M.K. Shrawat, Member (Judicial):— A Petition has been moved from the side of the Operational Creditor Jindal Steel & Power Ltd. on 08.11.2017 filed u/s. 9 of the Insolvency Code in respect of an Operational Debt of Rs. 5,23,28,605/- against the Corporate Debtor Mittal Corporation Ltd. (Operational Debtor), New Marine Lines, Mumbai.
2. The Petitioner has explained about the nature of Debt that:
“The Corporate Debtor had approached the Operational Creditor on 01.03.2016 and offered their requirement of High Carbon Billets and Mild Steel Billets. An offer was made to the Corporate Debtor for the delivery of Mild Steel Billets @ Rs. 24,000/- per Metric Ton (MT) and High Carbon Billets @ Rs. 25,000/- per MT. Purchase Orders were Issued on 07.03.2016. As mutually agreed, revised Purchase Orders vide e-mail dated 12.03.2016 were provided wherein the quantity, rate, duties and payment terms were changed for both the Purchase Orders. The Purchase Orders are hereby marked as Exhibit ‘B’.
Since the lifting of billets was not done in a timely manner in accordance with the terms of the Purchase Order by the Corporate Debtor, the Operational Creditor requested the Corporate Debtor to open the Letter of Credit (LC) and lift the left over material vide rake. The same was accepted by the Corporate Debtor and it agreed to lift the material vide rake and open three letters of credit along with advance payment in terms of purchase order. Accordingly, 473.22 MT was lifted through road transport and 2653.25 MT was sent through rake which was duly received by the Corporate Debtor in full and in good condition.
Two LCs, bearing LC No. 5089516LC0000230 and LC No. 5089S16LC0000231, were opened by the Corporate Debtor in State Bank of Patiala, Indore (SBP) on 22.04.2016 and the third LC, beanng LC. NO. 5 089516LC0000234, was opened on 25.04.2016. When the Bills of Exchange (BOE) were presented for the first time on 06.06.2016, out of the three above, BOE under one LC, bearing LC. No. 5089516LC0000234, was duly accepted by the SBP whereas the other 2 LCs were not accepted by SBP and were returned. Hereto marked as Exhibit “c” are the 2 LCs which were returned by SBP.
During the month of May 2016, the Corporate Debtor requested the Operational Creditor to modify/amend the sates order. Due to modification of sales order, two BOEs, JSPUDFT/16/34611 and 3SPL/DFT/16/34612 dated 02.06.2016 for Rs. 2,90,85,011/- and Rs. 2,32,78,993/- respectively were issued to the Corporate Debtor and the SBP. The modifications were made in the BOE as they were of a higher value than the permitted amount under the LC including tolerance. These BOE were then negotiated and discounted with Operational Creditor's bank i.e. State Bank of India, Raigargh (SBI). Hereto annexed and marked as Exhibit ‘D’ are the 2 revised BOE.
SBI issued a letter dated 20.06.2016 to SBP, with reference to LC NO. S0895LC0000230 and LC No. 5089516LC0000231, comprising of invoices and Lorry Receipts, and requested SBP to remit the proceeds upon maturity by means of demand draft/branch clearing. SBI also requested SBP to acknowledge the receipt and confirm acceptance.”
3. The Petitioner has explained the default on the part of the Corporate Debtor that:
“In blatant disregard of the law and undeniable obligations on behalf of the Corporate Debtor and SBP, the documents were returned by SBP vide letter dated 01.07.2016 without giving notice to the negotiating bank on the following grounds:
a) Original railway receipt not present;
b) invoice amount and net amount in BOE differs;
c) LC has expired on 14.06.2016.
