Worldwide Metals Pvt. Ltd vs SMW Metal Private Limited

Abni Ranjan Kumar Sinha, J

The present application is being preferred by Worldwide Metals Pvt. Ltd. (hereinafter referred to as "Operational Creditor") against SMW Metal Private Limited (hereinafter referred to as Corporate Debtor") under Section 9 of the Insolvency & Bankruptcy Code, 2016, (hereinafter referred to as the "Code") read with Rule 6 of the IBC, 2016 to initiate corporate insolvency resolution process in respect of Corporate Debtor.

The applicant/Operational Creditor is a duly incorporated private company under the Companies Act. The respondent/Corporate Debtor is also a private company, registered under the Companies Act. Registered office of the Corporate Debtor is 3/8, IInd Floor, Sab House, Asaf Ali Road, New Delhi-110002.

The case of applicant/Operational Creditor in short is that the Corporate Debtor had been a regular buyer of Aluminum Ingots and Wire Rods from the Operational Creditor. The Operational Creditor would fulfill orders placed by the Corporate Debtor and raise invoices for the same. The Corporate Debtor would in turn make lump sum payments periodically, within 120 days from the date of the oldest unpaid invoice. The sales and receipts of payments reflected in the ledger maintained by the Operational Creditor. The Principal Operational Debt herein pertains to purchases of Aluminum (Ignots and wire rods) from the Operational Creditor for the period 25.12.2017 to 22.01.2018. These sales are documented in the invoices bearing the following numbers:- WWMPL/DG/0122-0163 and WWMPL/DG/0167-0169.

These invoices amounted to a total unpaid amount of Rs. 13,07,50,666/- which forms the Principal Operational Debt on account of sale of goods. The operational Creditor performed its obligations in accordance with the agreed terms and continued to supply the material ordered. Whereas the Corporate Debtor failed to fulfill its obligations and defaulted in making payments to the tune of Rs. 13,07,50,666/- for the supplies made from 25.12.2017 to 22.01.2018 vide aforementioned invoices. The Corporate Debtor despite repeated requests and reminders has failed to clear his outstanding debt. On the Principal Debt on account of sales, interest at the rate of 18 per cent per annum for the period starting from amounting to Rs. 1,17,67,560/- has been added as per the terms of oral agreement and the terms of sale mentioned on the invoices issued. The Operational Creditor in its GST returns declared all the sales made by it to the Corporate Debtor. These returns are ordinarily accepted by the tax Authorities only when the buyer also declares identical returns. Any difference modification in the transaction is declared by the buyer to the tax authorities, which then has to be reconciled before the GST returns are finally accepted by the tax authorities. The GST returns filed by the Operational Creditor and accepted by the tax authorities reflect identical position in respect of sales of goods to the Corporate Debtor by the Operational Creditor.

The operational creditor performed by obligations in accordance with the agreed terms and continues to supply the material ordered. Whereas the Corporate Debtor failed to fulfill its obligations and defaulted in making payments to the tune of Rs. 13,07,50,666/- for the supplies made in the period from 25.12.2017 to 22.01.2018 vide the aforementioned invoices. It was orally agreed that in case of late payment, i.e. payment post the period of 120 days from the date of transaction, interest at the rate of 18 per cent per annum would be levied on the Principal amount from the date of the invoice. The rate of interest at 18 per cent is also reflected on the invoices. As a result of the failure of Corporate Debtor to comply with its obligations and having failed to pay an amount of Rs. 14,25,18,256/- in relation to the goods supplied and received, the Operational Creditor was constrained to send a Demand Notice dated 27.10.2018 calling upon the Corporate Debtor to make a payment of Rs. 14,25,18,256/-. The amount demanded in the Demand Notice included Principal Operational Debt of Rs. 13,07,50,666/- on account of sales of goods along with interest on the same amounting to Rs. 1,17,67,560/-. That in response to the Demand Notice, dated 27.10.2018 sent by the applicant, the Corporate Debtor responded by reply, dated 05.11.2018 to the demand notice. At the outset, it is stated that the Corporate Debtor has failed to bring to the notice of the Operational Creditor any existing dispute or any payment of the unpaid operational debt as is mandated under clause 2 of the Section 8 of the IBC. In the said reply the Corporate Debtor has admitted the maintenance of a mutual running account in para 5. The Corporate Debtor has referred to a non-existent settlement and reconciliation of accounts allegedly on 31.03.2018. The Corporate Debtor has not attached any proof of such reconciliation. In absence of any proof of the same, the averments are nothing but a mere denial of liability. A perusal of the ledger account of the applicant for the FY 2017-2018 shows that the last sale to the Corporate Debtor took place on 22.01.2018 and the last payment was received on 23.02.2018. Thereafter a balance of Rs. 13,07,50,666/- is due and payable on account of sales. The Principal Operational Debt is due and payable from the date on which the invoices were raised and material delivered i.e. the individual dates of the invoices in the period from 25.12.2017 to 22.01.2018. The total Principal Amount has been due since 28.02.2018, when the last transaction with the Corporate Debtor took place and it failed to make payments despite having received goods and invoices. The operational Debt herein further became due and when the Corporate Debtor failed to make payment and comply with demand notice dated 27.10.2018.

