1

IN THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL AT

NEW DELHI
APPELLATE JURISDICTION

COMPANY APPEAL (AT) INSOLVENCY NO. OF 2021

MEMO OF PARTIES
IN THE MATTER OF:

POWER2SME PRIVATE LIMITED

AD-13, BASEMENT (LGF),
TAGORE GARDEN,
NEW DELHI – 110027

ALSO AT:

POWER2SME PRIVATE LIMITED

PLOT NO. 88, UDYOG VIHAR PHASE IV,
GURUGRAM, HARYANA – 122015 …APPELLANT

VERSUS

PSR AQUA AND ENGINEERS PRIVATE LIMITED

HAVING REGISTERED OFFICE AT:
1589, MADARSA ROAD, KASHMIRI GATE,
DELHI – 110006 …RESPONDENT

APPELLANT

THROUGH

PANKAJ BHAGAT
ADVOCATE FOR THE APPELLANT
N29-A, LGF, JANGPURA EXTENSION
NEW DELHI-110 014
PH: 01143521415, 8800791415,9871441415
[email protected]
DATED: 18.03.2021
NEW DELHI
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BRIEF SYNOPSIS

“From the above, it is clear that at the stage of admission of

Application under Section 7, the requirement is to give limited

Notice and the considerations would be to see whether or not

satisfaction by Adjudicating Authority could be reflected on

the basis of Sub-Section (5) of Section 7. If there is a financial

debt, which is more than Rs.1 Lakh and there is a default

and if the Application is complete, the Application would have

to be admitted......"

The above quoted verdict has been passed by this Hon’ble

Appellate Tribunal in the case of “Vineet Khosla Versus

Edelweiss Asset Reconstruction Company Ltd. and Others”

2019 SCC OnLine NCLAT 487, interalia elucidating the

principle that if the debt is more than one (01) lakh and

admitted by the Corporate Debtor, then the petition deserves to

be admitted.

The above quoted verdict was again reproduced, relied upon

and reiterated by this Hon'ble Tribunal in Company Appeal

(AT) (Ins) No.271 of 2020 in the case of Mr. Subhash

Agarwal versus AU Small Finance Bank Limited, wherein

this Hon'ble Tribunal held as under:

"8................. As far as the admission of the Application is

concerned, question required to be considered by

Adjudicating Authority, was to see if financial debt was due

and if default was of Rupees One Lakh. If the Application is

otherwise complete, the Application is required to be

admitted."
 3

Similar view was adopted by three (03) judges bench of this

Hon'ble Tribunal in Company Appeal (AT) (Insolvency) No.

549 of 2020 in the case of Narendra Kumar Agrawal versus

Montorone Leasing Private Limited, in the following dictum

as passed by this Hon'ble Tribunal:

"20 It is also clear that the Corporate Debtor has not paid the

amount due and more than Rs.1 (one) lac. The Application is

complete. Therefore, the Adjudicating Authority was justified

in admitting the petition. We do not find any reason to

interfere with the Adjudicating Authority's order in admitting

the petition. Thus, Appeal is devoid of merit hence dismissed.

No order as to costs."

It shall be worth mentioning that the above quoted verdict and

dictum passed by this Hon'ble Tribunal is a constant view

taken time and again in numerous matters and again by three

judges bench in Company Appeal (AT) (Insolvency) No. 720

of 2018 in the case of Pedersen Consultants India Pvt. Ltd.

Vs. Nitesh Estates Limited, wherein it was held as under:

"8. From the aforesaid decision, it is clear that the existence

of dispute must be pre-existing i.e. it must exist prior to

issuance of the demand notice or invoice. If it comes to the

notice of the Adjudicating Authority that the ‘operational debt’

is exceeding Rs. 1 lakh and the application shows that the

aforesaid debt is due and payable and has not been paid, in

such case, in absence of existence of a dispute between the

parties or the record of the pendency of a suit or arbitration

 4
proceeding filed before the receipt of the demand notice of the

unpaid ‘operational debt’, the 13 Company Appeal (AT)

(Insolvency) No. 720 of 2018 application under Section 9

cannot be rejected and is required to be admitted. "

10. From the aforesaid findings, it is clear that the claim

means a right to payment even if it is disputed. Therefore,

merely because the ‘Corporate Debtor’ has disputed the claim

by showing that there is certain counter claim, it cannot be

held that there is pre-existence of dispute."

