MANU/NC/5694/2019

IN THE NATIONAL COMPANY LAW TRIBUNAL

AHMEDABAD BENCH
C.P. (I.B) No. 56/9/NCLT/AHM/2018
Decided On: 26.07.2019
Appellants: Global Wind Power Ltd.
Vs.
Respondent: Sarla Performace Fibers Pvt. Ltd.
Hon'ble Judges/Coram:
Harihar Prakash Chaturvedi, Member (J) and Manorama Kumari, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Maulik Nanavati and Mili Baxi, Advocates
For Respondents/Defendant: Priyam Shah and Tanvish Bhatt, Advocates i/b. Wadia
Ghandy & Co.
ORDER
Harihar Prakash Chaturvedi, Member (J)
1. The present I.B. Petition is preferred by the Operational Creditor M/s. Global Wind
Power Limited under Section 9 of the Insolvency and Bankruptcy Code, 2016 (herein
after referred to as a "Code") seeking for initiation of Corporate Insolvency
Resolution Process ("CIRP" in Short) in respect of the Corporate-Debtor-Company
namely, M/s. Sarla Performance Fibres Limited.
2. It is stated that the Petitioner/Operational Creditor is a registered company under
the provisions of Companies Act, 1956, with a Company Identification Number (CIN)
-U74140MH2007PLC168078. The Petitioner is a wide range wind turbine
manufacturer with the multinational presence and its registered office is situated at
Reliance Capital Limited, Trade World, B-Wing, 7th Floor, Kamala City, Lower Parel,
Mumbai - 400013.
3. The Respondent/Corporate Debtor, namely M/s. Sarla Performance Fibres Limited
was incorporated on 23.11.1993 with the CIN: L31909DN1993PLC000056. The
authorised share capital of the company is Rs. 10,00,00,000/- (Rupees Ten Crores
only) and the paid-up share capital is Rs. 8,35,03,000/- (Rupees Eight Crores Thirty-
Five Lakhs Three Thousand only). The registered office of the Corporate Debtor
Company is situated at: Survey No. 59/1/4, Amli Piparia Industrial Estate, Silvassa,
Daman - 396230, Gujarat, India.
4 . It is the case of the Petitioner that the Respondent/Corporate-Debtor approached
the Petitioner to make supply of two nos. of 1.5MW Wind Turbine Generators
("WTGs" for short). After various negotiations, the parties entered into an agreement
for supply of two "GWPL MY - 1.5MW -77 dia./75 mtr. HH" WTGs as per the terms
and conditions mentioned therein. It is submitted that the said agreement said to
have been amended on 02.02.2016, whereby the parties revised consideration for
supply of the WTGs to the Respondent/Corporate Debtor.
5. It is stated that as per the terms of the said Agreement, the Respondent/Corporate
Debtor issued a Letter of Credit bearing No.0011M02153630011 issued by Yes Bank

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 on 29.12.2015 for an amount of Rs. 11,30,00,000/- (Rupees Eleven Crores Thirty
Lakhs Only) in favour of the Petitioner/Operational Creditor. Since the validity of the
Letter of Credit was going to get expire on 28.03.2016, (i.e. after 90 days), the same
was renewed by the Respondent/Corporate Debtor and the validity of the Letter of
Credit was further extended till 12.08.2016, (i.e. 137 days) and the amount was
amended to Rs. 8,50,00000/- (Rupees Eight Crores Fifty Lakhs only). In support of
its claim, the Petitioner has annexed with copies of the letter of credit and renewed
Letter of Credit with the present I.B. Petition.
6 . That, under such Agreement, the parties were agreed to the following payment
schedule:
(i) 25% on signing of contract.
(ii) 65% of the WTG component reaching project site.
(iii) 5% of the WTG commissioning.
(iv) 5% on submission of commissioning certificates and signing of PPA.
7. It is further submitted that, the petitioner/Operational Creditor in order to execute
the contract work, further engaged another company M/s. Choksi Energy and
Infrastructure Pvt. Ltd. for smooth completion of the work of commissioning and
execution of the power purchase agreement with the concerned authority of the state
of Madhya Pradesh.
8. The Petitioner/Operational-Creditor, supplied WTGs to the Respondent/Corporate-
Debtor at the project site simultaneously with the execution of the said agreement
dated 28.12.2015 and thus commissioning of the WTGs took place on 30.01.2016.
The Respondent has duly received commissioning certificates from the Government of
Madhya Pradesh on 26.03.2016 and 27.03.2016 for both the WTG towers.
9. It is contended that as per the agreed payment terms, the Respondent/Corporate
Debtor was supposed to make payment of 90% of the total amount due, i.e. Rs.
15,57,00,000/- out of Rs. 17,30,00,000/-, however, in the month of March-2016, the
Respondent made only a part-payment of Rs. 6,00,00,000/- (Rupees Six Crores Only)
only against the sum of Rs. 15,57,00,000/- to be payable at that juncture. The
Petitioner/Operational Creditor furnished the tabulated details of part payments as
received from the Respondent/Corporate Debtor, which are described as under:
Date Amount
10.03.2016 1,00,00,000/-
11.03.2016 1,00,00,000/-
14.03.2016 1,00,00,000/-
17.03.2016 1,00,00,000/-
17.03.2016 1,00,00,000/-
19.03.2016 1,00,00,000/-
Total 6,00,00,000/-