The Operabonal Creditor brought to the attention of Corporate Debtor to its letter dated 22.08.2016 wherein the Operational Creditor had stated that the LC was not honoured because the BOE dated 02.06.2016 was not accepted by SBP. Hereto annexed and marked Exhibit ‘E’ is the letter of 22.08.2017 of the Operational Creditor. The Operational Creditor through its various emails to Corporate Debtor stressed upon the payment of the outstanding amount. Even after various visits to the Corporate Debtor's office, emails and telecommunications made by the Operational Creditor, the amount has not been paid by the Corporate Debtor. Hereto annexed and marked as Exhibit ‘F’ are the various correspondences exchanged between the Operational Creditor and Corporate Debtor.
Corporate Debtor since inception, bad no intention to make the payments due to the Operational Creditor and is in connivance and is colluding with SBP to give effect to their illegal acts of not making the payments. Despite repeated requests and reminders, the Corporate Debtor, has failed in discharging its liability and make the lawfully due payments to the Operational Creditor. Its liability towards the Operational Creditor accordingly remains un-discharged.
A Demand Notice dated 08.11.2016 was a/so issued to the Corporate Debtor to pay the outstanding amount, but till date the Operational Creditor has not received its entire outstanding amount. Hereto annexed and marked as Exhibit ‘G’ is the demand notice dated 08.11.2016. The Corporate Debtor vide its Advocate's letter dated 30.11.2016 replied to the Operational Creditor's demand notice. Hereto annexed and marked's Exhibit ‘H’ is the Corporate Debtor's Advocate's letter of 30.11.2016.
As on 13.09.2017, a provisional payment of Rs. 2,34,95,000/- has been received by the Operational Creditor. Hereto annexed and marked as Exhibit ‘I’ is the Bank letter statement confirming receipt of the said amount in the Operational Creditors Bank account. The interest @ 18% p.a. which has accrued on the outstanding debt of Rs. 5,23,28,605/- from 30.08.2016 till 13.09.2017 is Rs. 98,06,237/-. The provisional payment which has been made by the Corporate Debtor shall be adjusted by the Operational Creditor to offset the—
a) Interest amount of Rs. 98,06,237/- which has accrued till 13.09.2017;
b) Future interest which shall accrue, till the principal outstanding amount is being paid in full by the Corporate Debtor.;
c) Principal amount.
The set off is against the provisional amounts received and hence is not claimed separately.
The Operational Creditor once again sent a Demand Notice dated 13.09.2017 under section 8 of the Insolvency and Bankruptcy Code seeking payment of the outstanding amount. Hereto annexed and marked as Exhibit ‘J’ is the demand notice of 13.09.2017. The Corporate Debtor has vide its letter dated 28.09.2017 replied to the demand notice by denying and disputing the amount claimed by the Operational Creditor. Hereto annexed and marked as Exhibit ‘K’ is the Corporate Debtor's reply.
The debt amount has become clearly due and payable by the Corporate Debtor to the Operational Creditor from 30.08.2016.”
3.1. As per the Applicant the defaulted amount had become due on 30.08.2016, i.e. after 90 days from the last date of shipment i.e. 31.05.2016.
4. Claim of the Petitioner:— From the side of the Petitioner, Learned Sr. Advocate Mr. Anshuman Sharma appeared and drawn attention on a Purchase Order dated 12.03.2016 addressed to Jindal Steel (Operational Creditor) wherein 3200 MT of MS Billets were ordered for a sum of Rs. 7,68,00,000/-. There was one more Purchase Order dated 12.03.2016 for supply of 1500 MT of HS Billets for a sum of Rs. 3,75,00,000/-. The total value of the said two Purchase Orders was Rs. 11.43 Crores. He has explained that the MS Billets are the raw-material for manufacturing Wire-rods. The goods were supplied as per the requirement and duly accepted by the Corporate Debtor because no complaint of defect in the raw-material supplied was ever made.