12. The Respondent disputed that the alleged debt is not the

amount as shown in the Form. However, on mere dispute of

amount, the application under Section 9 cannot be rejected,

as in terms of Section 3(6) which defines ‘claim’ to mean a

right to payment even if it is disputed. The Hon’ble 18

Company Appeal (AT) (Insolvency) No. 720 of 2018 Supreme

Court in “Innoventive Industries Ltd. v. ICICI Bank and Anr.”

(Supra) noticed the definition of ‘claim’ and held that even if

the right of payment is disputed, the Code gets triggered the

moment default is of rupees one lakh or more (Section 4). In

the circumstances, in absence of any pre-existing dispute, it

was not open for the Adjudicating Authority to reject the

application under Section 9.

Thus, this Hon'ble Tribunal has constantly taken a view that

counter claim cannot be considered as "pre-existing dispute"

and cannot defeat the petition if the debt admitted is more

than Rupees one Lakh. It is humbly submitted that the present

case of the Appellant is squarely covered by the judgments

 5
quoted above and are binding on the Ld. Adjudicating

Authority.

"Apart from the notice invoking arbitration, there was nothing

on record to suggest that the Corporate Debtor raised any

pre-existing dispute. In the absence of any evidence to

suggest that dispute was raised prior to the issuance of

demand notice, the dispute cannot be held to be pre-

existing by merely showing the arbitration notice."

The above quoted verdict has been passed by this Hon’ble Appellate

Tribunal in the celebrated case of Ahluwalia Contracts (India) Ltd v

Raheja Developers Ltd. (2019 SCC OnLine NCLAT 942) .while

elucidating the principle that an application under Section 9 of the

Insolvency and Bankruptcy Code 2016 ("I&B Code") can only be

rejected if the dispute in relation to the claim pre-exists the date of

receipt of demand notice or invoice issued under Section 8 of the

I&B Code.

This Hon’ble Tribunal in the case of Binani Industries further

expounded and relied on the position taken by the Hon'ble

Supreme Court in Mobilox Innovations Pvt Ltd v Kirusa

Software (P) Ltd (2018) 1 SCC 353 which had observed that

"What is important is that the existence of the dispute

and/or the suit or arbitration proceeding must be pre-

existing – i.e. it must exist before the receipt of the demand

notice or invoice, as the case may be."

This Hon'ble Appellate Tribunal once again reiterated and

propounded its principal in clear terms, in the case of Rajeev K

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Aggarwal vs Panipat Texo Fabs. Pvt. Ltd. and Anr. in Company

Appeal (AT) (INsolvency) No. 715 of 2018 vide its judgment

dated 27.11.2018 as under:

"Raising of dispute in regard to quality of goods being

inferior/substandard of defective for the first time in reply

to demand notice or in response to notice served by the

Adjudicating Authority would not constitute a prior and

pre-existing dispute contemplated under laws as a

defence to the initiation of corporate Insolvency Resolution

Process..."

This Hon'ble Appellate Tribunal once again vide its judgment

dated 04.10.2018 passed in Company Appeal (AT) (Insolvency)

No. 327 of 2018 in the case of Sudhir Sales vs D-Art Furnitures,

made the following observations:

"ii. In Innoventive Industries Ltd. (Supra) the Hon'ble

Supreme court held that pre-existing dispute is the dispute raised

before demand notice or invoices was received by the "Corporate

Debtor". Any subsequent dispute raised while replying to the

demand notice under Section 8(1) cannot be taken into

consideration to hold that there is a pre-existing dispute.

Therefore, in the present case the reply given by the "Corporate

Debtor" on 09th September.2017 is to be ignored for finding out

whether there is pre-existence of dispute or not"

In the light of the aforesaid, the kind attention of this Hon'ble

Tribunal is invited to the admitted fact that:

1. Appellant issued a Notice under Section 8 of IBC.

 7
2. Respondent did not reply to the said notice, thus, raised

no dispute, whatsoever.

3. During arguments not even an iota of whisper or any

document brought on record that any dispute of any nature was

ever raised, prior to issuance of Statutory notice.

In the light of the aforesaid, the important question of laws

which arises for kind consideration of this Hon'ble Tribunal is

as to whether in absence of any pre-existing dispute, the

Petition by the appellant under Section 9 of IBC liable to be

dismissed?