1 0 . Pursuant to the commissioning of the WTGs, the power purchase agreements

("PPAs") were executed on 14.07.2016 and 24.08.2016 with M.P. Power Management
Co. Ltd. which is an undertaking of Government of Madhya Pradesh.
11. As per the terms agreed between the parties, the Petitioner/Operational Creditor
completed the entire scope of work within the mutually agreed timeframe and
pursuant to execution of the PPAs, the Respondent was supposed to clear the entire
consideration. However, apart from the part payment of Rs. 6,00,00,000/- (Rupees

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 Six Crores only), the Respondent has deliberately failed in and neglected to pay the
balance outstanding amount of Rs. 11,30,00,000/- (Rupees Eleven Crores Thirty
Lakhs Only).
1 2 . Upon completion of each milestone, the Petitioner followed up with the
Respondent/Corporate Debtor for the payment. However, the Respondent, on some or
the other pretext delayed the payments. The Petitioner sent numerous email to the
Respondent's Representatives requesting for making payment of all the outstanding
amount. The petitioner presented the Letter of Credit for discounting and the same
was dishonoured. The Petitioner approached the Respondent for making payment of
the outstanding amount. However, the Respondent requested for some more time to
make payment.
13. The Petitioner/Operational Creditor made persistent efforts and continuous follow
up with the Respondent/Corporate Debtor for a period over one year by telephonic
means and also by meeting in person with the Representatives of the Respondent. Till
date the Respondent has failed to fulfil its contractual obligations. In these
circumstances, the Petitioner was constrained to issue a demand notice on
14.09.2017 under Section 8 of the Code read with clause (a) of sub-rule 5 of the
Code, calling upon the Respondent to repay the unpaid Operational Debt in full within
10 days from the date of receipt of the Demand Notice.
14. The Respondent vide letter dated 28.09.2017 replied to the Notice issued by the
Petitioner on 14.09.2017. The Respondent, in its reply did not raise a dispute in
terms of Section 8(2) of the Code and has in fact accepted the debt and their liability
to pay to the petitioner. The Respondent in its letter dated 28.09.2017 attempted to
wriggle out from the liability to pay the Petitioner on some false, frivolous and
baseless grounds. In such reply, the Respondent, with malafide intentions and
ulterior motives tried to raise a dispute by mixing up facts of another agreement
signed and executed with the sister concern of the Petitioner i.e. Global Wind
Infrastructure and Services Private Limited for service and maintenance of the WTGs,
which has no concern with the Agreement dated 28.12.2015 signed and executed
between the parties for supply and commissioning of the WTGs.
15. In the facts and circumstances of the case, the Respondent company has failed to
repay the outstanding amount of Rs. 11,30,00,000/- (Rupees Eleven Crores Thirty
Lakhs Only) despite the fact that the Petitioner/Operational Creditor timely completed
the scope of work as per the signed Agreement.
1 6 . Thus, it is contended that the Corporate-Debtor has committed a default in
making payment of the rest of the principal amount to be paid to the
Petitioner/Operational-Creditor.
1 7 . The Operational-Creditor did not suggest any name of an Interim-Resolution-
Professional ("IRP" for short), if, this I.B. Petition is admitted and an IRP needs to be
appointed.
18. By opposing the above stated averments made by the Operational-Creditor in the
present I.B. Petition, the Corporate Debtor filed its reply as well as written argument.
The relevant Paras of the written objections/arguments are being reproduced herein
below:
xxxxxxx
PRE-EXISTING DISPUTES BETWEEN THE PARTIES