In response to the notice, Respondent appeared and filed the reply. The facts of the reply in short is that, Corporate Debtor has already issued a notice of dispute dated 27.08.2018 in response to the legal notice dated 11.08.2018 issued on behalf of Operational Creditor and in that reply, it is stated by the Corporate Debtor that no amounts are outstanding or payable by the Corporate Debtor to the Operational Creditor. Further, the invoices do not contemplate that the Corporate Debtor is liable to pay interest at the rate of 18 per cent per annum, if the payment is not made within a period of 120 days by the Corporate Debtor. Further, the Operational Creditor deliberately not disclosed the notice dated 11.08.2018 issued by the Operational Creditor and the reply dated 27.08.2018 by which dispute has been raised by the Corporate Debtor rather it is mentioned in the main application no dispute has been raised, further, in response to the demand notice, corporate debtor reiterating the contents of the reply dated 27.08.2018 and Corporate Debtor claimed that no amount of Rs. 14,25,18,256/- as alleged is liable to the paid by the Corporate Debtor to the Operational Creditor. He also referred the judgment of Hon'ble Supreme Court in the case of Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited (2017) SCC Online SC 1154 dated 21.09.2017. Further, the Corporate Debtor admits the relationship with the Operational Creditor regarding supply of aluminum and other related products by the Operational Creditor to the Corporate Debtor. Both Operational Creditor and Corporate Debtor would maintain running account and payments were being made on regular basis by the Corporate Debtor to the Operational Creditor and during the same time, the Operational Creditor was also purchasing aluminum products from sister/associate companies of the Corporate Debtor. Further, Operational Creditor claimed the amount from the period of 25.12.2017 to 22.01.2018 and as per Operational Creditor the Principal Amount of Rs. 13,07,50,666/- is due and payable since 28.02.2018. Further, the entries in the ledger account during the period of 01.04.2017 to 31.03.2018 as shown in the petition is not correct. Further, the Corporate Debtor vide letter dated 01.04.2018 sought confirmation from the Operational Creditor that against the purchases made by the Corporate Debtor from the Operational Creditor between 01.04.2017 and 22.01.2018, no amount was payable by the Corporate Debtor to the Operational Creditor as on 01.04.2018. The copy of the confirmation of accounts dated 01.04.2018 with the reply annexed as R-3 at page 34 to 62 of the reply. During the Financial Year 2017-2018, Corporate Debtor confirms the receipt of payments on 03.11.2017 for Rs. 1,95,85,789/- against LC on 07.11.2017 for Rs. 97,94,940/- against LC and on 10.11.2017 for Rs. 48,92,871/- against LC. Further, some of the subsequent entries of payment between 19.02.2018 and 31.03.2018 as reflected in the ledger of the Corporate Debtor in favour of Prominent Metals Pvt. Ltd. as per instructions of the Operational Creditor have been deliberately omitted from the ledger. Further, the Corporate Debtor states that the Operational Creditor has given credit to the Corporate Debtor payments made by the Corporate Debtor on 16.03.2018 and on 23.03.2018 for a sum of Rs. 8,43,00,000/-, break-up of which is as follows:-

(a) Rs. 2,55,00,000/-

(b) Rs. 2,40,00,000/-

(c) Rs. 2,48,00,000/-

(d) Rs. 1,00,00,000/-

However, the Operational Creditor deliberately ignores the entries of payment confirmed by it to the Corporate Debtor with respect to the entries of payments made to Prominent Metals Pvt. Ltd. Which are as follows:-

