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Judgment
Avinash K. Srivastava, Member, Technical
This is an application filed by the Applicant/Operational Creditor under Section 9 of the IBC, 2016 read with Rule 6 of the IBC (Application to
Adjudicating Authority) Rules 2016. This application was filed in October, 2018. The Operational Creditor (O.C.) has submitted that the
Respondent/Corporate Debtor had approached the O.C. in December 2014 with a view to engage the consulting services of the O.C. Accordingly, a
service order dated 22.12.2014 was executed by which the Corporate Debtor (C.D.) requested the O.C. to provide consultancy services for Coal
Block Biding as per the terms and conditions contained in the service order. The total fees agreed upon was Rs. 1,75,00,000/- and the C.D. also paid
mobilisation advance of 10% of the total fee for commencement of work on 23.12.2014. The O.C. carried out the work and completed all the
milestones set forth in the work order. Upon attainment of each milestone, the O.C. raised invoices between the period 03.01.2015 to 26.02.2015, for
a total sum of Rs. 1,71,91,080/- and debit notes against out of pocket expenses for a total sum of Rs. 3,66,796/-. The C.D. assured the O.C. that the
payment would be made within 7 days but no such payment was made. The O.C. issued repeated reminders by email and also contacted the
representatives of the C.D. telephonically. The C.D. fully acknowledged the dues to the O.C. and also paid TDS of Rs. 4,90,000/- for the Assessment
Year 2015-16 to the Income Tax Department in respect of payment of Rs. 49,00,000/- to O.C. which was never made. Several telephonical
reminders and personal visits including a meeting with MD and GM to Chairman took place wherein it was assured that once Chairman comes back
from London, the payment would be released, however no payment was forthcoming. Thereafter, on 26.07.2018, the O.C. issued a demand notice
under Section 8 of IBC to the C.D. demanding payment of outstanding amount of Rs. 2,84,95,237/- till 26.07.2018. The C.D. neither replied to the said
notice nor gave any notice of any dispute within the meaning of IBC. Accordingly, the O.C. approached this Hon'ble Tribunal for seeking initiation of
Corporate Insolvency Resolution Process (CIRP) against the C.D. The invoices and debit notes have been attached with the application and it is also
mentioned that the total principal amount due is Rs. 1,75,57,876/- plus interest @ 18%. In the application, letter of the C.D. dated 18.02.2015 has been
attached in which the C.D. has adversely commented the performance of the O.C. The reply of the O.C. dated 09.03.2015 is also attached in which
they have given point wise reply to the letter dated 18.02.2015 of the C.D. These letters are placed at Annexures-A-18 8s A-19 of the application.
Further, relevant extract of Form 26AS of the O.C. has also been attached showing the TDS paid on the PAN for the Assessment Year 2015-16.
 The C.D. has in its reply stated that all the 9 invoices and 12 debit notes being of the year 2015 are beyond their respective limitation period. The
Article 137 of the Schedule of the Limitation Act 1963 prescribes the period of 3 years for filing any other application for which no period of limitation
is provided elsewhere. In the present case, all the invoices of the year 2015 are beyond the statutory period of limitation. It is also stated that the
Respondent company is owner of Thermal Power Plant in Amravati (Maharashtra). The service order was issued in favour of the O.C. for
consultancy services for bid advisory for Coal Block Auction. However, the efficiency of services and performance provided by the O.C. has been
seriously disputed by the C.D. During the entire course of the work carried out by the O.C, the C.D. along with its representatives/associates have
repeatedly informed the OC, bringing to their notice the delay and deficiency of services caused by them in completing the assigned work including
various other quality issues. They have also invited reference to the letter dated 18.02.2015 issued by the C.D. to the O.C. with respect to inadequacy
in consultancy services. Due to poor performance of the O.C. as a bid advisor, the same has resulted in loss of business for the respondent company.
 The C.D. specifically brought to the notice of the O.C. about the deficiency in services namely no clue/support on how to quote a discounting
number, poor financial modelling, poor competitor analysis, poor analysis of site conditions, no support of legal/taxation point of view, no backup
documents, preparation of documents. One of the reasons for such a bad performance was allocated to constant change in team members with at
least one member having no idea as to what the other members were doing. Further, the key member of the O.C. who was driving the bid process
remained physically unavailable in their office during Schedule-Ill Blocks submission. Since the scope of work allocated to the O.C. was a reverse
bidding process, on failure of the O.C. to deliver standard market services, the C.D. could not allocate the said scope of work to any other company
thereby suffering huge business losses. Thus, there exists a well-established dispute raised prior in time even before the enactment of IBC. The C.D.
has also submitted that in response to the demand notice dated 26.07.2018 issued by the O.C. under Section 8 of IBC, the C.D. vide its letter dated
02.08.2018 responded to the said notice thereby raising a notice of dispute. Copy of this letter dated 02.08.2018 is attached as Annexure-R-2.
 It is also submitted that the Respondent company has an authorised share capital of Rs. 5,000,00,00,000/- with the paid-up share capital of Rs.