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 3. It is submitted that in order to avail the desired works at the Project of the
Respondent, the Petitioner addressed an e-mail dated 15th December, 2015
(Annexure - "B (Colly)" at Page 178 of the Reply) to the Respondent inter
alia sharing a draft Term Sheet (Page 179 of the Reply) along with an
elaborate Energy Yield Report dated 8th May, 2015 prepared by one M/s.
AWS True Power ('Report") (Page 181 of the Reply) for and on behalf of
Petitioner. It is submitted that as per the Term Sheet read with the Report,
the Petitioner assured and guaranteed the Respondent, a minimum
generation of 23 lacs units per annum per Wind Turbine Generator ("WTG").
It is submitted that based on the representations and commitments made by
the Petitioner, the Petitioner executed a Contract dated 28th December, 2015
(Exhibit - C at Page 24 of the Petition), as amended on 2nd February, 2016
(Exhibit - D at Page 31 of the Petition) ("Contract") for a total consideration
of Rs. 17,30,00,000/- (Rupees Seventeen Crores Thirty Lakhs only), with the
Respondent inter alia for carrying out works as more specifically stated
therein in respect of 3 MW Wind Power Project of the Respondent.
xxxxxxxx
5 . It is submitted that as per the terms of the Contract, the Petitioner was
required to get the Project commissioned/delivered by 20th March, 2016
which was delayed considerably on account of their shortcomings entitling
the Respondent to liquidated damages as per Clause IV of the Contract for
the losses suffered on their account. Even thereafter, the Respondent
continued to suffer impediments in the smooth running of the Project due to
various reasons, namely, lack of adequate and trained staff at the sites to
maintain the WTGs as well as lack of technical support from the Petitioner. It
is submitted that due to failure on part of the Petitioner to procure necessary
spare parts, one of the WTGs was at complete halt for the month July, 2016
i.e. during peak generation periods and consequently, the Respondent had to
suffer substantial losses due to the same.
6. It is submitted that due to faulty turbines and constant inaction on part of
the Petitioner, the energy generation from the WTGs continued to be
consistently lower than the represented estimations. Accordingly, the
Respondent addressed an e-mail dated 20th July, 2016 to the Petitioner
(Annexure - "C (Colly)" at Page 225 of the Reply) inter alia informing the
Petitioner that there was an appallingly low generation of energy from the
WTGs supplied by the Petitioners as against the minimum energy units
guaranteed by it at the time of executing the Contracts. It is stated that in
response to the aforesaid e-mail, the Petitioner addressed an e-mail dated
20th July, 2016 to the Respondent (Page 225 of the Reply) inter alia
admitting that the WTGs were not performing as per the minimum
guaranteed energy generation of 23 lacs units per WTG per year. The
Petitioner further informed the Respondent that it shall consider
improvements in the technical parameters to improve the energy generations
and assured the Respondent that the subsequent energy generation from
June, 2016 to May, 2017 shall be as per the minimum generation guarantee
of 23 lacs units per WTG, however, in vain. It is submitted that the Petitioner
has deliberately suppressed the aforesaid communications dated 20th July,
2016 exchanged between the parties.
7 . Due to continued inaction on part of the Petitioner, the Respondent
addressed another e-mail dated 3rd September, 2016 to the Petitioner
(Annexure - "D (Colly.)" at Page 226 of the Reply) inter alia reiterating its

