, it

is noted that the Appellant stated that he was ready to deposit the balance

amount of Rs. 1,06,31,219/- and accordingly it was directed that the CoC

shall not be constituted and left for the parties to enter into settlement, if

any. The Order reads as under :-

"Heard learned counsel for the Appellant. Learned counsel for the Appellant at the very outset submitted that

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 12 | 23 Appellant is ready to deposit balance amount of Rs.1,06,31,219/-.

In view of above statement, a Demand Draft drawn in the favour of 'The Pay and Accounts Officer, Ministry of Corporate Affairs, New Delhi' may be deposited by the Appellant within two weeks.

Learned counsel for the Respondent may file Reply within two weeks. Rejoinder may be filed within two weeks thereof. Learned counsel for the parties submit that the CoC has not yet been constituted.

Subject to deposit of the aforesaid amount, in pursuance of impugned order dated 21.02.2022, CoC shall not be constituted. In the meantime, it shall also be open for the parties to enter into settlement, if any.

List the Appeal on 18.04.2022."

(Emphasis Supplied)

35. We also note that Mr. Adarsh Tiwari, Advocate for the Appellant had

deposited Rs. 1,06,31,219/- by way of two Demand Draft as per these

letters dated 21.03.2022 which is seen as under :-

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 13 | 23 Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 14 | 23

36. Subsequently various dates were notified for hearing before this

Appellate Tribunal i.e., 18.04.2022, 29.04.2022, 13.05.2022, 02.06.2022,

05.07.2022, 20.07.2022, 30.08.2022, 18.10.2022 & 16.01.2023.

37. During hearing before this Appellate Tribunal on 16.01.2023, it was

brought to the notice of this Appellate Tribunal that the settlement did not

arrive between the parties despite the orders passed by this Appellate

Tribunal, and the following order was passed pm 16.01.2023 :-

"In terms of the order dated 18.10.2022, the Ld. Counsel for the Appellant has filed the short Affidavit with regard to negotiation of settlement between the parties have failed and there is not hope for settlement through out side the court, which is taken on record.

Let this matter go out of my list. The Registry is directed to place the matter before the Hon'ble Chairperson for listing the matter before appropriate Bench in which Hon'ble Mr. Justice Anant Bijay Singh, Member (Judicial) not a member.

Interim order to continue."

(Emphasis Supplied)

38. Subsequently the case was again listed for hearing on 23.01.2023,

13.02.2023, 31.03.2023, 17.04.2023, 02.05.2023, 26.05.2023 and

13.07.2023. The case was finally heard fully on 13.07.2023 and judgment

was reserved.

39. From the averments of both the parties as well as documents made

available, it is required to be seen by us now is that whether operational

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 15 | 23 debt over Rs. 1 Crore existed between the Corporate Debtor and the

Respondent No. 1. Similarly, another fact is required to be considered

whether any pre-existing dispute existed between the parties.

40. It is noted that no written contract is available between the Corporate

Debtor and the Respondent No. 1 regarding supply of TMT Bars. On a

pointed query by this Appellate Tribunal to both the parties, the same fact

was confirmed that indeed there was no formal written agreement between

both the parties.

41. We noted from the averments of the Corporate Debtor that based on

the purchase order, the Respondent No. 1 used to supply the material and

for which the Respondent No. 1 used to furnish the invoices. On this issue

since this Appellate Tribunal could not link any purchase order in the

records made available, another query was posed to the Corporate Debtor

regarding system of such purchase order and placing/linking such purchase

orders from the record available. The Corporate Debtor conceded that no

formal purchase orders were issued by the Corporate Debtor to the

Respondent No. 1.

42. This Appellate Tribunal wanted to understand the mechanism based

on which the Corporate Debtor used to seek the material i.e. TMT Bars from

the Respondent No. 1. The Corporate Debtor explained that since he was

constructing several projects in Noida, as per prevalent trade practices as

well as understanding with the Respondent No. 1, the representative of the

Corporate Debtor used to place orders through verbal communication or

telephonic conversation. We also noted that subsequent to supply of such

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 16 | 23 TMT Bars to the Corporate Debtor, the Respondent No. 1 used to raise the

concerned invoice regarding supply of said material and indicated the

payments to be made by the Corporate Debtor.

43. It is also observed that the business relationship between both the

parties started in 2015 and was continuing till middle of 2018. The

Corporate Debtor fairly accepted that the Respondent No. 1 had supplied

material worth Crores of Rupees during the period and Corporate Debtor

was also making payment based on "Running Account Manner". The

Corporate Debtor explained that payment made by the Corporate Debtor

were required to be adjusted for the invoices issued by the Respondent No. 1

in successive order i.e. running payment made by the Corporate Debtor was

required to be adjusted by the Respondent No. 1 for the previous pending

bills. According to the parties, the payments were being made from time to

time, however due to financial crises faced by the Corporate Debtor there

have been delays/ defaults in payment to the Respondent No. 1.

44. We also take into consideration desire of the Corporate Debtor settle

the matter before the Adjudicating Authority during the hearing of Section 9

Application and accordingly two tranches of payments of Rs. 25 Lakhs each

were made by the Corporate Debtor to the Respondent No. 1 and the same

were indicated in the order sheets of the Adjudicating Authority dated

10.07.2019 & 21.08.2019 :-

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 17 | 23 Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 18 | 23 Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 19 | 23

45. It is noted from the averments that there has been no pre-existing

dispute between the parties and the Corporate Debtor did not raise any

dispute before the demand notice was issued. Even during pleading before

this Appellate Tribunal, no pre-existing dispute on any ground has been

brought out by the Corporate Debtor.