The next substantial question of laws which requires kind

consideration by this Hon'ble Tribunal is as to whether the

Ld. NCLT Delhi not in error of law in not even dealing with the

legal questions related to "Pre-existing dispute", though raised

and argued by the appellant?

A very important question of law which emerges for kind

adjudication and for the benefit of general public is as to

whether Ld. NCLT justified in permitting to raise disputes which

are not pre-existing and are raised wrongly by the respondent,

thereby, enhancing the scope of "disputes" to same as was

available in pre-IBC era, i.e. during "winding up" proceedings? It

is imperative to state that during "winding up" proceedings

"bonafide disputes" were to be seen, whereas, there is a

mammoth change in IBC, were only the "Pre-existing" disputes

can be seen. The legislature in its wisdom has incorporated

these changes for (a)preventing raising of disputes as an

 8
afterthought, such as forging and fabricating documents, which

was rampant during winding up proceedings, and

(b) to drastically reduce the period litigation,

both of which shall not be possible, if the Concept of "Pre-

existing dispute" is given a go-bye.

Kind attention of this Hon'ble Appellate tribunal is invited to the

fact that the Ld. NCLT, New Delhi seems to have erred on facts

on various accounts, including but not limited to the following:

(i) That the Hon’ble court has failed to consider the

contentions so placed by the appellant.

(ii) That the respondent had evidently admitted its dues and

liability in the reply filed by it and also asserted that it

prepared two cheques bearing no.734130&870020 both

dated 03.07.2018 for amounts of Rs. 5,00,000/-&

Rs.5,25,119/- respectively totaling to Rs.10,25,119/- to

pay the balance amount. Then also it has failed to pay

towards its outstanding liability.

(iii) That the respondent, apart from the above two cheques,

also issued a cheque bearing no. 88620for

Rs. 15,00,000/- to pay of its outstanding dues which later

got dishonored.

(iv) That the respondent owes a operational debt amounting to

Rs. 22,75,120 /- out which the respondent has paid

nothing till now and has frivolously issued a debit note of

Rs. 12.5 Lakhs against the alleged losses it incurred due

to alleged delay in supply of the materials by the

Appellant. The entire allegations are only related to 12.5

lakhs whereas the respondent admitted to pay the balance

 9
amount i.e. Rs10,25,119/- and also issued cheques

covering the entire amount with interest.

Thus, the alleged disputes are irrelevantfor the dismissal

of the petition so preferred by the petitioner for the

following reasons:

1. Rs.22,75,120/- Lakhs has been admitted by the

respondent, which admission is absolute

2. Cheques for Rs. 10,25,119/- admitted to have been

issued and Cheque for Rs. 15,00,000 issued and

bounced.

3. There is no co-relation between the goods supplied

and payment due and counter claim of the

respondent for goods not supplied, as both are

independent and separate transactions in the eyes of

laws.

This is without prejudice to the fact that the appellant never

accepted any debit note from the respondent company against

the outstanding dues.

The Hon’ble Supreme Court in Mobilox Innovations Private

Limited v. Kirusa Software Private Limited held that:

40. 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..................

The Ld. Adjudicating Authority ought to have rejected the plea of

‘pre-existing dispute’ as the same is based on forged and

fabricated documents and is merely concocted with a view to

 10
evade the liability against the Respondent. The entire defence of

the Respondent is spurious and a mere bluster.

That the Ld. Adjudicating Authority failed to appreciate that the

Respondent admits all the invoices so raised by the Appellant

and also admits the invoiced amount of Rs. 22,75,120 /- and

also states that they prepared 02 cheques dated 03.07.2018 for

Rs. 10,25,119.75 /- for payment and adjusted the debit note of

Rs. 12.5 lakhs. Thus, having said so, since there is clear

admission of liabilities, which is more than Rs. 1 Lakhs, the

petition of the Appellant ought to have been allowed.

Kind attention of this Hon’ble Tribunal is invited to

Part IV on internal page 7 of the Reply filed by the Respondent

wherein the Respondent has explicitly admitted the liability

upon it and the debt. Thus, the Respondent having admitted the

entire liability and showed no protest against the invoices

raised, the material supplied and also admitted that it intended

to pay Rs. 10,25,119.75/-, the petition u/s 9 of IBC 2016 ought

to have been allowed. Kind attention of this Hon’ble Tribunal is

invited to para 10 of internal page 6 of the reply by the

Respondent in this regard.