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 woes as stated hereinabove. The Respondent further addressed an e-mail
dated 13th January, 2017 to the Petitioner (Annexure - "E" at Page 227 of the
Reply) inter alia conveying a detailed list of obligations yet to be fulfilled by
the Petitioner under the Contract including addressing the concerns of the
Petitioner under the 2 year warranty period and Execution of Free
Comprehensive Operation and Management Agreement by and/or on behalf
of the Respondent as per Clauses VI and VII of the Agreement; Providing and
setting up of SCADA viewing access as per Clause II (a) (v) of the Contract,
and; Fencing and Stone Pitching of the WTG land as required under Clause II
(a) (i) of the Contract (Page 227 of the Reply read with Clause II of the
Contract at Page 26 of the Petition). Thus, it is evident that there has been a
bonafide dispute between the parties and for the reasons best known to the
Petitioner, these relevant documents have been conspicuously suppressed
before this Hon'ble Tribunal.
8. It is submitted that thereafter in response to Petitioner's letter dated 20th
June, 2017 (Annexure - "F (Colly.)" at Page 228 of the Reply) inter alia
demanding payment for alleged over dues, the Respondent addressed a
detailed letter dated 20th July, 2017 (Page 234 of the Reply) to the Petitioner
inter alia reiterating the history of disputes pending between the parties since
2016 and further denying the existence of any dues unless the said disputes
are addressed by the Petitioner. It is submitted that a mere perusal of the
said letter dated 20th July, 2017, more particularly paragraphs 3, 4, 5, 7, 9,
11, 12 and 15, makes it abundantly clear that there are grave disputes
pending between the parties in respect of the Contract. Again these two
relevant documents have been suppressed before this Hon'ble Tribunal.
9 . It is submitted that the Petitioner, through its Advocates, issued a
Statutory Demand Notice dated 14th September, 2017, to the Respondent
under Section 8 of the IBC (Exhibit -H at Page 140 of the Petition) inter alia
demanding a sum of Rs. 17,30,00,000/- (Rupees Seventeen Crores Thirty
Lakhs only) as allegedly due under the Contracts. After receiving the
aforesaid Notice on 18th September, 2017, the Respondent, through its
Advocate, issued a detailed Reply dated 28th December, 2017 (Exhibit - J at
Page 145 of the Petition) inter alia bringing to the notice of the Petitioner,
preexisting bona fide disputes pending between the parties since 2016 in
respect of the subject Contract
1 0 . It is submitted that vide the aforesaid Reply dated 28th September,
2017, the Petitioner categorically raised a 'Notice of Dispute' inter alia by
referring to various communications exchanged in the years 2016 and 2017
evidencing preexisting disputes between the parties.
1 1 . Moreover, it is submitted that the Respondent has also disputed the
existence of amount of debt mentioned by the Petitioner at Clause 1 of Part -
IV at Page 3 of the Petition. It is pertinent to note by its own admission, the
Petitioner has stated that it has already received Rs. 6,00,00,000/- (Rupees
Six Crores only) from the Respondent under the Contract. Hence, it is stated
that the claim of the Petitioner that an amount of Rs. 17,30,00,000/- (Rupees
Seventeen Crores Thirty Lakhs only) is due from the Respondent is
completely falacious and contrary to the documents placed on record by the
Petitioner itself (Refer Exhibit - A/1 at Page 19 of the Petition).
12. It is submitted that in view of the above, it is abundantly clear that there
are long pending bona fide disputes between the parties with respect to the