4.1. Learned Counsel has drawn attention on certain letters dated 24.04.2016 through which the Purchase Order was amended. According to the amended Purchase Orders the date of shipment was re-scheduled along with the date of negotiation. There was one more letter of 25.04.2016 through which it was informed that the value of LC was enhanced by Rs. 82,99,726/- and the total value was Rs. 2,21,32,603/-. The said communication, according to the Petitioner, was a revised Purchase Order as well as a communication for revision of Letter of Credit facility. Thereafter, vide a letter of 03.05.2016 new expiry date was communicated and it was also communicated that in the event of delay, overdue Interest should be charged @ 18% from due date of payment and the date of receipt. Vide a letter dated 17.05,2016, last date of shipment was 31.05.2016, however, last date of negotiation was 14.06.2016.
4.2. The Applicant Company had fulfilled his part of commitment by supplying the goods, but the payment was not made when it was submitted to the Bank. To corroborate attention was drawn on a letter of State Bank of India having subject of “Payment of Outstanding amount of Rs. 5,23,28,605.00 as on 30/08/2016’ wherein it is stated as under:”
“This is in reference to the amount which is due from Mittal Corp Limited, Indore. JSPL has supplied Mild Steel Billet and High Carbon Billets vide Purchase Order dated 12.03.2016, bearing No. PO/II/RM/15-16/0011 and PO/II/RM/15-16/0012 respectively. The amount of Rs. 5,23,28,605/- was due on 30.08.2016. So far, staggered payment of Rs. 2,37,45,000/- has been made. Adjustment of the said amount would be in terms of inter-se understanding of the parties.”
4.3. Further, attention has been drawn on a letter of 20.06.2016 to demonstrate that certain negotiations have been carried by the parties in respect of the LC with a request to make arrangement to remit the proceeds upon maturity. Name of the Debtor Company was duly reflected in the said communication.
4.4. To further corroborate it is informed that there was a communication of 25.07.2016 which was addressed to State Bank of Patiala i.e. payee Bank and the subject was “Refusal by State Bank of Patiala, Indore to honour a document for Rs. 2,32,22,137/- and Rs. 2,90,27,670/- for payment under LCs”. It was communicated that Bill of Exchange (BoE) along with requisite documents under LC were negotiated by SBI Raigarh and the same were forwarded to Indore MCB Branch on 07.06.2016 for payment on due date, but the ‘Issuing Bank’ returned the documents raising discrepancy without giving any prior notice to the ‘Negotiating Bank’. Revised documents were re-sent by SBI Raigarh on 24.06.2016 but again SBP, Indore, returned documents by giving reason that the LCs have expired. The SBI, Raigarh has further brought certain facts to the knowledge of SBP as under:—
“We wish to bring the following fats in your knowledge that:
• The documents under both the LCs were presented well within the validity of the LCs
• SBP, Indore has not acted as per provisions of UCDPC 600 after finding discrepancy.
• We refer Article 16 of UCDPC 600 which says in case of discrepant documents:
• The LC issuing bank has to opt to approach the applicant for waiver of the discrepancies. SBP ACTION: It has not opted to approach the applicant for waiver.
• When the issuing bank decides to refuse to honour, it must give a single notice to that effect to the presenter stating reasons as per the said Article.
SBP ACTION: It has not given any prior notice to SBI, Raigarh.
• If the issuing bank fails to act in accordance with the provisions of this article, it shall be precluded from claiming that the documents do not constitute a complying presentation.
SBP ACTION: It has failed to act in accordance with the provisions of this article.
State Bank of Patiala, Indore has returned the documents without referring to the applicant and without giving pnor notice to me presenter SBI, Raigarh and violated the provisions of UCDPC 600. Due to this act of SBP, Indore our huge amount of Rs. 5,22,49,807/has stuck up.
The Applicant Mittal Corp Ltd. has given letters to SBP to accept the documents with discrepancy and has also requested to extend the validity of the LC but the bank has not acted upon the request of the applicant.
We request your goodself to look into the matter and instruct State Bank of Patiala, MCB, Indore to accept me documents under the LCs issued by it for payment on due date 29.08.2016.”