(a) 19.02.2018 - Rs. 2,62,00,000/-

(b) 22.02.2018 - Rs. 2,00,00,000/-

(c) 26.02.2018 - Rs. 2,50,00,000/-

(d) 01.03.2018 - Rs. 2,06,00,000/-

(e) 05.03.2018 - Rs. 2,15,00,000/-

(f) 08.03.2018 - Rs. 2,00,00,000/-

(g) 12.03.2018 - Rs. 2,00,00,000/-

Further, thereafter, an entry of transfer of an amount of Rs. 2,62,00,000/- was made in favour of M/s. Prominent Metals Private Limited by the Corporate Debtor on behalf of Operational Creditor against the credit balance relating to the Operational Creditor in the books of accounts of the Corporate Debtor and this fact was concealed by the Operational Creditor in the petition. Copies of letter dated 19.02.2018 from the Corporate Debtor to the Operational Creditor and confirmation letter dated 20.02.2018 from the Operational Creditor to the Corporate Debtor letter dated 19.02.2018 from M/s. Prominent Metals Pvt. Ltd. as annexed R-4 at page 63 to 66 of the reply. Further, letter dated 22.02.2018 sent from the Corporate Debtor to the Operational Creditor and the confirmation letter dated 23.02.2018 from the Operational Creditor to the Corporate Debtor, letter dated 22.02.2018 from M/s. Prominent Metals Pvt. Ltd. to the Corporate Debtor and a letter dated 22.02.2018 from the Corporate Debtor to the Prominent Metals Pvt. Ltd. as Annexed R-5 at page 67 to 70 to show that accounts have been settled between the parties. Further, Corporate Debtor has also annexed R-7, 8, 9, 10, 11, 12, 13, 14, 15 to show that several correspondence relating to confirmation of accounts was made between the Corporate Debtor, Operational Creditor and one M/s. Prominent Metals Private Limited and these have been confirmed by the Operational Creditor but in the main application under Section 9 at pages 29 to 34a totally different statement of accounts have been filed by the Operational Creditor, therefore, Corporate Debtor claimed that statement of accounts filed by the Operational Creditor from the period of 01.04.2017 to 31.03.2018 are factually incorrect and these facts have been raised prior to the issuance of the demand notice and all other correspondence have been made prior to the issuance of demand notice.

The applicant has filed rejoinder to the reply filed by the Corporate Debtor and the facts of the rejoinder in short is that letters or confirmation of accounts filed by the Corporate Debtor is false, forged, fabricated and manufactures and the signatures of the directors and associates of the applicant and its sister concern are also forged, fabricated and manufactured. Further, Corporate Debtor fails to establish the persons, who have signed the alleged letters, vide which the alleged transfer entries are purported to have been made had any authority whatsoever to sign the alleged letters or to authorize the alleged transfers and no related documents have been placed. Further, articles and memorandum vest all the powers in the directors only and whenever the seal stamp of the company is to be used anywhere, it is mandatory for at least one of the director's to be present and to sign the document where the seal stamp of the applicant company is used and the position with regard to the sister concern of the applicant company and so as per Doctrine of Constructive Notice, respondent be deemed to have knowledge of Articles and Memorandum of Association of the Company. The Operational Creditor has annexed true copy of Memorandum of Association and Articles of Association of the applicant company as well as M/s. Prominent Metals Private Limited respectively as R-10 & 11 Further, respondent seek to take shelter of the Doctrine of Indoor Management. However, the Doctrine of Indoor Management has no authority granting power and before invoking this doctrine this doctrine the respondent must establish that the employee was acting within his ostensible authority. He also placed reliance upon the decision of Anand Behari Lal Vs. Dinshaw & Co & Houghton & Co. Vs. Nothard, Lowe and Wills Ltd.

Further, in the normal course of business the practice in relation to the confirmation of accounts is that both of the parties send their own signed accounts to the other party and any discrepancy are then pointed out and reconciled in the appropriate manner. Further, no reconciliation/adjustments entries as alleged by the respondent. Further, so far claim of the respondent that applicant have concealed the reply of the legal notice sent by the Corporate Debtor is concerned, since the Corporate Debtor reiterated its statements in reply to the demand notice, therefore, it had not been referred in the application. Further, Hon'ble Supreme Court of India in the case of Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited held that mere denial of liability is not a dispute under the I & B Code. Further, respondent has two contradictory arguments, first is that the payments towards the invoices have been fully discharged and second is that the respondent had issued not one but two notices of dispute.

We have heard the Ld. Counsel for applicant as well as Corporate Debtor and perused the averments made in the application, reply, rejoinder, written submissions and documents enclosed by both the parties respectively.

