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Judgment
[Per; Ms. Shreesha Merla, Member (Technical)]:
Aggrieved by the ‘Order’ dated 05.01.2023 passed by the Learned ‘Adjudicating Authority’ (National Company Law Tribunal, Hyderabad Bench – I) in CP (IB) No.289/9/HDB/2022, whereby the ‘Adjudicating Authority’ has admitted the ‘Application’ filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as ‘The Code’), the Suspended Director of the ‘Corporate Debtor’ preferred this Appeal. The ‘Adjudicating Authority’ while admitting the Section 9 ‘Application’, had observed as follows:
“11.The operational creditor got issued legal notice dated 28.06.2022 which has been received by the corporate debtor. The corporate debtor had sent reply dated 12.07.2022 raising certain contentious pleas.
12.We have carefully examined the record, there is no denial of entering into CFA Agreement dated 22.12.2020 between the parties and it's termination after giving due notice. The deposit of Rs.2,00,00,000/-by the operational creditor in terms of the CFA Agreement is not in dispute. Invoices raised by the operational creditor as referred above are not in dispute. No payment has been made by the corporate debtor. No dispute is contemplated under Section 8(2) of I&B Code has been raised.
13.Therefore, we are fully satisfied that the Operational debt of sum over one crore was due and payable by the corporate debtor stands established and as no material has been placed before us by the corporate debtor discharging the debt, we hold that both existence of a operational debt and its default by the corporate debtor has been established. The point is answered accordingly.”
It is the case of the Appellant that the ‘Corporate Debtor’ executed an ‘Agreement’ with the Respondent/‘Operational Creditor’ on 22.12.2020, wherein the ‘Corporate Debtor’ appointed the Respondent as a Carrying & Forwarding Agent (‘C&F Agent’) for the purpose of ‘sale of products’ of the ‘Corporate Debtor’ with effect from 18.12.2020 till 31.12.2023. It is submitted by the Learned Counsel for the Appellant that without availing the remedy available in the ‘C&F Agreement’, the ‘Operational Creditor’ issued a ‘Payment Notice’ dated 28.06.2022 raising false allegations, which was replied to by the ‘Corporate Debtor’ on 12.07.2022. Vide email dated 01.02.2021, the ‘Corporate Debtor’ had requested the ‘Operational Creditor’, to dispatch the inventory lying in the warehouse of the ‘Operational Creditor’ based in Mumbai, but there was no response. Despite repeated requests from the ‘Corporate Debtor’ to vacate the warehouse of the Respondent, the ‘Operational Creditor’ kept using the same and making frivolous demands on the ‘Corporate Debtor’. Clause 32 of the ‘Agreement’ mentions ‘Arbitration Clause’ and it is the case of the Appellant that instead of resolving the dispute, the Respondent filed this Section 9 ‘Application’.
It is submitted that vide ‘Order’ dated 13.09.2022, the ‘Corporate Debtor’, was directed to serve a Petition of a copy within 3 days, and the matter was listed on 28.10.2022. It is submitted that on 30.09.2022, at 10:45AM, the ‘Corporate Debtor’ received an email from the ‘Adjudicating Authority’ intimating the date of listing of the Petition on the very same date. Therefore, it was not possible for the ‘Corporate Debtor’ to appear on the very same day. Therefore, on 28.10.2022, the ‘Adjudicating Authority’ once again directed the ‘Operational Creditor’ to share a copy of the Petition within 3 days as no ‘Proof of Service’, has been filed. Subsequently, on 21.11.2022, the ‘Adjudicating Authority’ while closing the rights of the ‘Corporate Debtor’ inter alia, recorded as follows:
“Counsel for the Operational Creditor filed a memo stating that copy of the Petition and the supporting documents has been sent through speed post and the track record of the same shows that the same has been served on 02.11.2022. Despite service of the copy, counter not filed thus, the Corporate Debtor has been taken time since 28.10.2022.”
It is contended by the Learned Counsel for the Appellant that the copy of the Petition was received only on 02.11.2022 and was completely in dark about any correspondence whatsoever and was not able to reply within time. It was only on 05.12.2022 that the ‘Adjudicating Authority’ has reserved the Order ‘Ex Parte’. It is the case of the Appellant that the ‘Corporate Debtor’ was not aware that the matter was listed on 05.12.2022 as the Counsel had not intimated about the listing of the matter on the said date. Therefore, the only course left with the ‘Corporate Debtor’ was to seek recalling of the ‘Order’ dated 21.11.2022 and 05.12.2022.
It is submitted that on 11.12.2022 immediately after passing of the ‘Order’ on 05.12.2022, the ‘Corporate Debtor’ preferred an ‘Application’ under Section 60(5) seeking the ‘Recall Order’ dated 21.11.2022 and 05.12.2022 thereafter the ‘Phone Number’ and the ‘Email ID’ in the e-Filing Portal was changed. Subsequently, the ‘Corporate Debtor’ received an email that the matter was listed ‘For Hearing’ on 22.12.2022 but the matter was not there in the ‘Cause List’. It is argued that the ‘Impugned Order’ failed to consider the issue of whether ‘services’ were actually rendered in the absence of any acknowledgement on behalf of the ‘Corporate Debtor’ in the alleged documents and also that the pending invoices alleged to be raised by the ‘Operational Creditor’ has never been received by the ‘Corporate Debtor’.
