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Judgment
06.09.2024: I.A. No. 5951 of 2024
The sufficient cause has been shown for condonation of refiling delay of 85 days’. Delay condoned.
CA (AT) (Insolvency) No. 1634 of 2024
Heard counsel for the appellant.
This appeal has been filed against the order dated 23.04.2024 by which Section 9 application filed by the Operational Creditor has been admitted. Under an agreement which Operational Creditor and the corporate debtor an EMD of Rs.6,17,97,000/- was given to the corporate debtor which was 30% of an amount for the material which was to be purchased, the corporate debtor could not supply the goods and returned some part of amount which was adjusted when the balance amount was not returned application was filed under Section 9.
Ld. Counsel for the appellant challenging the order submits that an amount was an EMD amount which shall not be an operational debt.
We have considered the submissions of the counsel for the appellant and perused the records. From the facts which has been noticed by the Adjudicating Authority it is clear that the supply of the coal was to be made after the receipt of the EMD of Rs.6,17,97,000/-. The submissions of the Operational Creditor have been noticed in paragraph 3 to 6 which are as follows:-
“The submissions by the Operational Creditor:-
The Operational creditor approached the corporate Debtor for the purchase of Coal from the Corporate Debtor and had executed the ‘Coal Sale and Purchase Agreement' dated 09.10.2019, bearing no. SRIPL/REFINE/2019-2020/002. Thereafter, the operational creditor awarded a purchase order dated 12.10.2019, bearing no. RAPL/SR/19-20/002 for 61,000 MT of Indonesian steam coal for a total amount of Rs. 20,57,77,400/- in favour of the Corporate Debtor.
According to the coal Sale and Purchase Agreement dated 09.10.2019, the Operational Creditor was required to pay an Earnest Money Deposit (EMD) equivalent to 30% of the contract price within 90 days of the Agreement i.e. by 07.01.2020. Thereafter, Rs.6,17,97,000/- to the Operational Creditor paid à total EMD of Rs.6,17,97,000/- to the Corporate Debtor by 02.01.2020. However, after receiving the EMD from the Operational Creditor the Corporate Debtor vide letter dated 06.01.2020 informed the Operational Creditor that they would not be able to supply the coal to the Operational Creditor due to the COVID-19 pandemic and its problems in the international market.
Further, the Corporate Debtor vide letter dated 06.01.2020 acknowledged the receipt of the entire EMD of Rs. 6,17,97,000|-, and. undertook to repay the EMD within 60 days i.e. on or before 06.03.2020, after adjusting the prior balance receivable from the Operational Creditor.
However, the Corporate Debtor had only refunded a sum of Rs.2,31,73,625/- and had adjusted a prior balance of Rs.1,37,73,693.04/- receivable from the Operational Creditor towards the supply of coal by the Corporate Debtor. The balance EMD of Rs. 2,48,49,682/- remains outstanding with the Corporate Debtor and the Corporate Debtor agreed to refund the balance EMD by 06.03.2020. However, failed to make the payment and thus, committed a default on 06.03.2020.”
Admittedly, the goods were not supplied and part of the amount was returned and part was adjusted the balance amount was clearly an operational debt which arose in a transaction between the parties with regard to contract of supply of goods.
We do not find any error in the order of Adjudicating Authority in admitting Section 9 application. There is no merit in the appeal.
Hence, appeal is dismissed.