Thus, the present case being admittedly more than

Rs. 1 Lakh, coupled with the admission of the Respondent that

the entire amount of Rs.22,75,120/- is due and more

specifically Rs. 10,25,119.75/-, as per pecuniary jurisdiction in

the year 2019 is liable to be admitted. The fact remains that

despite admitting the same the Respondent was unable to

discharge its liability/debt. Admittedly, for Rs. 10,25,119.75/-,

there is no dispute of any nature whatsoever.

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That the Ld. Adjudicating Authority failed to appreciate that for

the balance Rs. 12.5 Lakhs, Respondent alleges having raised a

debit note for losses suffered by it due to "non-supply of

materials as per fresh purchase order" so raised by it. Kind

attention of this Hon’ble Tribunal is invited to Part IV on

internal page 7 of the reply of the Respondent. It is submitted

that the said issue is what has been considered to be the alleged

‘pre-existing dispute’ wherein the said Rs. 12.5 Lakhs has been

allegedly adjusted vide debit notes. It is submitted that the said

debit note of Rs. 12.5 Lakhs or the quantum of Rs. 12.5 Lakhs

is in the nature of damages and a counter claim, which is

independent to the debt of the Appellant. Thus, such imaginary

and vexatious counter claims deserves to be rejected.

That the Ld. Adjudicating Authority failed to appreciate that

apart from the abovementioned, there is neither any allegation

nor any dispute for the invoices raised and the goods supplied,

either on its quality or otherwise. The only allegation is that

further goods were not supplied for the fresh purchase order.

That the Ld. Adjudicating Authority failed to appreciate that this

cannot be a valid “pre-existing dispute” for holding payments for

invoices/goods, against which there is no allegation/dispute

whatsoever. The invoices for which the payments are being

sought has till date not been disputed including in the reply

filed by Respondent. There is also no objection to the quality

and/or quality of goods supplied.

That the Ld. Adjudicating Authority failed to appreciate that

since admittedly purchase orders were raised from time to time

and the entire transactions between the parties were for supply
 12
of material and the same was neither a running contract nor

anywhere alleged or evidenced by the Respondent thus, there is

no rationale for not paying for the invoices against which there

are neither any disputes nor any differences, only on the

allegation that the Appellant did not supply more goods. It is

stated that since payments were pending, there is neither any

obligation nor any rational to supply more goods.

In view of the same, CIRP ought to have been initiated against the

Respondent. Hence the present appeal.

LIST OF DATES & EVENTS

30.01.2012 That the appellant company (appellant) is a

Private Company duly incorporated under the
provisions of the Companies Act, 1956, having
its Registered Office at 1-B, Vikrant Enclave,
Mayapuri, New Delhi, West Delhi – 110064. The
Appellant company was incorporated on
30.01.2021.

22.05.2019 That the Appellant Company vide its Board

Resolution dated 22.05.2019 has authorized Mr.
Munender Chauhan who is conversant with the
facts of the present case, to sign, verify and
institute the present appeal on its behalf.

07.10.2005 That the respondent company is a company

incorporated under the Companies Act, 1956
and a certificate of incorporation bearing no.
U74899DL2005PTC141588, registration no.
141588, date of incorporation 07.10.2005 was
issued by the Registrar of the Companies, New
Delhi certifying the incorporation of the
respondent company.
 13
The registered address of the respondent
company as per the Registrar of Companies
record is situated at and having its registered
office at 1589 Madarsa Road, Kashmere Gate,
New Delhi- 110006 and the said respondent is
within the local limits of the Jurisdiction of this
Hon’ble Tribunal.

25.10.2017 The respondent issued a purchase order dated

25.10.2017 demanding certain goods from the
Appellant as detailed in the said purchase order.

The Appellant supplied the goods as demanded

and upto the complete satisfaction of the
respondent and raised invoice and debit notes
from time to time. However, despite assurances,
promises, various invoice and debit notes are
still due and pending. The details of invoice and
debit notes have been mentioned in the appeal
and copies have been annexed in the
accompanying appeal.