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 existence of amount of debt, the quality of goods supplied by the Petitioner
as well as with respect to the representations and warranties made by the
Petitioner. It is thus, submitted that there are pre-existing disputes between
the parties as per Section 5(6) of the Insolvency and Bankruptcy Code, 2016
("IB Code"). It is submitted that it is a settled position of law that a Petition
is liable to be rejected under Section 9(5)(2) (d) of the IB Code if notice of
dispute is received by the Petitioner. It is also settled that it is neither the
aim nor the object of the IB Code to go into enquiry of disputes pending
between the parties. Reliance is placed on the following judicial
pronouncements in support of the aforesaid contentions, (copy supplied)
[Mobilox Innovations Private Limited v/s Kirusa Software Private Limited,
2017 SCC Online SC 1154 -Paragraphs 33, 34, 54 and 57;
Himalay Dassani v/s M/s. South East U.P Power Transmission Company Ltd.,
CP No. (IB) 18/ALD/2017 - Paragraphs 31 and 36]
COMPANY PETITION IS FILED BY ONE MR. MEHUL LAKHANI WITHOUT ANY
VALID AUTHORITY
13. It is submitted that the captioned Petition is filed without any authority
as required under the Insolvency and Bankruptcy Code, 2016 ("IBC") read
with the Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rules, 2016 ("Rules"). It is submitted that as per Clause 6 of Part II at Page
2 of the captioned Petition, Mr. Mehul Lakhani claims to have been
authorized to file the present Petition vide a Power of Attorney dated 1st
August, 2013 ("POA") (Exhibit - A at Page 16 of the Petition) allegedly
executed on behalf of the Petitioner.
14. It is submitted that it is a settled position of law that a Tower of Attorney
holder' cannot file any Application/Petition under Section 7 and/or Section 9
and/or Section 10 of the IBC, since the Power of Attorney Act does not
override the I&B Code. It is submitted that admittedly the present Petition is
filed by Mr. Mehul Lakhani in his capacity as an alleged Power of Attorney
Holder of the Petitioner (Page 2 read with Page 16 of the Petition). Reliance
is placed on the following judgment of the NCLAT in support of the aforesaid
contention (copy supplied already during hearing).
[Palogix Infrastructure Private Limited v/s ICICI Bank Limited, Company
Appeal (AT) (Insol.) No. 30 of 2017 -Paragraphs 17, 31 to 35].
FALSE AFFIDAVIT FILED BY MR. MEHUL LAKHANI AT PAGE 152 OF THE
PETITION
15. It is submitted that the Petitioner with a malafide intent to mislead this
Hon'ble Tribunal has filed a false affidavit (Page 152 of the Petition) inter alia
stating that the Respondent has not raised any dispute and/or has not denied
the alleged operational debt From the details provided hereinabove based on
the communications even prior to the statutory notice, it is evident that there
are prevailing bonafide disputes between the parties which unambiguous and
cannot be considered sham in any manner.
16. It is settled position of law that when notice of dispute has been raised
by Respondent, an Affidavit as per Section 9(3)(b) of IB Code cannot be
given despite which Mr. Mehul Lakhani has wilfully committed the offence of
perjury making him liable to be punished under Sections 191, 193 and 199

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 of the Indian Penal Code, 1860 ("IPC").
[Macquarie Bank Limited v/s Shilpi Cable Technologies Limited, 2017 SCC
Online SC 1493 - Paragraph 13;
In Re: Suo Motu Proceedings against R. Karuppan, MANU/SC/0338/2001 :
(2001) 5 SCC 289 - Paragraphs 13 to 16].
OFFENCES AND PENALTIES UNDER SECTION 65 READ WITH SECTION 76 OF
THE IB CODE
1 7 . It is noteworthy to mention here that it is expressly pleaded by the
Petitioner (Paragraph 3 at Page 12 of the Petition) that the present Petition is
filed for recovery of alleged debt and not for resolution of insolvency and/or
liquidation. It is stated that from e paragraph under reply, it is clear that
present Petition is filed only with a fraudulent and malicious intention to arm
twist the Respondent to pay monies to the Petitioner albeit pre - existing
disputes between the parties. It is stated that in view of the above, this
Hon'ble Tribunal be pleased to impose penalties on the alleged authorized
signatory, Mr. Mehul Lakhani in terms of Section 65 of the IBC.
Xxxxxxxxxx
19. We have gone through the averments made in the present I.B Petition and the
objections/contentions raised by the Corporate-Debtor in its affidavit in respect, as
well as in its written submission. It is a matter of record that the Corporate-Debtor,
along with its affidavit-in-reply has annexed certain documents in its support of its
stand that there was a pre-existing dispute with regard to alleged-substandard quality
of WTGs installed and poor service performance by it in power generation for
minimum generation of 23 Lakh units per annum per WTG, which was agreed
between the parties as per the terms and conditions of the contract. It is a matter of
record that the Petitioner, before filing of the present I.B. Petition had issued a
demand notice on 14.09.2017 (Annexure-H), claiming the above stated amount of
debt which was duly replied by the Corporate-Debtor through its letter dated
28.09.2017 (Annexure-J) and in the very same reply, the Corporate-Debtor has
raised a dispute between the parties and on the alleged claim where it referred to the
previous correspondence including email, written notice entered between the parties,
specifically an email dated 20.07.2016 and 03.09.2016 and thus has categorically
denied its loan liability or operational debt as due and payable unless the same is not
adjudicated before a competent court of Law.
2 0 . Despite this, the petitioner filed an affidavit by deposing that there was no
dispute raised by the Corporate-Debtor with regard to the unpaid operational debts,
specifically such affidavit goes contrary to the averments or submissions made by the
Respondents in the reply to the demand notice dated 20.09.2017, for which, the
petitioner himself enclosed a copy thereof.
21. Moreover, the corporate debtor, along with his reply, has enclosed copy of a
letter dated 28.07.2017 by replying to the demand letter issued by the Operational
Creditor from time to time and specifically of 20.06.2017, wherein he, not only
disputed liability to make payment but also certain grievances/compliances made by
it to the Operational Creditor.
22. With regard to unsatisfactory performance of the WTGs and breach of terms of
minimum warrantied generation of the power, the Respondent further raised his
grievance that it was not attended by taking remedial measures to increase power

