AI Structured Summary
Not yet generated for this judgment
Judgment
O R D E R
08.01.2024 Heard Learned Counsel for the parties. This appeal has been filed against the order dated 20.10.2023 passed by Adjudicating Authority rejecting Section 9 Application filed by the Appellant on the ground that there was pre-existing dispute. There was a contract between the parties regarding polishing of pulses. The Appellant was engaged in the business of processing/polishing and packaging of raw materials such as Tur Dal, Chana Dal, Moong Dal etc. The goods were given by the appellant for which he has raised invoices and claimed amount of Rs.9,09,693/- which is due from the aforesaid invoices.
The contract between the parties was cancelled / terminated by the Corporate Debtor on 25.05.2019. The demand notice was issued by the Operational Creditor on 11.12.2019, which was also replied by the Corporate Debtor on 18.12.2019 denying the liability. Reply to Section 9 was also filed opposing the claim of the Appellant. Adjudicating Authority dismissed the application holding that there was pre-existing dispute.
Learned Counsel for the Appellant challenging the order contends that the dispute raised was moonshine dispute since they have not raised a claim as per contract.
We have considered submission of Counsel for the Appellant and perused the record in para 6 of the order, where Adjudicating Authority has returned following findings:
“…..6. A perusal of the record reveals that the Petition has been filed on 06th January, 2020. There are two invoices i.e. Invoice No.02 dated 26/04/2019 of INR 6,87,038/- and Invoice No.03 dated 09/05/2019 of INR 2,22,655/- total amounting to Rs.9,09,693/- are outstanding and remaining unpaid. The Corporate Debtor in its detailed reply to the Demand Notice dated 18.12.2019 as well as in its Affidavit-in Reply has disputed the liability and asserted the existence of dispute between the Operational Creditor and the Corporate Debtor in respect of the claim made in the aforesaid demand notice. The Corporate Debtor through its Notice dated 25th May, 2019 to the Operational Creditor for termination of Third-Party Processing Contract had stated in Para 5 as follows:
“My clients state that as per above stated contractual agreement dated 25.12.2018, your job requirements were conversion/processing of raw material i.e. Tur, Chana and Moong supplied by my clients into Finished Goods with agreed yield rate and also packing the said finished goods. However, my clients have observed that you have not fulfilled these responsibility satisfactorily on account of adverse differential in the yield rate/recovery stated in the contract and therefore, my clients do not wish to continue the aforesaid contract.”
In the said notice, the Corporate Debtor had also asked the Operational Creditor to compensate for the differential in yield rate for the conversion carried out till date and in case of failure to comply with the above, the Corporate Debtor had reserved its right to levy penalty on the Operational Creditor.”
When the contract was cancelled the dispute between the parties was very much there at that time. In the notice, cancelling the contract Corporate Debtor had reserved its right to levy penalty on the Operational Creditor. The outstanding was noted, in the order terminating the contract and it was also noted that there is a differential in yield rate. The demand notice was also replied refuting the claim. In the facts of the case, there was pre-existing dispute between the parties and Adjudicating Authority did not commit any error in rejecting Section 9 application. However, it shall be open for the appellant to take remedy under the contract with regard to his dues in accordance with law.
With these observations, appeal is dismissed.