Girraj Bansal vs Rakesh Kumar Goyal, Proprietor Of Mohini Food Product & Anr.

Per Justice Sharad Kumar Sharma Member (Judicial)

Before us is the impugned order dated 11.09.2025, which is under an appellate scrutiny, that was rendered by the Ld. NCLT, Indore, in CP IB No. 86/2023, which had an effect of admission of the Section 9 application preferred by the Respondent.

Primarily, the Ld. Counsel for the Appellant had argued this appeal from the perspective that, the admission of the Section 9 application, was based on the viewpoint that, out of the 8 invoices which were made as subject matter of consideration, as a matter of fact no supply of goods was ever made under these invoices, and secondly, that since the e-way bills were not carrying the correct address, it cannot be presumed that, the goods were actually supplied, which occasion the debt and default for attracting Section 9 of the Code.

The facts that could be borne out from the record are that the Appellant had alleged that Respondent No. 1 had been in continuous business transaction of supplying mustard seeds to the Corporate Debtor and in relation to those transactions had raised 8 invoices, between the period from 05.08.2021 to 31.08.2021, and in support thereof, the Appellant had filed the invoices themselves on record. On perusal of the invoices, which had been placed before the Ld. Tribunal, what could be seen is that the invoices do carry the address registered as the address of the Corporate Debtor, but the only distinction or the difference, which has been admitted by the Appellant is that the invoices did not carry the correct PIN Code. It is because of that reason that it is argued by the Ld. Counsel for the Appellant before the Ld. Tribunal that there was a wrong address mentioned in the invoices and, hence, the goods were not supplied. Thus there cannot be a presumptive inference of debt and default, when on its basis the 8 invoices were argued to be doubtful.

The transactions under the aforesaid 8 invoices were carried between the period from 05.08.2021 to 31.08.2021, wherein the default amount was shown to be of Rs. 01,42,46,178/-, was alleged to be payable, along with interest payable on it @ 12% P.A., that is, Rs. 28,58,480/-. According to Part IV of the Section 8 notice that was issued, the date of default was shown to be 20.08.2021, and was determined to be from the date of the first invoice. In accordance with the notice under Section 8, which was issued on 10.05.2023, as per the contents of Part I, the amount shown to be due was above the threshold limit as contemplated under Section 4 of the IBC Code, and in accordance with the date of default that has been expressed therein, the default was disclosed to be as on 20.08.2021. Admittedly, and as per records too the Section 9 application was preferred on 20.07.2023, as against the Corporate Debtor, which was registered as CP (IB No. 86/2023), before the Ld. NCLT. Its during the course of the proceedings, that the Corporate Debtor came out with the case that there was no actual or complete supply made of the goods undertaken to be supplied under the respective invoices. As there was no agreement in writing, nor any agreement was entitling for payment of interest. Another discrepancy, which was pointed out by the Corporate Debtor in his reply was with regard to the e-way bills carrying a wrong address, and hence based on it, a presumption was drawn that there was no supply of the goods at all and, thus, there was no default.

Further, it was argued that in the absence of there being any agreement or any purchase order or any acceptance or acknowledgment, as to whether actually the goods were actually supplied to the Respondent, there could not be said to be any justification to conclude of existence of the debt and default which could have necessitated the initiation of proceedings under Section 9 of the Code. Besides that, the GST returns for August 2021, nowhere it clarifies or has a segregated supply. It is based upon the aforesaid premise that the proceedings were taken, and in the proceedings that were held on 25.04.2025, before Ld NCLT, it had directed the Corporate Debtor to answer the queries pertaining to the TDS deduction and Income Tax Credit on GST and sought an explanation from the Appellant.

What is more important is that the Appellant did file an affidavit in which he explained that the Corporate Debtor had deducted the TDS on purchase, and the Corporate Debtor had also claimed the benefit of input tax credit for GST paid by the Operational Creditor. More importantly, besides that, the ledger account itself mentions an amount due to be paid, that is, Rs. 01,29,33,407/-, as on the date of the application, which was above the threshold limit.