Ld. Counsel for applicant in course of arguments submitted that receipt of goods has not been denied nor the quality of goods is disputed rather respondent has admitted the supply of goods. He further submitted that respondent claimed that debt has already been discharged and he further claimed that by sending the reply of the Legal Notice as well as demand notice he raised the dispute, therefore, two contradictory submissions have been made by the respondent. He further submitted that no document has been produced by the respondent as required under Section 8 of the IB Code to show that debt has been discharged. He further placed reliance upon the various letters alleged to have been exchanged between the parties to show that these entries have been agreed to by both the parties which are annexed as R-4 to 15 but these documents are forged and fabricated. He further submitted that the signatures of the above mentioned letters are alleged to be those of clerical employee of the Operational Creditor, who had no authority whatsoever to allow setting off such huge amounts. He further submitted that all the invoices of the Operational Creditor have been signed by the director but letters allegedly signed by one Sandeep on behalf of Worldwide Metals Private Limited and by one Yogender on behalf of M/s. Prominent Metals Private Limited and these clerical employees had no authority to sign these documents on behalf of petitioner or its sister concern. He further submitted that it is settled principal law that to bind any company by the acts of an employee, who so wishes to bind the company has to show that the employee had authority to do the act with which the company is sought to be bound but the respondent miserably failed to even plead that the persons who have signed the alleged letters had any authority whatsoever to sign the alleged letters by the company. He further submitted that Memorandum and Articles of Association of the applicant company vest all the powers in the director of the company to sign the documents. He also placed reliance upon the decision of another Bench of New Delhi, NCLT, in the case of Oyster Steel and Iron Pvt. Ltd. Vs. Royal kitchen Appliances, numbered (IB)-968/PB/2019 dated 19.08.2019.

He further submitted that there is a difference between preexisting dispute and the discharge of debt and in this regard, he placed reliance upon the Section 5(6) read with Section 8(2) of the IBC.

On the other hand, Ld. Counsel for respondent submitted that Operational Creditor failed to disclose the fact of the existence of dispute raised by the Corporate Debtor much before the demand notice dated 27.10.2018. He further submitted that Operational Creditor issued a notice claiming the same amount from the Corporate Debtor and this notice was replied by the Corporate Debtor on 28.08.2018 in which Corporate Debtor specifically mentioned that as per mutual understanding necessary journal entries have been passed in the books of accounts being maintained by the Corporate Debtor and in terms of the said journal entries adjustment of payments were made in the books of accounts of the Corporate Debtor and as a result thereof no amounts are outstanding as payable by the Corporate Debtor to the Operational Creditor. He further submitted that this reply dated 28.08.2018 was willfully concealed by the Operational Creditor and Corporate Debtor by sending the reply to the demand notice, reiterated the same facts of the reply dated 28.08.2018. Further, Operational Creditor failed to file ledger accounts as reconciled between the Corporate Debtor and the Operational Creditor, whereas the Corporate Debtor filed the statement of accounts from 01.04.2017 to 31.03.2018 duly confirmed by the Operational Creditor. He further submitted that Operational Creditor taken a plea that the persons, who have signed the letters relied upon by the Corporate Debtor have not been authorized and had no authority to sign the letters and these letters have not been signed by one of the directors of the Operational Creditor and its Sister concern, therefore, these documents, which are annexed at page 97 to 134 of the Reply are forged and fabricated and manufactured by the Corporate Debtor therefore, Operational Creditor by making such submission themself raised the dispute. He further submitted that on the basis of ledger account, which the Corporate Debtor referred in the reply, there is no debt due. He further submitted that there exists a pre-existing disputes and in this regard he placed reliance upon the decision of Hon'ble Supreme Court in the matter of Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd. He further submitted that applicant has not raised these facts in the application that the documents were forged and fabricated rather he concealed these facts.

He also placed reliance upon the decision of Hon'ble NCLAT in the matter of M/s. Global Infonet Distribution Pvt. Ltd. Vs. M/s. Tespa Infotech Pvt. Ltd. Company Appeal (AT) (Insolvency) 185 of 2019 & in the matter of SP Concrete Product Pvt. Ltd. Ltd. Vs. Advaitha Ventures Pvt. Ltd. Company Appeal (AT) (Insolvency) no. 648 of 2019.

