S. Vijayaraghavan, Member (Technical):— Under adjudication is a Company Petition filed by M/s. BM Pipes Private Limited (in short, “OperationaI Creditor”) against M/s. ETA Engineering Private Limited (in short, “Corporate Debtor”) Under Section 9 of the Insolvency and Bankruptcy Code, 2016 (in short, IB Code, 2016) r/w Rule 6 of the Insolvency and Bankruptcy (Application of Adjudicating Authority) Rules, 2016 (for brevity, IBC Rules 2016).
2. Before proceeding with the matter it would be appropriate to make a note of background facts for the purpose of determination of this petition.
3. The Corporate Debtor Company had placed various Purchase Order(s) with the Operational Creditor for supply of PVC, PVC Conduit Pipes and Pipe Fittings at its project sites. The Operational Creditor supplied the material/goods in consonance with the specifications enumerated in each Purchase Order which were accepted by the Corporate Debtor without any protest or demur. The payment in respect of the first invoice No. 489 (In the application, Invoice No. wrongly mentioned) dated 27.07.2013 has been made only in part i.e. to the extent of Rs. 99,745/-. The payments received from the Corporate Debtor from time to time were duly and regularly credited. After adjusting all the amounts, the principal sum of Rs. 15,42,492/- is still due, payable and outstanding against the 12 invoices from 27.07.2013 to 11.12.2014. The last “on Account” payment of Rs. 2,91,864/- was made by the Corporate Debtor on 29.08.2015 and then defaulted payment. Thus, the Operational Creditor issued a notice of demand in Form-3 as contemplated in Rule 5 of the Code, calling upon the Corporate Debtor to make the payment in respect of outstanding dues within a period of 10 days from the date of receipt of the notice. The said notice was delivered upon the Corporate Debtor on 02.08.2018. Till date, the Corporate Debtor neither made any payment nor even replied to the said notice. As on 20.07.2018, the Corporate Debtor is liable to pay a total sum of Rs. 23,45,771/- (Rs. 15,42,492/- towards principal and Rs. 8,03,279/- payable as interest).
4. The learned counsel appearing on behalf of Corporate Debtor in his written submission contended that the Operational Creditor had concealed the fact that they had instituted a money recovery suit in the Hon'ble Delhi District Court on 06.04.2017 and is pending in relation to the same subject matter. On 24.10.2018, the Corporate Debtor filed typed set of documents viz. (i) Civil Suit 376 of 2017 filed at District Courts, Delhi for recovery of Rs. 5,09,039/- (ii) Written Statement on behalf of the Defendant (iii) last Order passed dt. 29.08.2018 and (iv) Case Status as on 23.10.2018.
5. It has been submitted by the Corporate Debtor that assuming that all the alleged invoices were due, undisputed and unpaid by the Corporate Debtor, then the Operational Creditor ought to have sued the Corporate Debtor in respect of all those invoices in the suit in Delhi in light of Order II Rule 2 Code of Civil Procedure and according to law well laid down in Virgo Industries (Eng) Pvt. Ltd. v. Venture tech Solution, (2013) 1 SCC 625 since all the invoices were raised as early as 27.07.2013 onwards and the last invoice was dated 11.12.2014. In the money recovery suit filed in Delhi, the Operational Creditor had admitted certain payments by the Respondent but such payments are not revealed in the ledger filed before this Tribunal. The Operational Creditor has not only concealed the fact of instituting a suit in Delhi but has also removed correspondent payments revealed in the suit and approached this Tribunal with malafide intention based on tempered documents.
6. The learned counsel for Operational Creditor argued that the purported defense of the Corporate Debtor is a feeble argument that one of the Claims arising out of an unpaid invoice in the sum of Rs. 93,854/- being the subject matter of a civil suit instituted by the Operational Creditor is pending adjudication before the Hon'ble District Courts, Delhi. As has been contemplated u/s. 5 (6), 8 and 9 Insolvency & Bankruptcy Code, 2016, the Corporate Debtor shall within a period of 10 days from the date of receipt of Demand Notice under Section 8 of the Code, bring to the notice of the Operational Creditor, the existence of a dispute or record of the pendency of the suit or arbitration proceedings filed prior to the receipt of such notice.
7. It is further submitted by the counsel for Operational Creditor that the phrase “suit or arbitration proceeding” has to be necessarily construed to mean the suit or arbitration proceeding instituted or initiated by the Corporate Debtor. In this regard, reference was drawn to the observations of the Hon'ble Supreme Court in the matter “Mobilox Innovations Private Limited v. Kirusa Software Private Limited . No. 9405 of 2017) decided on 21.09.2017 wherein the legislative intent has been discussed in detail. Since Section 5(6) was referring to a pre-existing suit or arbitration proceeding(s) initiated by the Corporate Debtor as opposed to the Operational Creditor, the Corporate Debtor cannot seek refuge of the fact that the creditor has instituted a suit to recover his dues, and bring the same within the purview of “dispute”. It is further relevant to state that the Corporate Debtor despite having received the notice for recovery of dues dated 07.11.2016 and 25.01.2017 has admitted not having responded to the same. With regard to non-furnishing of the particulars of an order of a court, tribunal or arbitral panel adjudicating on the default, (in the present case, a part of the default to a tune of Rs. 93,854/-) is a curable defect under proviso to section 9(5)(ii) which provides as under - “provided that the Adjudicating Authority, shall before rejecting an application under sub-clause (a) of clause 4 (ii) give a notice to the applicant to rectify the defect in his application within seven days of the date of receipt of such notice from the Adjudicating Authority”. The Operational Creditor sought permission to rectify its application. 8. After hearing submissions of both the sides and having perused the record, this Adjudicating Authority is of the view that the Operational Creditor has filed a civil suit No. 376/2017 during March/April 2017 whereas the Demand Notice in this case has been issued on 25.07.2018. This clearly shows that there was on record of the pendency of the suit filed before the receipt of such notice or invoice in relation to such dispute as defined under Section 8(2)(a). 9. Accordingly, the Company Petition CP/1145/(IB)/CB/2018 is hereby dismissed as per the provisions of Insolvency & Bankruptcy Code, 2016. There will be no order as to cost.
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