Jain Irrigation Systems Limited vs EID Parry (India) Limited

"The amount payable to JISL by the Bank/Factory is arrived at after deducting the subsidy component from the project cost".

a)

EID will arrange to pay Farmer's contribution of the invoice within 7 days after supply of drip components. In case of Bank loan is being arranged by EID, bank shall pay 90% of farmers contribution and balance 10% after submission of final invoice and verification by the concerned cane and bank officials.

b)

JISL to directly follow up with the concerned office of the Government towards the collection of drip subsidy under the TANHODA scheme. The company will not be responsible for any delay in the disbursement of subsidy by the Government. If a beneficiary for any reason whatsoever, does not receive the subsidy EID shall arrange to deduct the same from the cane proceeds of the concerned farmer and pay JISL after the first harvest or after 12 months whichever is earlier.

c)

EID shall stand guarantee for the above payment terms

d)

All payments should be made by demand drafts / at par cheques to JISL payable at Coimbatore.

Pre-Existing Dispute

24.

In the light of the above facts, it is evident that there exists a plausible and genuine dispute raised by the Respondent at a prior point in time to the issuance of the Notice in Form - 3 by the Applicant. The Respondent has clearly informed the Applicant vide its Mail dt. 31.03.2016 that, in the absence of relevant documentation including consent letters from the farmers, no payments could be withheld from the farmer's cane proceeds and paid to the Applicant. Despite being called upon to produce such documents, the Applicant has never come forward with the same. The Applicant's subsequent Letters in the years 2017 and 2020 do not contain any material particulars or details about the so called debts due from the Respondent. They do not even mention the names of the farmers or even the work order references under the Agreement. Thus, it is clear that, the Applicant has no documents to substantiate its claims as against the Respondent. A dispute having been raised by the Respondent, that is plausible and genuine and pre-existing, the present Application ought to be dismissed as such.

25.

It is further pertinent to point out that, the Applicant is well aware of the above facts, but has chosen to suppress these material particulars from this Hon'ble Tribunal. This itself establishes that the present Application is mala fide and devoid of merits. The Applicant, having failed to establish its claims is now seeking to mislead this Hon'ble Tribunal into initiating CIRP as against the Respondent and utilising the provisions of the Code as a threat in an attempt to snatch some undue gains. The present Application is thus an abuse of process of law and ought to be dismissed with exemplary costs.

Limitation

26.

The Agreement itself relates to the period 2010-11. Under Clause C(4), if any lands were left uncovered, the same was to be done in the next plantation season 2011-12. The activity of procuring drip irrigation systems for farmers was stopped by the Respondent in the year 2013 itself.

27.

The Respondent vehemently denies that any drip irrigation systems were installed or supplied by the Applicant under the provisions of the Agreement post the aforesaid dates. No proof to the contrary has been furnished by the Applicant, whereas the Applicant's own documents bear out the Respondent contention in this regard.

28.

The Applicant has stated in his Application that the date of default would be "For invoice raised during an year is deemed to be the year and date with further interest from date of invoice...". It is further alleged that the account is a "running account". All of these allegations are denied. Even going by the Applicant's own contentions, taking the date of default in respect of a particular invoice to be the year in which it was issued, the latest invoice filed by the Applicant before this Tribunal is of the year 2012. Therefore, the period of limitation has long since expired.

29.

The Applicant further seeks to rely on a payment made by the Respondent in the year 2018 claiming that it is the "last payment made on 09.03.2018 by way of online transfer dated 09.03.2018 for Rs.10,04,934/- towards drip irrigation for season." The said contention is also denied as false.

30.

The said payment was made by the Respondent's Bio Products division and relates to a totally unrelated transaction arising out of a separate Service Order No. 80565104 dated 12.04.2017 (Annexure-4) for the purpose of installation of Drip irrigation system in neem plantations at the Respondent's Pattamadai Farm, Cheranmahadevi Taluk, Tirunelveli District. The said amount was the last tranche of payment under the said Purchase Order, being 25% of its total value. Thus, no reliance can be placed on the same. The present agreement dated 21-09- 2010 relates to designing and supplying of drip irrigation and fertigation system for sugarcane farmers located in the command area of the Respondents' sugar factories at Pudukkottai, Pugalur, Nelikkuppam, Pettavathalaiti in Tamilnadu and in Puducherry. It is further pertinent to note that, the Annexure II(4) to the present Applications, which is claimed to be a Ledger of the Respondent's Account in the Applicant's books does not reflect this payment. This fact in itself exposes the claims of the Applicant to be totally bogus and rooted in falsehood.

31.

At any rate, even assuming without admitting that, the said payment is a part payment, the same does not extend or revive the period of limitation which has long expired.

32.

The Letter dt. 26.05.2014 in Annexure No. II(8) states that the dues of Rs. 2.89 Crores has been overdue even as on 2009-10 itself, Thus, the Application has evidently been filed alleging default of dues that are more than 12 years old and is thus hopelessly time barred.

33.

It is submitted that, the latest date mentioned under the Invoices, Work Orders and Material Lists filed by the Applicant along with the present Application is the Invoice dt. 13.03.2012. The payment terms on the said Invoice are not clear and some portion of the same is not visible. It is stated that, "Payment within 60 days from ________" and the rest is not available in the document. Reckoned from the date of the Invoice itself, payment ought to have been made on or before 12.05.2012. The period of limitation has therefore long since expired, most certainly in respect of the amount allegedly due under the Invoice and also in respect of the time period for presenting the present Petition under the Code, as per the law laid down by the Hon'ble Supreme Court.

34.

