A Section 9 petition must not be dismissed by a cryptic order; the Adjudicating Authority must provide a reasoned order, especially when pre-existing dispute is alleged and key documents are missing.

JUDGMENT

(Hybrid Mode)

[Per: Justice Mohd. Faiz Alam Khan, Member (Judicial)]

The instant appeal has been preferred by the appellant being aggrieved by the impugned order dated 08.11.2024, passed by the Ld. National Company Law Tribunal, Ahmedabad Bench (Adjudicating Authority) passed in CP (IB) 252 of 2023 under Section 9 of the Insolvency and Bankruptcy Code, 2016 (Code) whereby the petition filed by the appellant has been rejected.

2. Brief facts giving rise to this appeal are that appellant/operational creditor and CD entered into business terms with each other in January, 2022. The CD is a Pvt. Ltd. Company engaged in the trading business and having its registered office at the residential premises of the Director of the CD. The CD is not having any manufacturing facility and all the transactions between the appellant and CD were on ‘Bill to Ship Basis’ i.e. on any order, goods were delivered directly to the customers of the CD under his instructions.

3. The appellant/ operational creditor supplied goods on various dates to the CD and raised various invoices from 13.12.2022 to 18.12.2022 against the purchases made by the CD amounting to Rs. 17,732,898/- however these invoices were not paid and a default had occurred.

4. It is further reflected that the payment of the invoice was required to be made by the CD as per the credit terms stated in the invoice and the invoice was due after 30 days of its issuance.

5. It is also reflected that when the amount of the invoices was not paid a notice under Section 8 of the Code was issued by the appellant to the CD on 17.08.2023 via email as well as through registered post which was received by the CD on 21.08.2023, and the demand of Rs. 17,732,898/- along with interest of Rs. 1,867,637/- was made by delivering the aforesaid notice. The reply to this notice was sent by the CD on 29.08.2023, raising certain pre-existing disputes.

6. It is also reflected that the appellant/operational creditor has filed petition under Section 9 of the Code which has been dismissed by the Ld. Adjudicating Authority while passing the impugned order.

7. Ld. Counsel for the appellant submits that the Ld. Adjudicating Authority has committed manifest illegality in rejecting the petition filed by the appellant by passing a cryptic/unreasoned order.

8. It is further submitted that perverse findings have been recorded by the Ld. Adjudicating Authority in the impugned judgment with regard to issuance of credit notes by the CD while no credit note has been issued by the CD on the appellant and instead some debit notes were raised by one of the customer of the CD on the CD and thus no credit/debit has been raised by the CD on the appellant, thus the finding of the Ld. Adjudicating Authority in this regard is against the factual matrix.

9. It is further submitted that the transactions between the CD and the appellant are of the period from 17.01.2022 to 18.12.2022 whereas the debit note of Reliable Industries is for Invoice pertaining to 31.03.2021 and debit note dated 22.08.2023 has been issued by Hiltop Highrise Pvt. Ltd. pertaining to discount on oil purchase for the period from April 2023 to May 2023, after the date of issuance of notice by the appellant under Section 8 of the Code.

10. It is further submitted that there is no communication of any dispute on 01.11.2022 and in fact no dispute has been raised with respect to any specific invoices and the first communication in this regard has been received by the appellant