A genuine pre-existing dispute must exist prior to the service of a demand notice for IBC proceedings to be initiated.

JUDGMENT

(Hybrid Mode)

[Per: Arun Baroka, Member (Technical)]

This Appeal has been filed by the Appellant Company, under Section 61 (1) of the Insolvency and Bankruptcy Code , 2016 ("the Code") against Order dated 6th July 2023 passed by the Ld. National Company Law Tribunal, Chandigarh Bench (hereinafter referred to as Adjudicating Authority), whereby the Ld. Adjudicating Authority has dismissed the application of the Appellant under Section 9 of the Code ("Impugned Order").

Factual Background

2. The dispute centers around a sales contract formed on March 20, 2017, between Hi Exports (Respondent) and Durst Phototechnik (Supplier) for the purchase of an industrial inkjet printer (Alpha 190-D). The agreed timeline for delivery was April 15, 2017, but the machine arrived significantly later on August 28, 2017. Upon receiving the machine, the Respondent discovered critical performance issues and defects that significantly hampered its functionality.

Appellant’s Case:

3. Background and Initial Transaction:

3.1. The debt in question originates from a transaction involving the purchase of a disperse system digital textile-printer with 32ph with standard accessories (hereinafter referred to as the "Machine") by the Corporate Debtor from Durst Phototechnik AG (hereinafter referred to as the "Supplier").

3.2. In the course of business, the Corporate Debtor entered into a Sales Contract dated 20th March 2017 with the Supplier, which detailed the terms of sale of the Machine to the Corporate Debtor.

3.3. Upon executing the Sales Contract, the Supplier issued proforma invoice no. 90006348 dated 20 March 2017 for the sum of Euro 535,780.00, which was duly accepted by the Corporate Debtor.

3.4. As per the agreed terms, the Corporate Debtor made a down payment of Euro 135,780.00 and issued six promissory notes dated 11th May 2017 for the payment of Euro 421,000.00. This amount included Euro 400,000.00 for the remainder of the cost of the Machine and Euro 21,000.00 towards a 3% per annum special interest rate for financing the Machine over three years in six half-yearly instalments with the following maturity dates:

4. Issuance of Invoice and Delivery

4.1. In the course of the transaction, the Supplier issued invoice no. 21706064 dated 15th May 2017 for the total sum of Euro 535,780.00, adjusting for the advance payment of Euro 135,780.00 and agreeing on payment terms via the aforementioned promissory notes.

4.2. The Supplier shipped the Machine to the Corporate Debtor via Bill of Lading No. 705EMA0446-EMA-170421 dated 18.05.2017. The Corporate Debtor accepted delivery of the Machine without protest or demur and issued an Acceptance Certificate dated 28th August 2017, acknowledging receipt of the Machine without objection and confirming that the Supplier’s contractual obligations were duly executed.

5. Assignment of Obligations and non-payment

5.1. Subsequently, the Supplier assigned all its contractual obligations and endorsed the promissory notes in favour of the Operational Creditor (UniCredit S.P.A.) via the Cash Discount Agreement dated 23^rd August 2017. 5.2. The Corporate Debtor was delinquent in making payments and released payment against the promissory note with a maturity date of 18th November 2017 for Euro 72,666.67 on 20^th December 2017 t