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Case Note of MCC Concrete v. Northway Spaces Ltd.

This case summary discusses a case between MCC Concrete (the operational creditor) and Northway Spaces (the corporate debtor). MCC Concrete supplied concrete to various sites of Northway Spaces, but Northway Spaces disputed invoices totaling over Rs. 10 lakh. The NCLT rejected MCC Concrete's application, finding a pre-existing dispute over the invoices. However, the NCLAT found MCC Concrete's ledger accounts to be reliable, showing over Rs. 19 lakh was due. It also found no pre-existing dispute since the sites were associated with Northway Spaces. Therefore, the NCLAT set aside the NCLT's findings on the first two issues and admitted MCC Concrete's application under section

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73 views2 pages

Case Note of MCC Concrete v. Northway Spaces Ltd.

This case summary discusses a case between MCC Concrete (the operational creditor) and Northway Spaces (the corporate debtor). MCC Concrete supplied concrete to various sites of Northway Spaces, but Northway Spaces disputed invoices totaling over Rs. 10 lakh. The NCLT rejected MCC Concrete's application, finding a pre-existing dispute over the invoices. However, the NCLAT found MCC Concrete's ledger accounts to be reliable, showing over Rs. 19 lakh was due. It also found no pre-existing dispute since the sites were associated with Northway Spaces. Therefore, the NCLAT set aside the NCLT's findings on the first two issues and admitted MCC Concrete's application under section

Uploaded by

Subodh Asthana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Case Note of MCC Concrete v. Northway Spaces Ltd.

, Company Appeal (AT) (Ins)


No. 527 of 2020
FACTS
The appeal was preferred by the Operational Creditor against the order dated 12/02/2020
passed by the Adjudicating Authority (NCLT), Ahmadabad Bench. In the present case, the
Operational Creditor (Appellant herein) has supplied ready MCC Concrete at various sites
of the Corporate Debtor (Respondent herein) upon placing purchase order by the
Respondent. The delivery challans were signed and stamped by the Respondent. The
Respondent was earlier known as Mayfair Spaces Ltd. Hence, all the invoices and delivery
challans were issued in the name of Mayfair Spaces Ltd.
As per ledger account of Appellant has supplied goods to the Respondent for the total sum of
Rs. 02,29,94,288/-. The Respondent has made part payment of Rs. 02,09,30,948/-., therein
making the outstanding amount of Rs. 20,63,340/ as on 11/11/2015. However, the
Respondent resisted the application on the grounds that two invoices of amount Rs.
5,33,120/- and Rs. 5,16,460/- respectively were issued incorrectly to the Respondent.
Furthermore, on dt. 11/02/2017 the Appellant has sent a demand notice to the Respondent for
clearing the remaining dues of the Appellant to which Respondent didn’t pay any heed.

ISSUES RAISED
1. Whether the Respondent has failed to pay the operational debt more than Rs. 1 lac?
2. Whether there is a pre-existing dispute with respect to the two invoices of amount Rs.
5,33,120/- and Rs. 5,16,460/-?
3. Whether the present application is barred by Limitation?

ORDER PASSED BY NCLT, AHMADABAD


It was observed by NCLT, Ahmadabad that the invoices in dispute were wrongly issued by
the Appellant to the Respondent. The Respondent has no connection with Mayfair Corporate
Park to whom the goods were delivered. Therefore, there is pre-existing dispute regarding the
goods supplied and invoices raised thereof. Hence the application was rejected.
Furthermore, with respect to the issue of limitation the tribunal rejected the objection of
Respondent. The tribunal held that the application was filed within the period of limitation
because ledger account is a running account and the limitation period shall start from the date
on which partial payment was made by the Respondent (i.e., Rs. 12 lacs on dt. 05/11/2015).
Therefore, the Appellant has filed the appeal before the appellate tribunal to set aside the
order passed by NCLT.

ARGUMENTS ADVANCED BY THE LD. APPELLANT


It was contended by the Appellant that there is no pre-existing dispute with respect to the two
invoices. It was further submitted that the goods were delivered on the site of Mayfair
Corporate Park, an associated entity of the Respondent. The invoices raised against the
Respondent have been acknowledged with the seal and stamp of Respondent. Moreover, the
application was filed within three years from the date of acknowledgment of partial debt by
the Respondent, thus the application is filed with the limitation period.

ARGUMENTS ADVANCED BY LD. RESPONDENT


The Respondent submitted that as per ledger only Rs. 70,165/- is due which is less than Rs. 1
lac, therefore, the appeal is not maintainable. It was further submitted that the Appellant had
supplied the goods to Mayfair Corporate Park but erroneously raised the disputed bills to the
Respondent as both are unrelated parties. Thus, there was a pre-existing dispute in regard to
payment of these invoices and thus the appeal is not maintainable. Moreover, it was
contended that the claim is barred by limitation.

FINDINGS BY NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI


With respect to the first issue the tribunal observed on the basis of the ledger accounts put
forth by the Appellant & Respondent that the ledger account filed by the Appellant is genuine
and shows the true picture. Therefore, it is a reliable document and thus operational debt of
Rs. 19,89,130/- was due and payable and has not yet been paid because the entries were
found missing in the ledger accounts maintained by the respondents.
With respect to the second issue the tribunal placed its reliance on the judgement of Supreme
Court in Mobilox Innovations Pvt. Ltd. v. Kirussa Software Pvt. Ltd1 wherein the Hon’ble
court held as to what are facts to be examined by the Adjudicating Authority while examining
an application under Section 9 of I & B Code which therein included pre-existing dispute as
one of the grounds and further held that a pre exiting dispute is a dispute should have prima
facie bona fide and exists naturally in a given fact and the existence of a dispute need not
require further to be proved..
In the light of pronouncement, the tribunal observed that the Mayfair Corporate Park is an
associated entity of the Respondent because the corporate park was being developed by the
Respondent. Thus, there is no pre-existing dispute between the parties in regard to the
aforesaid invoices since the ledger accounts of Appellant was reliable. Therefore, Appellant
was correct in sending the aforesaid invoices to the Respondent.
Furthermore, with respect to the third issue the tribunal upheld the observations of the NCLT,
Ahmedabad in deciding the limitation period because ledger account is a running account and
the limitation period shall start from the date on which partial payment was made by the
Respondent (i.e., Rs. 12 lacs on dt. 05/11/2015).

OUTCOME

Thus, the tribunal held that the application filed under section 9 of I&B Code preferred by the
Appellant before the NCLT was fit to be admitted and therefore the findings of the NCLT
with respect to first and second issue was set aside.

1
2017 1 SCC Online SC 353.

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