*(highlighted some potions for emphasis)
4.5. In the light of the documents and communication Learned Counsel Mr. Anshuman Sharma has pleaded that it was a clear breach of contract because the goods were supplied as per the Purchase Orders hence as per the definition of “Debt” defined u/s. 3(11) means a liability in respect of a claim which is due from any person and includes a Financial Debt and Operational Debt. Further, it is contended that due to dishonouring of LC, the “Default” has also been established as defined u/s. 3(12) of the Code.
4.6. Section 8 Notice of I & B and Legal Notices have been issued but no payment was received. As per a Legal Notice dated 08.11.2016, issued prior to the incorporation of Insolvency & Bankruptcy Code, it was demanded to make the payment otherwise constrained to initiate appropriate Civil and Criminal action. As per Section 8 Notice dated 13.09.2017 Debt amount claimed was at Rs. 5,23,28,605/- and the working of the default amount was as under:—
“WORKINGS FOR COMPUTATION OF DEFAUL
TOTAL AMOUNT DUE AS ON 13.09.2017—
S. No.
LC No.
LC DATE
BOE DATE
DUE DATE OF BOE
INV AMT (INR)
USANCE INTEREST FOR 90 DAYS (INR)
BOE AMT (INR)
1.
5089516LC230
22.04.2016
02.06.2016
29.08.2016
22608908
613228
23222136
2.
5089516LC231
22.04.2016
02.06.2016
29.08.2016
28261135
766535
29027670
TOTAL
50870043
1379763
52249806
(INR)
Amount BOE
5,22,49,806
Ledger Debit balance
78,799
Net amount receivable
5,23,28,605
Overdue Interest @ 18% p.a.
From 30/08/2016 to 13/09/2017 for 380 days
Rs. 98,06,237”
5. Objections of Respondent:— A preliminary objection has been made that there was a mismatch about the Debt amount, not tallying with the Invoices. The computation of default is defective due to the reason that there was no evidence of “Ledger Debit Balance” of Rs. 78,799/-. The amount of Rs. 5,22,49,806/- stated to be the amount of Bill of Exchange (BoE) has also not tallied. It is also contended that there was no reason of charging 18% interest because there was no default or delay on the part of the Respondent Company. It is pleaded that in the “Invoice-cum-Challan” issued by Jindal Steel & Power has no specific clause describing the delay in case of non-payment by Bank under L/C obligation or from what date the period of delay is to be calculated for charging of Interest @ 18%.
5.1. According to the Learned Counsel appearing on behalf of the Respondent Company Mr. Zal Andhyarujina there was no default on the part of the Respondent Company because of the basic reason, which is also an admitted fact, that the Company had opened the L/C facility with a Bank and the said State Bank of Patiala, Indore (Issuing Bank) was under the obligation to discharge the claim on demand. The facility of opening L/C account in a Bank is to ensure the payment to a claimant and on the basis of the said assurance supplies are being made as a common trade practice. In this case as well, the MS Billets were delivered against the L/C assurance which were duly opened by the Respondent Company. It is informed by the Learned Advocate that for opening of the L/C account sufficient deposit had already been made available with the Bank. The allegation of non-payment on the part of the Debtor Company is absolutely wrong once the Debtor Company has demonstrated its bona fide by opening L/C with the Bank. By whatever reason, once the L/Cs were not honoured by State Bank of Patiala, only to be answered by the Bank and not by the Company.