2,952,93,33,530/- The C.D. has availed term debt from Power Finance Corporation led consortium of lenders to the tune of Rs. 6,353 crore and
working capital debt from SBI led Consortium to the tune of Rs. 900 crore for its power plant. The outstanding of term debt and working capital debt
stands at Rs. 6,500 crore approximately as on date.
 The C.D. was under strategic debt restructuring scheme. It is submitted that the O.C. under the guise of recovery of its alleged disputed claim of
Rs. 2.85 crore has approached this Hon'ble Tribunal to pressurize and harass the C.D. where in such huge money is involved by various banks and
financial institutions. The admission as prayed by the O.C. would cause a financial impact on the public money lent by the consortium of lenders which
is in process of being resolved. If the O.C. is allowed to misuse this forum by way of the present application, it would lead to a travesty of justice as
the IBC which is principally enacted for the benefit of Financial Creditors would lead to the doom of the same.
 The C.D. filed its reply on 09.05. 2019. The O.C. filed its rejoinder on 3.06.2019, in which it has stated that the reply to the demand notice dated
02.08.2018 produced by C.D. as Annexuire-R-2 is fabricated and false and the C.D. does not make any attempt to show that the same has been
posted and no postal receipt or acknowledgement is produced. Further, the said reply is not even on letter head of the C.D. and contains no reference
number as seen in other letters which only shows that the same is a false document. The C.D. has purposely misused the provision of IBC by
submitting a false affidavit to this Hon'ble Tribunal misusing the RBI circular dated 12.02.2018, which the C.D. was very well aware that the circular
pertains only to Financial Creditors having a default of more than Rs. 2,000 crore and the O.C. were not covered under this circular, thereby dragging
the matter as long as more than 200 days as against the prescribed time of 14 days under Section 9 of IBC. Further, the C.D. is misleading the
Hon’ble Tribunal by quoting the impugned letter dated 18.02.2015 which is mainly seeking for information and clarifications from the O.C. Also
the contention that the instant petition is hit by limitation is incorrect and the C.D. has subsequently acknowledged its liability to pay the dues to the
O.C. vide email dated 06.12.2016. Copy of the email is produced as Annexure-1 of the Rejoinder.
 Since, there is an acknowledgement of debt by letter dated 06.12.2016, the period of limitation shall be computed from the time when the
acknowledgement was signed. The O.C. was called on many occasions for discussions regarding the negotiation and payment to the O.C. which
continued till 24.04.2017, the payment of TDS was effected well after the letter dated 18.02.2015. There were more than 20 communications from the
C.D. requesting for further advice for auctioning, and discussions for payment to be made to the O.C., and the last being on 24.04.2017. The letter of
the C.D. dated 18.02.2015 was merely seeking an information and clarification which was adequately addressed by the O.C.’s letter dated
09.03.2015. The contractual relationship has continued even after 18.02.2015 Â and has not been terminated or modified. The reply sent to C.D. dated
09.03.2015 covers all the clarifications sought by the C.D. with respect to how to quote a discounting number, poor financial modelling, poor
competitor analysis, preparation of documents etc. The Respondent was giving continuous assurances for release of invoices and had called the O.C.
on numerous occasions for negotiations and payments which continued till 24.04.2017.
 The C.D. in its written submission has stated that the alleged email dated 06.12.2016  filed by the O.C. in its rejoinder has been categorically
denied to have been issued by the C.D. on which an affidavit under Section 65B of the Indian Evidence Act has been placed on record, payment of
TDS by the C.D. does not amount to acknowledgement of debt.
 We have heard the Ld. Counsels for both sides and perused the documents available on the matter. The O.C. has stated that the team of O.C.
was called several times between the dates December 2014 to April 2017 for personal discussions and assurances made by the C.D. towards
payment and also several telephone calls and communications are available, however, such details have not been provided. Further, the email dated
06.12.2016, which allegedly is an admission of the liability of the C.D. has been disputed by the C.D. Though, the alleged reply of the C.D. dated
02.08.2018 to the O.C.’s demand notice has been disputed/claimed to be false by the O.C. But the Operational Creditor has not disputed the letter
dt. 18/02/2015, page 52 of the petition. Â Since this letter is filed by the Petitioner, therefore, its genuineness cannot be doubted. And on the basis of
this document, it is admitted fact that the Respondent has raised the dispute regarding the quality and deficiency in the service, which comes under the
definition of dispute u/s 5(6) of the IBC, 2016. In view of Section 9(5)(ii) IBC, the moment dispute is established by the Corporate Debtor, the
Corporate Insolvency Resolution Process should not be initiated against the Corporate Debtor. Â So far payment of TDS is concerned, it is now
settled that deduction of TDS does not amount to acknowledgement of debt. The Insolvency Proceedings are not meant to be recovery proceedings.
This Adjudicating Authority cannot enter into disputed questions of fact which could be resolved only through formal proceedings of a Civil Court, nor
is it meant to be a recovery forum.
 In view of the above, this application for initiating the CIRP under Section 9 of the IBC against Rattan India Power Ltd, fails and the application
is dismissed. No order as to cost.