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 generation capacity of the WTGs, despite couple of months were passed.
23. In such reply to the notice, there is reference of various emails addressed to the
Operational-Creditor by the Corporate-Debtor, specifically of 20.04.2016 and
03.09.2016 by complaining that none of WTG is producing minimum guaranteed
energy units and there is abysmally low generation of energy even during the high
wind period and despite the repeated requests from the Corporate-Debtor to the
GWSPL and GWIPL it was not attended to and no further action allegedly was taken
in this regard by the Petitioner.
24. In support of such contentions, the Corporate-Debtor has enclosed a copy of its
email dated 28.07.2016, which was addressed from Mr. Bijal Vijay Shah to Mr.
Kameshwara and its reply by Mr. kameswara to Mr. Bijal Vijay Shah, wherein, it is
reflected that even across high wind period, present generation cannot reach to A1,
20 lakh units in March 2017 per WTG. Thus, it was requested to him through a letter
because there was an issue of maintenance on the machine(s) available.
25. There is further correspondence on 03.09.2016 and on 13.01.2016 pointing out
and highlighting the same issue which gives prima-facie proof that there exists some
dispute/difference of opinion among the parties, which is prior to the issuance of
statutory demand notice under Section 8 of the I.B. Code on 14.10.2017.
26. It is also a matter of record that, the demand notice of the petitioner has been
elaborately replied by raising dispute which is now a matter of record. Thus, it cannot
be found that the Corporate-Debtor never disputed its loan liability towards the
unpaid operational debts. As per the material available on record, there exists some
dispute with regard to the quality of WTG material supplied and also about its
performance below the assured generation of power. Such dispute seems to have
been raised first in the month of July 2016 which was continued till the present
petition is filed in this Court on 18.01.2018 and demand notice was issued on
14.09.2017.
27. Hence, by following the relevant provisions of Section 9 of the I.B. Code, which
stipulates that, in case, there is a preexisting dispute, the C.I.R.P. in respect of
Corporate-Debtor-Company cannot be initiated.
28. The Learned Respondent Counsel, while making the above stated contentions has
placed a reliance on a landmark decision of Hon'ble Supreme Court in the matter of
M/s. Mobilox Innovations Pvt. Ltd. Vs. M/s. Kirusa Software Pvt. Ltd. (Civil Appeal
No.9405 of 2017, 2017 SCC Online SC 1154), wherein, their Lordship came to
examine the issue of pre-existing dispute and nature of a preexisting dispute in
respect of the operational debts.
29. The Hon'ble Supreme Court, in paragraph no. 54 of the above said judgement
has pleased to observe that the Adjudicating Authority must reject the application
under section 9(5)(2)(d) if notice of dispute has been received by the operational
creditor or there is a record of dispute in information utility.
30. The Hon'ble Supreme Court went further to make clear about the existence of
dispute and pleased to observe that all the Adjudicating Authority is to see at this
stage, as to whether there is a plausible contention which requires further
investigation and this dispute is not patently feeble, legal arguments or assertion of
fact(s) unsupported by evidence. It is important to separate grain from chaff and to
reject the spurious defence which is mere bluster, Further, in contentions, the Court
does not need to be satisfied that the defence is likely to be succeeded. The Court
does not, at this stage examine the merits of the dispute except to the extent as