46. It is the case of the Corporate Debtor that 12 invoices which have

been claimed by the Respondent No. 1 are not genuine and have been

fabricated by the Respondent No. 1 to get more money out of the Corporate

Debtor. From this, only point emerges is regarding existence of 12 invoices

and not regarding any other point including supply or quality of the

material/ pre-existing disputes.

47. The Corporate Debtor has also taken the plea that the Respondent No.

1 has not furnished documents to prove his claims like weight scale receipt

of Dharamkata. On this account the Respondent No. 1 has submitted that

he was never required to submit the Dharamkata receipt as it was choice on

part of the Corporate Debtor as buyer of the goods to get the products

weighted at its end, if so required, and to communicate discrepancy, if any,

the Respondent No. 1. The Respondent No. 1 further clarified that even for

the invoices admitted by the Corporate Debtor, no Dharamkata receipts

have been produced, by the Corporate Debtor as such the plea of the

Corporate Debtor about non-submission of documents is prima-facie not

convincing to us.

48. We have already noted that the Corporate Debtor has paid Rs. 50

Lakhs during the petition hearing before the Adjudicating Authority against

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 20 | 23 which the Corporate Debtor has now claimed that he has over paid Rs.

18,79,851/-. This Appellate Tribunal is not able to appreciate any reason

for such alleged over payment by the Corporate Debtor to the Respondent

No. 1, since these were supposed to be voluntary settlement payments by

the Corporate Debtor and not by any judicial order from any judicial forum.

We also take into account averments made by the Corporate Debtor that he

was maintaining Ledger Account and was paying on the basis of 'Running

Account Manner', as such the plea regarding over payment, if any, is not

convincing to us.

49. The Corporate Debtor has admitted that there was no formal written

contract agreement for supply of material by the Respondent No. 1 and

similarly no formal purchase order was issued by him. The Corporate

Debtor also admitted that on the representative of the Corporate Debtor

used to ask the Respondent No. 1 to supply goods on oral instructions and

subsequently payment would be claimed by the Respondent No. 1 based on

invoices issued by him to the Corporate Debtor. Hence, there cannot be any

dispute regarding payment being made on the basis of invoices issued by

the supplier of the material, here in case, by the Respondent No. 1.

50. We take into consideration that the various invoices which have been

relied upon by the Respondent No. 1 had been attached with the application

filed before the Adjudicating Authority under Section 7 of the Code. On this

account, it may also be pertinent to note that these invoices have stated to

been reported in the GST returns and necessary ITC have also been claimed.

It is the case of the Corporate Debtor that CGST Department had enquired

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 21 | 23 into alleged fake purchases by the Corporate Debtor based on the alleged

fake documents/ invoices issued by alleged non-existent Respondent No. 1.

We note from the averments of the Respondent No. 1 that no case has been

framed against him by GST Authority and his GST Certificate is intact. On

the point of CGST enquiries into the affairs of the Corporate Debtor and / or

the Respondent No. 1, it is for the concerned authorities to look into and

take necessary action, if any, in accordance with law and the concerned

parties have to defend at appropriate forum. For us, in present appeal it will

suffice to decide the matter under the Code based on the facts and the

documents and not on the basis of complaints/ counter complaints/

enquiries by GST Authorities into the alleged affairs of the Corporate

Debtor/ Respondent No. 1.

51. The Corporate Debtor has admitted that he was undergoing financial

stress and there have been delays in making payments as well as in default

at relevant period. In fact, the Corporate Debtor indeed tried to settle the

matter by making payments as already discussed earlier, however, the

Corporate Debtor failed to settle the matter.

52. In view of the detailed analysis, we are not in position to accept the

plea of the Corporate Debtor regarding alleged fraudulent invoices claimed

by the Respondent No. 1 or over payment made by the Corporate Debtor to

the Respondent No. 1.

53. After careful consideration of all the facts, averments made by all

parties, we do not find any error in the challenged Impugned Order. The

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 22 | 23 'Appeal' being devoid of any merit(s) is dismissed. No costs. Interlocutory

Applications, if any, are closed.

54. Since, there has been stay on the constitution of CoC vide order of

this Appellate Tribunal dated 07.03.2022, as discussed earlier, the stay on

constitution of CoC is removed and the IRP shall proceed immediately in

accordance with the law as per the Impugned Order dated 21.02.2022.

55. We have also taken into consideration submissions of the Corporate

Debtor that the Appellant has already deposited the amount of

Rs. 1,06,31,219/- vide two demand drafts as detailed by Mr. Adarsh Tiwari,

Advocate for the Appellant in his letter dated 21.03.2022 (noted earlier), the

Appellant is entitled to claim this money back based on this order from the

Pay and Accounts Officer, Ministry of Corporate Affairs, New Delhi after

following due process with Pay and Accounts Officer. The Pay and Accounts

Officer, Ministry of Corporate Affairs, shall satisfy himself regarding earlier

receipt of the said money from the Appellant before refunding the same to

the Appellant.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Naresh Salecha] Member (Technical)

Sim

Company Appeal (AT) (Insolvency) No. 228 of 2022 Page 23 | 23