5.2. The impugned Corporate Debtor had issued Purchase Orders initially dated 07.03.2016, however, due to changed circumstances the commodity i.e. MT Billets were not supplied hence the said Purchase Order was revised on 10.03.2016/12.03.2016 for supply of Billets. Contrary to the understanding giving by the Supplier, i.e. the Petitioner, Billets could not be supplied, which resulted into loss to the Corporate Debtor, alleged by Ld. Advocate. Even the schedule of lifting was disturbed and the consignment was lifted belatedly by Railway rakes on 31.05.2016 after expiry of 45 days. Due to delayed lifting additional cost of Rs. 560/- per tonne, about Rs. 14.86 Lakhs, was forced to be borne by the Debtor Company, One more statement has been made that due to delay, additional cost was suffered by the Debtor Company. The Debtor Company had already paid an amount of Rs. 2,37,45,000/- to the Operational Creditor. As a consequence, there was no amount of ‘Debt’ remained due, thus no ‘Default’ had happened.
5.3. About the confusion in respect of ‘Letter of Credit’ the reply of the Respondent is that the Operational Creditor was informed that after 45 days of the opening of L/C several Bills were submitted by the Operational Creditor to the State Bank of Patiala, Indore. Moreover, the value of “Bill of Exchange” was in excess to the value of L/Cs. Due to the said reason, the Bank had returned the BoE. Thereafter, the Operational Creditor submitted amended BoE only after the expiry of L/C It was a mistake of the Petitioner and not the Corporate Debtor. The negligence of the Creditor in not submitting the claim within the prescribed time could not be attributed to the Debtor.
5.4. As far as the bona fides of the Corporate Debtor is concerned, the admitted position is that to secure the payment L/Cs were opened with State Bank of Patiala, Indore, which could have been encashed by the Petitioner. Summary of the L/Cs is as under:—
“15. Mittal Corp Limited had duly vacated the limit by arranging funds in bank to open the L/c on 22/04/16. Following L/Cs were opened by State Bank of Patiala;
S. No.
LC No.
Date of Issuance
Amount in Rs. Cr.
Date of Expiry (Negotiating)
Last date of Shipment
Quantity (MT)
1
5089516LC0000231
22/04/16 amended on 16/05/16
2.77
21/05/16 amended to 14/6/16
6/05/16 amended to 31/5/16
1000
2
5089516LC0000230
22/04/16 amended on 16/05/16
2.21
21/05/16 amended to 14/6/16
6/05/16 amended to 31/5/16
849
3
5089516LC0000234
25/04/16 amended on 16/05/16
1.44
10/05/16 amended to 31/5/16
25/05/16 amended to 14 6:16
500
Total
6.42
5.5. L/Cs were opened with State Bank of Patiala, Indore with the intention to make the payment hence those were in favour of the Operational Creditor. Despite having due knowledge of expiry date, the Petitioner instructed its Bank to encash L/Cs. Consequently, the Bank vide letter dated 20.06.2016 requested State Bank of Patiala to remit the amount of the L/Cs. Attention is drawn that the L/C period had expired on 14.06.2016, even then those were tendered on 20.06.2016. The SBP returned them on 20.06.2016 with the remark that (i) Original RR was not present, that the (ii) Invoice Amount and the Net Amount of BoE do not match and that (iii) the L/C had already expired on 14.06.2016. L/Cs could not be honoured on account of negligence on the part of the Creditor. The Corporate Debtor had no role to play.
5.6. There was a Police complaint dated 01.11.2017 against the Corporate Debtor filed by the Petitioner, however, no action was taken. The Debtor Company has raised certain objections and explained the nature of dispute to the Police authorities, hence there was no action. Since there was an ‘existence of dispute’ due to non-delivery of the goods within the time prescribed and that dispute was since inception, hence following the legal ratio laid down by the Hon'ble Supreme Court in the case of Mobilox Innovations Private Limited v. Kirusa Software Private Limited . No. 9405 of 2017], this Petition deserves rejection, pleaded by Ld. Advocate.
5.7. The Debtor Company always wanted to make the payment to the Creditor but due to its own conduct the L/Cs could not be encashed. It was not the default of the Corporate Debtor but the Petitioner who had faulted in submission of claim, arguments concluded.