He further takes a plea raised by the applicant regarding the Doctrine of Indoor Management in the instant case is not applicable and he further submitted that in the similar situation another Bench of Tribunal in the case of Ouster Steel & Iron Pvt. Ltd. Vs. SMW Metals Pvt. Ltd. (IB-1244/2019), held that the letters placed on records by the Corporate Debtor pertain to the period prior to the issuance of the demand notice by the Operational Creditor and that there exists pre-existing dispute.

Now, in the light of the submissions made on behalf of the parties, we have again gone through the averments made in the application, reply, rejoinder as well as documents enclosed by both the parties respectively and the decisions upon which both the parties placed reliance and we find that it is a fact that prior to the issuance of demand notice, the Operational Creditor had sent a legal notice dated 11.08.2018, which would be evident from the Annexure -1 of the reply at page 21 and reply to that legal notice had been sent on 27.08.2018 by the Corporate Debtor and in para 7 & 8 of the reply, it has been clearly mentioned that accounts have been settled as on 31.03.2018 and in para 14, it is claimed that no amount of Rs. 13,07,50,66/- as alleged is liable to be paid by the Corporate Debtor and we further find that in support of that, Corporate Debtor enclosed confirmation of accounts and the various correspondence made in the between the parties and one M/s. Prominent Metals Pvt. Ltd., which would be evident from Annexure R-4 to 15 from page 34 to 109 of the reply. We further find, by filing the rejoinder Operational Creditor has challenged the documents enclosed with the reply by which Corporate Debtor claimed that accounts of both the parties have been settled.

At this juncture, we would like to mention this fact that from the invoices enclosed with the application, which runs from page 35 to 79 shows that these invoices are for the period of 24.12.2017 to 22.01.2018, when we read these documents along with the confirmation of accounts filed by the Corporate Debtor in his reply from page 42 to 47 then we find that these invoices are referred in the confirmation of accounts filed by the respondent/Corporate Debtor.

At this juncture, we would like to refer the submissions made by the Operational Creditor. In course of arguments, Operational Creditor submitted that all these documents are signed by clerical employee of the Operational Creditor, who had no authority whatsoever to allow setting of such huge amounts and these documents are forged, and fabricated and manufactured, so, no reliance can be placed upon these documents.

In the light of submissions, when we have gone through the documents then we find that the Demand Notice was issued on 27/10/2018 and reply to the Demand Notice was sent on 05/11/2018 within the period prescribed U/S 8(2) of IBC but these documents are prior to the issuance of demand notice. We further find, in the reply to the Demand Notice, same points have been referred by the Corporate Debtor, which the Corporate Debtor had raised in the reply to the legal notice dated 11.08.2018 and this fact has also been admitted by the Operational Creditor. Since the Operational Creditor submitted that there is a difference between preexisting dispute and the discharge of debt and in this regard he placed reliance upon the Section 5(6) read with Section 8(2) of the IBC, therefore, at this juncture, we would like to refer Section 5(6) and Section 8 of the IBC and the same are quoted below:-

Section 5(6) "dispute" includes a suit or arbitration proceedings relating to--

(a) the existence of the amount of debt;

(b) the quality of goods or service; or

(c) the breach of a representation or warranty;

Section 8

(1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed.

(2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational creditor--

(a) existence of a dispute, if any, and record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute;

(b) the repayment of unpaid operational debt--

(i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or

(ii) by sending an attested copy of record, that the operational creditor has encashed a cheque issued by the corporate debtor.

Explanation.--For the purposes of this section, a "demand notice" means a notice served by an operational creditor to the corporate debtor demanding repayment of the operational debt in respect of which the default has occurred.