The claim in the present Application of a principal amount of Rs. 726.71 Lakhs and Interest of Rs.2046.82 Lakhs has been mentioned for the first time only in the Applicant's Notice in Form 3 issued in the Month of September, 2020. The said amounts have hitherto never been claimed or demanded from the Respondent. At no prior point in time has the said amount been claimed from the Respondent. This itself shows that the same is barred by limitation.

35.

Thus, it is submitted that, the so-called operational debt and the present Application are time barred, being beyond the prescribed period of limitation.

There is no "Operational Debt"; The Applicant has failed to furnish any documentary evidence to support its case in the present Application

36.

It is submitted that the documents furnished along with the Application, replete with false assertions, inaccuracies and contradictions. It is apparent that, the said documents are bogus and fabricated solely for the purpose of propping up the present non-existent and fictitious claim as against the Respondent in the present proceedings. The entire Application is denied as being mala fide and an abuse of process of law.

a. The Applicant has failed to file a complete copy of the Agreement dated 21.09.2010, Crucially, the Annexures to the Agreement which provides the price list for the material supplied under the Agreement have conveniently not been filed.

b. The Applicant has filed certain letters, Invoices, Bills of Quantities, purportedly for work done under the Agreement. The said documents are indecipherable and are denied as being false and self-serving. In any event, the documents relate only to a few lakhs worth of work allegedly done by the Applicant, and not to the humungous "operational debt" of Rs. 27 Crores in the present Application. Furthermore, the latest such Invoice filed by the Applicant is dated 13.03.2012 and stipulates that payment is to be made within 60 days. Thus, any amounts claimed under such documents of almost a decade ago are barred by limitation

c. According to the Applicant, it has sent letters dt. 26.05.2014, 26.11.2014, 22.05.2017 demanding payment of balance dues from the Respondent. It is submitted that, the Applicant has no record of ever receiving any letters dt. 26.05.2014 and 26.11.2014 From the Applicant and the Applicant is put to strict proof of their having been issued and delivered to the Respondent.

d. It is pertinent to note that, in the Letter dt. 26.05.2014, the Applicant has stated that an amount of Rs. 2.89 Crores has been overdue from 2009-10 onwards. This clearly shows that the "Operational Debt" claimed in the present Application is barred by limitation.

e. In the letter dt. 22.05.2017, the Applicant itself has once again clearly accepted and admitted that the farmer's share is to be arranged either through the bank or from out of the cane proceeds. Thus, even according to the Applicant, there is no "operational debt" payable by the Respondent and that the Respondent is only supposed to, subject to proper documentation being furnished by the Applicant, deduct the dues of farmers from out of the farmer's cane proceeds and pay the same to the Applicant. In the said Letter, the Applicant has not called upon the Respondent to make any payments and has not even quantified the same. There are no annexures or any details of the farmers, ryot numbers, work order numbers, acceptance certificates, invoices, material lists, etc. enclosed along with the said Letter. The said Letter is absolutely devoid of any material particulars relating to any dues allegedly payable by the Respondent. It is therefore evident that, the so called "operational debt" claimed by the Applicant is totally fictitious and non-existent.

f. The Applicant then claims to have sent Letters in the year 2020. The Respondent has no record of having received the Letters dt. 02.07.2020 purportedly issued by the Applicant to the Respondent's factories at Nellikuppam, Pettavaithalai, Ariyur, Pudukottai and Pugalur and the same are denied.

g. It is submitted that, Annexure No. II(4) to the present Application is denied in full as been rooted in falsehood, entirely fabricated, fictitious and mischievous. The said document, described as a "Ledger" showing the alleged debt due from the Respondent, is a self-serving document fabricated by the Applicant solely for the purposes of the present Application. The said documents, though accompanied by a certificate from an Auditor in Annexure No. II(5), is not reliable and highly misleading.

h. The said document suffers from several defects that are ex-facie apparent:

i.

The document is a unilateral document, which has not been approved or certified in any manner by the Respondent.

ii.

An unintelligible copy of the said Annexure claims to have been enclosed along with the Notice in Form-3. However, since the copy enclosed with the notice was unreadable, there is no way of confirming that the same document has been filed before this Hon’ble Tribunal. At any rate, this document has come to light for the first time only before this Hon’ble Tribunal.

iii.

None of the entries in the said document are borne out or substantiated by any documents. The so called “Ledger” and the entries therein do not by any stretch of the imagination establish that there are any amounts payable by the Respondent to the Applicant. The entries are not corroborated by supporting documents in the form of Work Orders, Material Lists, Acceptance Certificates etc., all of which are essential under the Agreement dt. 21.09.2010, to substantiate any transactions thereinunder.

iv.

The details provided in the “Ledger” are themselves scanty and skeletal, with no way of deciphering what a particular entry relates to. Strangely, the entries are not correlated to any Work Order No. or any Invoice No. as is the normal practise for a Ledger, especially running accounts. The last column is captioned “narration” and contains a plethora of entries which do not shed any light or substantiate any claims as against the Respondent.

V. The entries themselves are, arbitrary and unreliable, inasmuch as they are devoid of all material particulars linking them to any plausible transaction involving the Respondent. Merely mentioning the Respondent's name against a debit entry, without providing any of the back papers and supporting documents for the said entry is not sufficient to establish the Applicant's claim before this Hon'ble Tribunal;

"The accounts are only in reference to the Corporate Debtor. Farmers' names reflect in terms of work orders issued by the Corporate Debtor and invoices, delivery and installation in the particular farmer's place. As and when the payment is made by the Corporate Debtor, they refer to the invoice and based on the same, the farmers names are captured in the accounts".

"40.

It is clear, 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."