6. In the Rejoinder Learned Counsel has stated that under the Contract Act, the defaulter is liable to make the payment. Hence it was expected from the Corporate Debtor to monitor the clearance of L/C, but the Debtor had deliberately ignored the payment.
FNDINGS
7. Heard the arguments of the Learned Representatives of both the sides at length in the light of the Compilation with Annexures filed for due consideration. The term “Dispute” has duly been defined by the Hon'ble Supreme Court while pronouncing the Judgment in the case of Mobilox Innovations Private Limited v. Kirusa Software Private Limited ., [Civil Appel No. 9405 of 2017] Order dated 21.09.2017, opined that:
“Para-40. It is dear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the “existence” of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the “dispute” is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application”, (with great respect be permitted to high-light)
7.1. On in-depth perusal of the evidences and the correspondence exchanged between the rival parties, on the face of all those communique, it is difficult to ignore the fact that there was no dispute or misunderstanding not only between the parties but also between the Banks. Even the Police complaint lodged by the Operational Creditor gives a clear indication that the default in payment required investigation to establish the criminal intention on the part of the defaulters. In that criminal complaint the complainant has also roped in the Bank officials of SBP of their involvement in alleged breach of obligation. According to the Complainant, the Bank Officials in connivance with one Mr. Karan Mittal had deliberately and unlawfully breached the contractual obligation of the Bank operating as a Trustee of the monies payable to JSPL (Operational Creditor). The Bank Officials of SBP have knowingly refused to honour the two L/Cs and returned the documents to SBI Raigarh without giving reason or without a cover letter for refusal. The SBI Raigarh had presented the documents for clearance but those were not honoured dishonestly by SBP officials. If this complaint is to be perused along with other evidences a question shall crop up that whether the default of non-payment could be attributed to SBP Bank or SBI Raigarh or the Respondent Debtor?.
7.2. One more evidence is very much relevant to get an answer to this question, i.e. Letter dated 25.07.2016 (relevant portion reproduced supra). This letter definitely throws a light on the reasons of dishonouring the L/Cs. (a) As per the guidelines (referred as Article 16 of UCDPC 600), the L/C issuing Bank has to opt to approach the Applicant for waiver of discrepancies. The allegation is that SBP, Indore had not approached SBI, Raigarh for waiver. If it was so, then obviously the default of non-payment must not be attributed to the Respondent Debtor, (b) One more guideline is communicated to SBP that when the issuing Bank decided to refuse to honour, should have given notice to that effect to the presenter stating reasons. No prior notice issued to SBI Raigarh by SBP. The allegation of SBI Raigarh is that the issuing Bank had failed to act in accordance with the provisions of the Articles of the Circular hence committed default, (c) SBP, Indore had returned the documents without referring to the Applicant and without giving prior notice to the presenter (SBI Raigarh), therefore, violated the provisions of UCDPC 600. Thus the blame is totally upon SBP, Indore that due to their act a huge amount of Rs. 5,22,49,807/- had stuck up of SBI Raigarh. (d) An important admission of a relevant fact in the said communique dated 25.07.2016 is that quote, “The Applicant Mittal Corp Ltd. has given letters to SBP to accept the documents with discrepancy and has also requested to extend the validity of the LC but the bank has not acted upon the request of the applicant.” This comment is a clear indication that MCL had given an authority by opening L/C to honour the payment but due to certain procedural lapses it could not be encashed by State Bank of Patiala, Indore. Therefore, it is a clear cut incident of non-encashment on tendering of L/Cs by the confusion of Bank authorities for which it is not fair to put the blame on the Respondent Company.
