A Section 9 application under IBC is not maintainable if there are existing pre-existing disputes pertaining to the operational debt, preventing the Adjudicating Authority from initiating the Corporate Insolvency Resolution Process.

ORDER

Per: Bidisha Banerjee, Member (Judicial)

1. The Court congregated through a hybrid mode

2. The Ld. Counsels of both the parties were heard.

3. The instant application has been filed by Skyquad Electronics & Appliances Private Limited, hereinafter referred to as the ‘Applicant’ under section 9 of the Insolvency and Bankruptcy Code, for brevity ‘I&B Code’ to initiate Corporate Insolvency Resolution Process in respect of Everready Industries India Limited, in short ‘EIIL’.

4. Facts in a nutshell

4.1 In the year 2016, the Corporate Debtor approached the Operational Creditor through its Manager, Mr. Suddajit Sinha, for the manufacture and supply of LED Bulbs and Batons, to be produced by the Operational Creditor, for its brand Eveready'.

4.2 After such due diligence, prior to entering into the Agreement dated November 1, 2017, the Corporate Debtor had placed order for trial production from March 19, 2016 to October 31, 2017.

4.3 In view to accommodate the production volume of the Corporate Debtor, the Operational Creditor had invested in Surface Mount Technology (SMT). The Operational Creditor had also incurred an expenditure of Rs 1,07,68,414.71 [approximately) in training its personnels since 2016-17 to maintain high quality standards.

4.4 The OC between March 19, 2016 to August 11, 2021 supplied goods and raised invoices against such supply to the CD. For the sake of production for the brand Eveready', the Operational Creditor had purchased components from overseas origin under the instruction of the Corporate Debtor as per Clause 4 of the Agreement which were supplied by the CD through its associate companies namely Ever-Spark Hong Kong Private Limited and KLITE International Trade Company Limited.

4.5 On August 11, 2021 the Corporate Debtor had abruptly stopped placing orders on the Operational Creditor.

4.6 The Corporate Debtor herein has issued a purported demand notice under Form 3 against the Operational Creditor.

4.7 The Corporate Debtor herein had filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 on December, 2021. The Operational Creditor herein through its Advocate had issued a notice dated August 1, 2023 under section 8 of the . The Corporate Debtor has emailed a purported reply to the demand notice issued by the Operational Creditor making frivolous claims all of which are untenable in law and facts. Hence, the instant Application.

5. Submissions of the Ld. Counsel on behalf of the Applicant

5.1 It is submitted that the Corporate Debtor hatched a conspiracy along with the Chief Production Head one Mr. Praveen Rawle, and M/s. Vidatha Plastics India Private Limited who were the suppliers of the Batons used in the manufacturing of LED Lighting and overnight poached the entire skilled technicians employed at the manufacturing unit of the Operational Creditor.

5.2 The Operational Creditor vigilantly issued Notice through its counsel on 06.09.2021 demanding a consolidated amount of Rs. 50,00,00,000/-on the Corporate Debtor for damages, and recovery of balances due, and in continuation lodged a criminal complaint before the Commissioner of Police.

5.3 That the Corporate Debtor replied on 24.09.2021 threatening to take civil and criminal actions unless the Notice dated 06.09.2021 is withdrawn. (Rejoinder-Annexure-'L'- Pages 302-310) The subsequent action of the Corporate Debtor filing the Section 9 Application is a clear evidence of the actual 'counter-blast'.

5.4 In retaliation to the Notice dated 06.09.2021 issued by the Operational Creditor, the Corporate Debtor issued a concocted Demand Notice on 17.11.2021 self-styled itself as the 'corporate debtor' and initiated the Section 9 proceedings before the NCLT, Hyderabad in CP.(IB)18/9/HDB/2022 claiming an amount of R