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 communicated above. So long as a dispute truly exists in fact and is not spurious,
hypothetical or illusory, the Adjudicating Authority has to reject the application.
31. For the sake of convenience, the relevant Para(s) of the reported judgement are
reproduced herein below:
"54. It is clear, therefore, that once the operational creditor has filed an
application, which is otherwise complete, the adjudicating authority must
reject the application under Section 9(5)(2)(d) if notice of dispute has been
received by the operational creditor or there is a record of dispute in the
information utility Alt is clear that such notice must bring to the notice of the
operational creditor to the "existence" of a dispute or the fact that a suit or
arbitration proceeding relating to a dispute is pending between the parties.
Therefore, all that the adjudicating authority is to see at this stage is whether
there is a plausible contention which requires further investigation and that
the "dispute" is not a patently feeble legal argument or an assertion of fact
unsupported by evidence. It is important to separate the grain from the chaff
and to reject a spurious defence which is mere bluster. However, in doing so,
the Court does not need to be satisfied that the defence is likely to succeed.
The Court does not at this stage examine the merits of the dispute except to
the extent indicated above. So long as a dispute truly exists in fact and is not
spurious, hypothetical or illusory, the adjudicating authority has to reject the
application.
58. The demand notice sent by the respondent was disputed in detail by the
appellant in its reply dated 27th December, 2016, which set out the e-mail of
30th January, 2015. The appellant then went on to state:
"Sometime during June and September 2016, an officer of your
Client, one Mr. Jasmeet Singh wrote to our Client that tie wanted to
meet and revive business relationship and exploring common
interest points to work together. In fact, in his email, he admits that
there should be resolution to the impending payments thereby
implying that there was (a) a dispute (as defined under the Code)
and (b) there was a breach of the NDA which needed to be resolved.
Mr. Singh's emails to our client were sent after 1 year and 6 months
had elapsed from the date of our Client's email of 30 January 2015.
This clearly shows that your Client was silent during this period and
had not bothered to answer the questions raised by our Client.
Hence, once again in September, our Client called upon your Client
to explain its breach of the NDA. Your Client instead of explaining its
breach of the NDA remained silent for about 3 months and thereafter
chooses to issue the Notice as a form of pressure tactic and extort
monies from our Client for your Client's breach of the NDA. All the
conduct of your Client explicitly shows laches on its part.
Your Clients should note that under the NDA, it has agreed that a
breach of the NDA will cause irreparable damage to our Client and
our Client is entitled to all remedies under law or equity against your
Client for the enforcement of the NDA. Accordingly, given the
severity of the breaches of the NDA committed by your Client, the
delay and laches committed by your Client and the conduct of your
Client, our Client is not liable to make payments to your Client
against the breaches of the NDA and the delay and laches committed

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 by your Client. In fact, at this stage, our Client is contemplating
initiating necessary legal actions against your Client and its parent
company for the breach of the NDA to seek further compensations
and damages and other legal and equitable remedies against your
Client and its parent company."
59. Going by the aforesaid test of "existence of a dispute", it is clear that
without going into the merits of the dispute, the appellant has raised a
plausible contention requiring further investigation which is not a patently
feeble legal argument or an assertion of facts unsupported by evidence. The
defense is not spurious, mere bluster, plainly frivolous or vexatious. A
dispute does truly exist in fact between the parties, which may or may not
ultimately succeed, and the Appellate Tribunal was wholly incorrect in
characterizing the defense as vague, got-up and motivated to evade liability.
60. Learned counsel for the respondent, however, argued that the breach of
the NDA is a claim for unliquidated damages which does not become
crystallized until legal proceedings are filed, and none have been filed so far.
The period of limitation for filing such proceedings has admittedly not yet
elapsed. Further, the appellant has withheld amounts that were due to the
respondent under the NDA till the matter is resolved. Admittedly, the matter
has never been resolved. Also, the respondent itself has not commenced any
legal proceedings after the e-mail dated 30th January, 2015 except for the
present insolvency application, which was filed almost 2 years after the said
e-mail. All these circumstances go to show that it is right to have the matter
tried out in the present case before the axe falls.
61. We, therefore, allow the present appeal and set aside the judgment of
the Appellate Tribunal. There shall, however, be no order as to costs."
32. By following the above stated judicial precedents and in the light of above stated
discussions, we are of the view that there was a pre-existing dispute with regard to
the quality of the WTGs supplied and with regard to its warrantied generation
capacity and there were other complaints regarding services and maintenance which
were, as per the material available on record, were existing since July 2016 onwards,
which is prior to the issuance of demand notice on 14.09.2019 on filing of the
petition.
33. Therefore the present petition cannot be found maintainable in view of Section
9(5)(2)(d) and hence, the I.B. Petition is rejected/dismissed accordingly. No order as
to costs.
34. The present IB-Petition is disposed of accordingly.
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