8. To sum up, facts have revealed that Purchase Orders were issued by Mittal Corp Limited (Operational Debtor) on 07.03.2016, revised on 10.03.2016/12.03.2016. Accordingly, the goods viz. MS Billets were supplied, however, lifted on 31.05.2016 partly by road and partly by Railway rakes on 31.05.2016 i.e. late by 45 days. Two L/Cs (bearing last No. 230 and 231) were opened with State Bank of Patiala, Indore (Issuing Bank) dated 22.04.2016 and Third L/C bearing last No. 234 dated 25.04.2016. Admittedly, SBI, Raigarh (Negotiating Bank) through Indore MCB Branch presented the document, Bill of Exchange (BoE) on 06.06.2016. One of the LCs bearing last No. 234 was accepted by State Bank of Patiala, Indore, however, Two L/Cs bearing last Nos. 230 and 231 were returned. BoE again presented with Invoices and Lorry Receipts annexed on 20.06.2016 with reference to Two L/Cs (230 and 231), but documents were returned by SBP, Indore on 01.07.2016 on the ground that those L/Cs had already expired on 14.06.2016 (last date of negotiation duly noted on the documents). Documents have revealed that Two impugned L/Cs bearing No. 230 for Rs. 2,32,22,137/- and No. 231 for Rs. 2,90,27,670/-, both dated 22.04.2016 were issued by Issuing Bank State Bank of Patiala, Indore on the request of Mittal Corp Limited (Debtor Company) in favour of Jindal Steel (Creditor Company). On these facts, it is not judicious to blame Corporate Debtor for default of non-payment. A conclusion can be drawn that there was misconceived tender of documents on the part of the Negotiating Bank which had caused this controversy. Further, filing of Police complaint has indicated that there was a controversy which can be termed to be a dispute among the parties.
8.1. In respect of the definition of “dispute”, the law is now very much settled as held by several Hon'ble Courts, most importantly the decision of Mobilox v. Kirusa (supra) in which an observation has been made that the Adjudicating Authority is to examine at the stage of admission that whether there is a plausible contention which requires further investigation and on assertion of fact a dispute is supported by evidence. The expression used in Section 8(2) of the Insolvency & Bankruptcy Code “existence of a dispute, if any” is very significant because the Legislature is deemed not to waste its words or to say anything in vain hence every word is significant, as held in Mithlesh Singh v. Union of India, (2003) 3 SCC 309. It is also important to clarify that if the intent of the Legislature was to limit the dispute to only a pending Suit or Arbitration (refer Section 5(6) Definition of Dispute) then there was no requirement to add in Section 8(2)(a) of the Code “existence of a dispute, if any”. A harmonious and co-joined reading is, therefore, required. A view has also been expressed that the definition of ‘dispute’ as per Section 5 of Insolvency & Bankruptcy Code is illustrative and not exhaustive. It is held that a ‘dispute’ must not be spurious, hypothetical or illusory, quoted verbatim “So long as a dispute truly exists in factandis notspurious, hypothetical or illusory, the adjudicating authority has to reject the application”, unquote. The Adjudicating Authority is also expected to see whether there is a plausible contention of dispute and not a feeble argument, quoted verbatim, “Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the “dispute” is not a patently feeble legal argument or an assertion of fact unsupported by evidence” unquote.
9. Finally, a conclusion is hereby drawn that this is not a case where the impugned Debt and the alleged default was free from existence of plausible dispute or merely a feeble argument; but duly supported by corroborative evidences, therefore, cannot be proceeded under the Insolvency Code so as to commence CIRP by declaring the Debtor Insolvent or Bankrupt. However, it is worth to put on record that the scope and jurisdiction of this Tribunal is limited as also confined to the provisions of Insolvency Code only while dealing with Petition filed under Section 9, therefore, the impugned Debt in question does not fall within those ambits. However, the claim under any other law, if permissible, can be pursued by the Petitioner as prescribed under that law. Any observation, legal or factual, shall not prejudice the rights of the Petitioner, if to be exercised under any other law.
9.1. With foregoing observations and considering the totality of the facts along with the circumstances of the case and law applicable, this Petition does not survive under the Insolvency Code, hence hereby “Dismissed”.
10. Registry is directed to close the file by consigning the Petition to records.