Beetel Teletech Ltd vs Arcelia IT Services Pvt. Ltd.
CA (AT) (Ins) 1459 of 2022
Facts:
1.Corporate Debtor and the Operational Creditor had executed a Channel Partner Registration Form wherein both parties had agreed to work on mutually accepted terms and conditions. The Corporate Debtor raised a purchase order on 25.10.2019 pursuant to which the Operational Creditor supplied goods and services and raised an invoice No.RV1927813879 dated 31.12.2019 for which payments remained due.
2.Demand notice under Section 8 of the IBC was issued by the Operational Creditor. The Corporate Debtor did not file any reply to the statutory demand notice. Subsequently the Operational Creditor filed a Section 9 application on 15.12.2021 seeking initiation of CIRP of the Corporate Debtor.
3.NCLT dismissed the application.
Issue: Whether the order passed is correct ?
Arguments:
Appellant:
1.Counsel for the Appellant submitted that as per payment terms followed by the two parties, the payments were to be made by the Corporate Debtor 60 days from the date of invoice. It was further submitted that in terms of payment conditions as laid down at Clause 12.8.2, the Corporate Debtor was liable to pay interest at the rate 18% per annum if payment was not cleared within 60 days.
2It was submitted that though certain payments were received from the Corporate Debtor post this invoice, these payments were adjusted both against invoice No.RV1927813879 and other outstanding invoices. After carrying out these adjustments, the payments still continued to remain outstanding in respect of invoice.
3.It was also added that a cheque issued by the Corporate Debtor also got dishonoured compelling the Appellant to issue a Section 8 demand notice which was allegedly never replied to nor disputed by the Corporate Debtor. It has been further admitted that post issue of demand notice, two cheques of Rs.5 lakhs were issued which were adjusted against other pending invoices.
4.It was further pointed out that in Part IV, the operational debt claimed by the Operational Creditor is confined only to Invoice No. RV1927813879 for an amount of Rs.1,15,11,486/- which included a principal amount of Rs.1,01,80,986 and an interest amount of Rs.13,30,500/- at the rate of 18% per annum as agreed. It was vehemently contended that the Adjudicating Authority erroneously dismissed the Section 9 application on the ground that the threshold limit of Rs.1 crore is not fulfilled.
Decision: NCLAT allowed the appeal.
Rationale:
1.Hon’ble Tribunal noted that A plain reading of Section 10A signifies that no application/ proceedings under Sections 7, 9 and 10 can be initiated for any default in payment which is committed during Section 10A period. Thus, what is essentially barred is initiation of CIRP proceedings when the Corporate Debtor commits any default during the Section 10A period. However, if the default is committed prior to the Section 10A period and continues in the Section 10A period, this statutory provision does not put any bar on the initiation of CIRP proceedings.
2.It held that The present is a case where default has been committed by the Corporate Debtor since 29.02.2020 which is prior to commencement of Section 10A period. Hence, this is a case where the default was undisputedly committed before the bar of Section 10A came into play. There being categorical default by the Corporate Debtor prior to Section 10A period, the Corporate Debtor was clearly not entitled to claim the benefit of Section 10A period.
3.It further held that A plain reading of Section 60 of the Indian Contract Act 1872, shows that if the debtor makes any payment without any appropriation, then the creditor can use his discretion to wipe out any of the remaining debt(s) which is/are due. The right of appropriation lies with the creditor if the debtor does not indicate in what manner the debt is to be discharged.
Order Copy:
