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Judgment
29.05.2025: This appeal is against the order dated 25.08.2023, by which an application filed by the Operational Creditor for the resolution of an amount of Rs. 3,18,79,093/- has been dismissed on the ground of pre-existing dispute.
The Appellant issued demand notice dated 11.03.2022 on 19.03.2022 to the CD but no reply was filed to it, however, the CD filed the reply to the application under Section 9 of the Code.
The Ld. Tribunal, while dismissing the application, made the following observations: -
“5.This bench has perused the documents and pleadings available on record and considered the arguments of both the sides.
5.1.On perusal of the pleadings and the records we find that the applicant has filed this petition claiming a sum of Rs.2,17,69,078/-in default on account of principal outstanding against the supply of goods together with interest of Rs.1,01,10,015/-. The applicant has raised 17 invoices aggregating to Rs. 35,99,413, which fell due for payment during the period which fell due u/s 10A. This bench is of considered view that that the date of default in relation to each invoice is to be determined independently, and the invoices falling within limitation period running from the date of default as well as invoices not falling due for payment within 10A period are eligible for determination of the debt due and in default for purpose of Section 4 of the Code. Accordingly, the claim against these 17 invoices is barred u/s 10A. However, even if that amount is excluded the principal outstanding is more than 1 Crore.
5.2.We find merit in the contention of the Operational Creditor that the defence of dispute is merely to deny the rightful claim and the Corporate Debtor has failed to bring on record any evidence to prove his claim haven't raised as the invoices dated 12.04.2022, 01.03.2022, 07.03.2022 returning the goods However, this bench finds that these invoices are tax invoices under GST law stating GST No. of the Operational Creditor. The Operational Creditor has not denied that these invoices were not reflecting in there GSTR 2A (Invoice wise details of invoice supplied made available by the GST portal to the recipient of goods to facilitate the claim of input credit). The debit note dated 13.01.2022 pertains to the rate difference and the email communications suggest the existence of dispute to this extent in some of the cases, However, this bench does not have sufficient material to arrive at a finding whether the Corporate Debtor was liable to make payment for defective or broken goods as narrated in various emails placed on record by the Corporate Debtor. Further, on perusal of invoice it is found that some of the invoices, not all, contemplate levy of interest @24% if the payment is not made within due date whereas the applicant has claimed interest on all the invoices claimed to be in default.
5.3.In view of aforesaid findings this bench is of the considered view that there exists disputes in relation to quantification of the total debt claimed to be in default and the applicant has failed to bring on record the correct amount of undisputed debt in default.
1.1.It is trite law that an Application under Section 9 of the Code cannot be admitted in relation to disputed debt as held by the Hon'ble Supreme Court in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited held that, in the event there is a pre-existing dispute between the parties, an Application under Section 9 of the Code would have to be rejected”.
Counsel for the appellant has argued that the Tribunal has found in paragraph 5.1. (supra) that the amount due and payable is more than Rs. 1 Cr. which crosses the threshold as provided in Section 4 of the Code. It was also observed in paragraph 5.2 (supra) that the defence of pre-exiting dispute raised by the CD to deny rightful claim of the OC is without any evidence. The Tribunal has referred to the invoices dated 12.04.2022, 01.03.2022 and 07.03.2022 pertaining to the return of goods but the OC has submitted that there is no evidence that the same were communicated to it.
The Appellant has raised similar contention regarding debit note dated 13.01.2022 but the Tribunal while noticing the aforesaid short comings in the case set up by the CD observed that “However, this bench does not have sufficient material to arrive at a finding whether the Corporate Debtor was liable to make payment for defective or broken goods as narrated in various emails placed on record by the Corporate Debtor”.
Counsel for the appellant has submitted that on the one hand, the Tribunal has observed that there is no sufficient material that the CD was liable to make payment for defective goods and on the other hand, the application has been dismissed on the ground that there is a pre-existing dispute. He has also submitted that the CD, at one point of time, through email dated 15.06.2023, had asked the Appellant for an amicable settlement of dispute in respect of debt which has not been taken into consideration by the Tribunal whereas a similar email for settlement has been found to be a sufficient reason to admit the application filed under Section 9 in another case.
On a pointed query to the Respondent about the communication of the invoices dated 12.04.2022, 01.03.2022 and 07.03.2022 to the Appellant, the Respondent did not give a concrete reply rather he has referred to emails which were sent by Respondent to the Appellant regarding broken glasses on the basis of which a pre-existing dispute has been raised.
We have heard Counsel for the parties and perused the record.
The Tribunal has erred in taking into consideration the email of the Respondent without giving any detail in the impugned order as to how the said emails have been found to be sufficient for the purpose of holding a pre-existing dispute, therefore, we are of the considered opinion that the impugned order dismissing the application filed under Section 9 is totally non-speaking and unreasoned. In such circumstances, we have no alternative but to set aside the impugned order and remand the matter back to the Tribunal.
Consequently, the present appeal is allowed and the impugned order is hereby set aside. The main application filed under Section 9 is restored. The matter is remanded back to the Tribunal to decide it afresh after taking into consideration the entire case set up by both the parties, evidence led by them and by passing a speaking order.
The parties are directed to appear before the Tribunal on 20.06.2025.
It is made clear that we have not made any observation on the merits of the case while setting aside the impugned order and remanding the case back to the Tribunal. All the issues involved in the application have been kept open. The parties shall bear their own costs.
IA’s, if any pending, are hereby closed.