Mere plain reading of the provision show that Section 5(6) define the Dispute whereas Section 8(2)(a) and (b) deals with existence of Dispute and mode to prove the repayment debt and that is the reason the Operational Creditor submitted that Corporate Debtor has taken both the plea i.e. Existence of Dispute as well as repayment of debt. As per the definition of Dispute, it is either existence of amount of debt or quality of goods or service or breach of representation or warranty. So far the contention of the Operational Creditor that Corporate debtor has not raised the quality of goods therefore, it is not a dispute is concerned, it is true that Corporate debtor has not raised the quality of goods but they raised the existence of amount of debt, which in our opinion, come under the definition of Dispute and this has been raised by the Corporate Debtor prior to the issuance of Demand notice and also in reply to the Demand Notice as required U/S 8(2)(a) of IBC. Now the next contention of the Operational Creditor is that Corporate debtor also claim that debt has been satisfied but fails to produce the documents as required U/S 8(2)(b) of IBC is concerned when we shall consider the first submission of Operational Creditor along with this submission then we are of the view that second submission of Corporate debtor is related with first submission in support of this contention the Corporate debtor enclosed the documents with the reply which we have referred in the aforementioned Para and which are duly signed by the Operational Creditor regarding the confirmation of accounts and various correspondence made between the parties and one M/s. Prominent Metals Pvt. Ltd. By filing rejoinder Operational Creditor claimed that these documents are forged and fabricated. When we shall consider the submissions raised on behalf of Operational Creditor as well as Corporate Debtor then we find that documents upon which the Corporate Debtor placed reliance, these documents are executed prior to the issuance of demand notice and reference of these documents were given in the reply to the legal notice dated 28.08.2018 and we further find that neither the legal notice nor the reply sent by the Corporate Debtor in response to legal notice have been referred by the applicant in the main application. Operational Creditor has not stated anywhere about the notices, which are issued prior to the issuance of demand notice and it has come to the notice of Operational Creditor that Corporate Debtor is claiming upon the documents and on the basis of that documents, Corporate Debtor claimed that statement of accounts is confirmed and several correspondence have been made and there is no debt due as on 01.04.2018. Operational Creditor has not explain why they have not sent the rejoinder to the reply filed by the Corporate Debtor in response to the legal notice and why they have not disclosed about these documents in the main application, which have been referred in the reply to the legal notice dated 11.08.2018 rather Operational Creditor raised this issue that these documents are forged and fabricated, when Corporate Debtor appeared and filed the reply and enclosed all the documents along with the reply.

At this juncture, we would like to refer the judgment of Hon'ble NCLAT in the case of M/s. Global Infonet Distribution Pvt. Ltd. Vs. M/s. Tespa Infotech Pvt. Ltd. Company Appeal (AT) (Insolvency) 185 of 2019 in which Hon'ble NCLAT held that "Learned Counsel for the Appellant submits that the records which were submitted by the respondent before the adjudicating authority were fictitious. Therefore, such document could not have been relied upon to come to a conclusion that there is no debt payable. However, such dispute could not have been decided by the Adjudicating Authority nor can be decided by the Appellate Tribunal as to whether the documents were fictitious or is of earlier period which could be decided only by the forum of competent jurisdiction".

At this juncture, we would also like to refer the decision of Hon'ble Supreme Court in the case of Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited (2017) SCC Online SC 1154 dated 21.09.2017 in which Hon'ble Supreme Court held that "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. It clear that such notice must bring to the notice of the Operational Creditor 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 examined 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."

In the light of the aforesaid decisions when we shall consider the case in hand then we find that the Corporate Debtor has enclosed documents prior to the issuance of demand notice and all these documents referred by the Corporate Debtor in the reply to the legal notice dated 28.08.2018, therefore, before issuance of demand notice or before filing this application, Operational Creditor was aware with the facts that the Corporate Debtor are placing reliance upon these documents and on the basis of that Corporate Debtor claimed that there is no outstanding due, which is payable by the Corporate Debtor to the Operational Creditor as confirmation of accounts have been settled between the parties and one M/s. Prominent Metals Pvt. Ltd. But Operational Creditor has not referred this facts in the application but after filing of the Reply by the Corporate Debtor this plea has been taken by the Operational Creditor that those documents are forged and fabricated and signed by the persons, who are not authorised to sign, therefore, we can safely say the documents upon which Corporate Debtor placed reliance their genuineness is disputed by the Operational Creditor themself. In other word Operational Creditor also raised the dispute, which can only be decided by adducing the evidence by both parties, and which in our considered view can only be decided by the Court having jurisdiction to declared these documents forged. Admittedly by exercising power Under Section 9 of the IBC, Jurisdiction of the Adjudicating Authority is very limited. Therefore, we are of the considered view since these documents are referred prior to the issuance of demand notice and on the basis of that Corporate Debtor raised the debt has been repaid and claim of the amount is disputed therefore, we are of the view that both the submission of the Corporate debtor is corelated. Therefore, we are of the considered view that there are pre-existing dispute raised by the Corporate debtor and even Operational Creditor raised the dispute regarding the genuineness of documents.

Under such circumstances for the reasons discussed above and in view of the decisions referred above, we have no option but to reject prayer of the Operational Creditor.

Accordingly, it is therefore, ORDERED

That the application is DISMISSED.