Tijaria Polypipes Limited vs Kevadiya Construction Pvt Ltd

[Arising out of order dated 2nd November, 2020 passed by the Adjudicating Authority (National Company Law Tribunal) Ahmedabad Bench in CP (IB) No. 808/9/NCLT/AHM/2019]

IN THE MATTER OF:

Tijaria Polypipes Limited. Through its Authorized Signatory Mr. Vikas Jain Tijaria Having Office at SP-1-2316, RIICO Industrial Area, Ramchandrapura (Sitapura Extn.) Jaipur RJ 302022. ...Appellant

Versus

Kevadiya Construction Pvt. Ltd. Through its Authorized Signatory Having Office at 1, Suketu Complex, Second Floor, Near Aastha Buglows, New India Colony Road, Nikol, Ahmedabad 382350. (erstwhile registered office)

FF-406, Abhishree Complex, Opp. Om Tower, Satellite Road, Ambawadi, Ahmedabad GJ 380015 (Present registered office) ...Respondent

Present:

For Appellant: Mr. Anurag Kalavatiya, Advocate. For Respondent: Mr. Arpit Singhvi and Ms. Ranu Purohit, Advocates. Mr. Dhruv D. Vaghasia, Advocate. -2-

DR. ASHOK KUMAR MISHRA, TECHNICAL MEMBER

This Appeal has been filed under Section 61 of the Insolvency and

Bankruptcy Code, 2016 ('IBC' for short) challenging the impugned order dated

2nd November, 2020 passed by the Adjudicating Authority (National Company

Law Tribunal) Ahmedabad Bench in CP (IB) No. 808/9/NCLT/AHM/2019

dismissing the petition filed by the Operational Creditor under Section 9 of the

IBC. Adjudicating Authority has dismissed the petition particularly on the

ground of dispute regarding quality of the goods supplied by the Appellant. The

other ground is that the consignment number given in the track report and in

the postal receipt does not match, thereby reflecting the non-service of notice

under Section 8 of IBC and there are other grounds also for dismissal of the

Application.

2. The brief profile of the case is as under:

The Appellant is engaged in the business of manufacturing of various

plastic products like HDPE, PVC pipes, ducts, tubes, etc. and they are supplying

it to the customers across the country.

The Respondent issued Purchase Order dated 9th March, 2018 to the

Appellant for purchase of goods and also made an advance payment on 29 th

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March, 2018 of an amount of Rs.9,65,554/- pursuant to which the Appellant

supplied goods to the Respondent. The Appellant supplied total value of goods

worth Rs.91,57,699/- to the Corporate Debtor. However, upon delivery of the

entire goods, the Respondent wrote an email dated 24th May, 2018 to the

Appellant raising certain objections in respect of quality of goods supplied by the

Appellant and Appellant immediately took action to lift/ take back some defective

goods from the site of the Respondent and upon taking back such goods issued

seven credit notes equivalent to the value of goods taken back i.e. Rs.47,51,473/-

and a balance amount after adjusting advance of Rs.34,40,672/- remained due

from the Corporate Debtor. Since the Respondent failed in making the payment

of balance outstanding dues of the Appellant, the Appellant issued demand

notice under Section 8 of the IBC dated 27th June, 2019 demanding a payment

of Rs.41,21,405/- which included principal outstanding as stated above of

Rs.34,40,672/- and balance being interest. The same demand notice was sent

to the Registered Office of the Respondent through Speed Post. Inspite of

demand notice, they did not get back the payment and hence filed the petition

before Adjudicating Authority.

3. The Learned Counsel for Appellant has submitted that they have attached

the acknowledgement due slip of postal authorities along with tracking record.

They made all attempts to prove that there is no difference in the consignment

given in the track report and in the postal receipt. He has also submitted that

through email in October, 2018 they have communicated to the Respondent that

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they will lift some requisite materials which they have done and still they are not

getting the balance payment. Hence, they have no other alternative but to

approach the Adjudicating Authority. The Adjudicating Authority has dismissed

the petition in an arbitrary manner by holding that a dispute exists between the

parties before issuance of demand notice dated 27th June, 2019 regarding quality

of the goods supplied by the Appellant as Operational Creditor to the Respondent

as Corporate Debtor.

4. The Learned Counsel for the Respondent has submitted that the Purchase

Order dated 9th March, 2018 for supply of Pipes has clearly mentioned the

description of the Pipes in the said purchase order. The Purchase Order contains

binding terms and conditions accepted by both the parties and hence binding on

both the parties in accordance with the provisions of law. They have also

submitted that all the materials supplied by the Appellant as per Page 90 (in the

Appeal Paper Book) through email they have communicated that entire material

is defective and has raised quality issue vide email of October 13, 2018 and

Respondents responded as below:

"Dear Sir,

As per given below mail, this is to request you to kindly share with us your store location from where we lift the complete material.

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Kindly provide us complete address along with contact person name and contact details so that we can arrange the transportation accordingly."

Even the same was communicated by the Appellant that they will lift the

complete material and ask the Respondent to provide contact person and contact

details so that they can organize transportation accordingly. Instead of lifting of

complete material they have lifted partially the material and has provided the

credit notes. They have not lifted the complete materials and are accordingly

demanding the balance payments even for those unlifted defective materials.

5. The Respondent has also submitted that they have not received the

demand notice and accordingly has not responded for the same. They also stated

that they have provided track report without providing the Post Office Receipt.

6. We have carefully considered the submissions of the parties and have gone

through the records. An analysis of the same reveals that the Appellant itself

has accepted and agreed to lift the complete material being defective and has

failed to lift the material which is of no use to the Corporate Debtor. However,

the Appellant is pressurizing using the provisions of IBC to recover the money

forcefully as IBC immediately changes the management of the Company.

7. It is also very much clear that they have not filed the Postal Receipt before

this Tribunal which proves the fact that there is some mismatch between

Consignment Number given in the Track Report and Postal Receipt. Hence, the

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finding of Adjudicating Authority is correct. It is also proved from the email that

the Appellant has accepted the fact that the material is defective and

substandard and failed to lift the complete material.

8. The requisite conditions necessary to trigger the Corporate Insolvency

Resolution Process under Section 9 of the IBC are:

a) Existence of a debt due and its default by the corporate debtor.

b) Delivery of demand notice of an unpaid and undisputed debt.

c) There is no payment of the unpaid and undisputed debt within the period

of 10 days of receipt of demand notice.

d) There is no pre-existing dispute.

9. In the present case the delivery of demand notice itself is a grey area and

Adjudicating Authority has rightly held so. In addition to that there is also a

pre-existing dispute.

10. Furthermore, this is the case of chasing of payments under the pressure

of IBC. Hon'ble Supreme Court in Civil Appeal No. 9597 of 2018, "Transmission

Corporation of Andhra Pradesh Limited vs. Equipment Conductors and Cables

Limited" vide Para 15 has already held that IBC is not intended to be a substitute

to a recovery forum and also laid down that whenever there is existence of real

dispute, the IBC provisions cannot be invoked.

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11. In view of this, we do not find any infirmity in the order. The Appeal

deserves to be dismissed and is dismissed and no order as to costs.

[Justice Ashok Bhushan] Chairperson

[Justice Jarat Kumar Jain] Member (Judicial)

[Dr. Ashok Kumar Mishra] Member (Technical)

Date: 17th November, 2021 New Delhi.

Archana.

Company Appeal (AT) (Insolvency) No. 85 of 2021