On an overall summary of the documents, these were produced and upon its scrutiny, what could be inferred is that there had been supply made under the invoices, were infact was received by the Appellant, because of the fact that the TDS deductions were shown to have been made against the invoices was evident from the records. Non-supply of goods as against the aforesaid 8 invoices cannot be a theory which would acceptable to us, for the reason being that under normal business prudence, wherein the Appellant it had raised invoices and the goods were not supplied against it, in that eventuality, it was all the more necessary under simple logic the appellant ought to establish that the Appellant did raise a query because of the non-supply of goods, and if it is not done, the presumption would be that the goods under the 8 invoices were supplied, owing to the ledger entries, the TDS deductions, and with regard to the GST returns for August 2021 as against the goods supplied.

What is more important is that the Appellant, very fairly, during the course of the argument, accepted that:-

If we scrutinize the controversy from the perspective of the documents, that were called upon by the Tribunal from the Appellant itself, and from the documents with regard to the assessments made by the Income Tax Department and deductions made therein, it showed that in the reply that was filed by the Appellant, by way of additional documents, as per the books of accounts of the Corporate Debtor, it showed that the total purchase that was made was of Rs. 08,60,22,119.94/-, out of which only a payment of Rs. 7,60,88,711/- had been made by the appellant, and hence, according to the Appellant itself, the outstanding difference was shown to be Rs. 99,33,408.25/-. But, as per the averment in the affidavit and as per the documents in support thereto, a specific question was raised to the appellant as to whether the TDS was deducted by them under Section 194(Q) of the Income Tax Act, of 0.10 per cent on the purchase in question from the Operational Creditor, which was made applicable with effect from 01.07.2021 as per the Circular of the Income Tax Department, being Circular No. 13 of 21.The record shows that the CD had deducted the TDS on the purchases made on or after 01.07.2021, and the TDS deductions as against the total purchase were made and deposited by the Corporate Debtor. Not only that, the buyer, that is, the Corporate Debtor, did raise claim of the input tax credit on the part of the GST as invoiced by the supplier as against the 8 invoices, which are the subject matter of consideration in the instant appeal. In accordance with the documents supplied by the Appellant with the additional documents before the Ld. Tribunal, the 8 invoices forming part of the additional documents, which showed, that as against the first invoice T35, the vendor inventory date is 05.08.2021, and the GST recoverable on the purchase was shown in the credit amount. Similar were the entries for the other invoice T38, T39, T40, T41, T42, T43 and T44. The relevant extracts are given hereunder:

This itself shows that once there was an input tax credit claimed on the part of the GST paid as invoiced by the supplier, all these documents did show that the goods were actually supplied and received by the Appellant, and the minor change in the PIN Code in the invoices for the demand notice will not have any adverse bearing on the proceedings under Section 9 of the IBC Code. Because of the fact that the supply of the goods is accepted by the Appellant, its receipt, once these aspects are established, and because of the fact that the Appellant's defence had been exclusively that there was no supply, ruled out from the documents on record, and it has been ruled out too with regard to as to what effect the address would have because of non-reference of the PIN Code.

On the issue of threshold, when the Tribunal passed an order on 25.04.2025 directing the Appellant to explain the information pertaining to the ledger copy of the supplier of the Operational Creditor bearing in the books of accounts for the aforesaid period of transaction, the Tribunal, based upon the affidavit filed by the Corporate Debtor on 20.06.2025, rightly came to a conclusion that, according to the ledger entries supplied by the Appellant himself, the ledger account, from the books of the Corporate Debtor showed an outstanding amount as on the date of filing of the application was Rs. 1,29,33,407/- as against an amount of Rs. 1,42,46,179/- as stated in the application filed by the Operational Creditor. It is because of that the conclusion, which could be drawn is that, in the circumstances where:-

For the aforesaid reasons, the impugned order does not call for any interference by us in the exercise of our appellate jurisdiction. The appeal would stand rejected, and all pending Interlocutory Applications would stand closed.