At the outset, it is necessary to reproduce the ‘Orders’ dated 28.10.2022 and 21.11.2022 and examined whether the Appellants/‘Corporate Debtor’ was given a fair opportunity to file a ‘Counter’:
“No representation for the Operational Creditor. Proof of service of notice not filed. However, Mr. Shreyas Hingmire Advocate present and submits that the Corporate Debtor has received an e-mail informing about the listing of the matter today. Hence, he appeared for the Corporate Debtor. On request we grant 3 days’ time to the Counsel to file Vakalat if any, and 2 weeks for counter. Meanwhile, the Operational Creditor is directed to share the copy of the petition along with the enclosures if any on Corporate Debtor/Counsel within 3 days from today forthwith and file compliance within 3 days. Matter adjourned to 21.11.2022.”
“Ld. Counsel Mr. Asad Hussain for the Operational Creditor present. Ld. Counsel Mr. Shreyas Hingmire for the Corporate Debtor present. Corporate Debtor had already appeared. Counsel for the Operational Creditor filed a memo stating that copy of the Petition and the supporting documents has been sent through speed post and the rack record of the same shows that the same has been served on 02.11.2022. Despite service of the copy, counter not filed thus, the Corporate Debtor has been taken time since 28.10.2022. Therefore, opportunity to file counter stands closed. List the matter for hearing on 05.12.2022.”
From the aforenoted ‘Orders’, it is clear that the ‘Corporate Debtor’ had appeared on both the dates and that the copy of the Petition and the ‘supporting documents’ were served on them on 02.11.2022, hence the ‘Adjudicating Authority’ had closed the opportunity to file the ‘Counter’ vide ‘Order’ dated 21.11.2022; the matter was posted ‘For Hearing’ on 05.12.2022 and thereafter on 05.01.2023, the CIRP was initiated. When the matter came up ‘For Hearing’ on 05.12.2022, the ‘Corporate Debtor’ could have been present and submitted his arguments. Though, his right to file the ‘Counter’ was closed, he was not set ‘Ex Parte’ as on the date 21.11.2022 and therefore he could have appeared on 05.12.2022 when the matter was posted ‘For Final Hearing’ and having been present as on 11.12.2022, the Counsel was very much aware that the matter was posted ‘For Hearing’ on 05.12.2022. Though, the ‘Adjudicating Authority’ does not have the ‘Power of Review’ it can, based on the facts and circumstances of the case, `Recall the ‘Order’. In the instant case, this `Tribunal’, sitting in `Appeal’, does not find any `tangible’ / `substantial’ grounds to interfere with the ‘impugned order’.
At the cost of repetition, this `Tribunal’, pertinently observes that having been present, on 21.11.2022, and being aware of the candid fact that the matter was posted, on 05.12.2022, the Learned Counsel for the ‘Corporate Debtor’, ought to have been present and submitted his argument.
Further, the Appellant, has challenged the ‘Admission Order’, dated 05.01.2023 on merits, on the ground that there was an ‘Arbitration Clause’, in the ‘C & F Agreement’, and that the `Respondent’, ought to have invoked this Clause. There is no embargo on the ‘Operational Creditor’, to file a Section 9 Petition, under I & B Code, 2016, even if there is an ‘Arbitration Clause’, in the ‘Agreement’. The scope and objective of the Code is ‘Resolution’, and not a ‘Recovery Mode / Forum’. In the instant case, the ‘Adjudicating Authority’, based on the material on record, had arrived at a conclusion that there were ‘recurring defaults’ on behalf of the ‘Corporate Debtor’ and that the ‘Operational Creditor’, has requested for full and final payment of the outstanding dues. The ‘Corporate Debtor’ vide Reply dated 01.02.2022, requested for dispatch of the inventory stocked in the warehouse in Mumbai. The ‘Operational Creditor’ in reply to the email, sent an email dated 02.02.2022, highlighting the `outstanding dues’, along with the ‘Ledger’ attached. But, there was no response and the ‘Operational Creditor’ sent one more email dated 29.03.2022, demanding the outstanding total dues of Rs.3,12,81,028/- and therefore issued a ‘Legal Notice’ dated 28.06.2022, for which, the ‘Corporate Debtor’ sent a ‘Reply’ dated 12.07.2022, but the amounts were not paid.
For all the aforenoted reasons and discussions, this `Tribunal’, does not find any `illegality’ or `infirmity’, in the Order dated 05.01.2023, passed by the ‘Adjudicating Authority’ (`National Company Law Tribunal’, Hyderabad Bench – I), in CP (IB) No.289/9/HDB/2022, and this ‘Appeal’ is dismissed accordingly. No order as to costs. The connected pending `Interlocutory Applications’, if any, are closed.