That the outstanding dues of the appellant

company is Rs. 32,08,640/- (Rupees Thirty Two
Lacs Eight Thousand Six Hundred Forty
only)including Rs. 22,75,120/- towards Principal
amount and Rs. 9,33,520/- towards interest and
a further interest of Rs. 76,270/- accrued
thereon from 16.06.2019 upto 19.09.2019,
against said invoice and debit notes raised by
the appellant.

15.05.2019 That the appellant made several

reminders/requests demanding its payments
vide correspondences vide which
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payment/regularization of outstanding dues was
demanded.

24.10.2018 That the respondent company issued a cheque

bearing no. 886620 for Rs. 15,00,000/- (Rupees
Fifteen Lakhs Only) and handed over to the
appellant against the goods so received by them
and towards invoices so raised.

15.01.2019 The appellant company presented the above

mentioned cheque through its banker however,
the same got dishonoured by their banker and
returned vide return memo 15.01.2019 given
with reason “payment stopped by drawer”.

18.06.2019 That the Appellant issued a statutory demand

notice on 18.06.2019, through its Authorized
representative Mr. Munender Chauhan. Tracking
report of the delivery of the notice duly received
by the respondent on 25.06.2019 was taken out
through the official web portal of india post.
Despite the receipt of the said notice the
respondent company failed to address the issue
or reply to the same. It is stated that no notice
has been issued by the respondent relating to
any dispute of the unpaid operational debt.

24.10.2019 That the appellant filed a petition under section

9 of the IBC, 2016 at the Hon’ble National
Company Law Tribunal with company petition
(IB) No. 248 of 2020 against respondent with
title “Power2SME Pvt. Ltd. Vs. PSR Aqua and
engineers Pvt. Ltd.

19.02.2020 The respondent filed its reply on 19.02.2020,

which was received by the appellant.
 15

13.03.2020 Rejoinder filed by the Appellant to the reply of

the respondent dated 19.02.2020.

27.01.2021 Written argument filed by the respondent.

29.01.2021 Written Arguments filed by the appellant through

NCLT web portal E-filing bearing no.
0710102148542019.

03.03.2021 The Hon’ble NCLT passed the impugned Order

and dismissed the petition filed by the appellant
under section 9 of the IBC, 2016 at the Hon’ble
National Company Law Tribunal

Hence the present Appeal.

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IN THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL AT
NEW DELHI
APPELLATE JURISDICTION
COMPANY APPEAL (AT) INSOLVENCY NO. OF 2021

(Arising out of the order dated 03.03.2021 passed by the Hon’ble

National Company Law Tribunal, Delhi in Company Petition (IB)

248 of 2020 titled as ‘Power2SME Private Limited v. PSR Aqua and

Engineers Private Limited’, under Section 61 read with Section 32

of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of

the Insolvency and Bankruptcy (Application to Adjudicating

Authority) Rules, 2016.)

CAUSE TITLE

POWER2SME PRIVATE LIMITED

AD-13, BASEMENT (LGF),
TAGORE GARDEN,
NEW DELHI – 110027

ALSO AT:
POWER2SME PRIVATE LIMITED
PLOT NO. 88, UDYOG VIHAR PHASE IV,
GURUGRAM, HARYANA – 122015 …APPELLANT

VERSUS

PSR AQUA AND ENGINEERS PRIVATE LIMITED

HAVING REGISTERED OFFICE AT:
1589, MADARSA ROAD, KASHMIRI GATE,
DELHI – 110006 …RESPONDENT

MEMORANDUM OF APPEAL PREFERRED UNDER SECTION 61

READ WITH SECTION 32 OF INSOLVENCY AND BANKRUPTCY

CODE, 2016 AGAINST THE ORDER DATED 03.03.2021 PASSED

BY THE HON’BLE NATIONAL COMPANY LAW TRIBUNAL, DELHI

BENCH, COURT NO. VI, IN (IB) 248 OF 2020 TITLED AS

‘POWER2SME PRIVATE LIMITED V. PSR AQUA & ENGINEERS

PRIVATE LIMITED’.
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MOST RESPECTFULLY SHOWETH:

1. DETAILS OF THE APPEAL

The present appeal is being filed under Section 61 read with

Section 32 of the Insolvency and Bankruptcy Code, 2016

against the final order and judgment dated 03.03.2021

(impugned order) dismissing the application/petition of the

Appellant (Operational Creditor) under Sections 8 & 9 read

with Sections 14 & 33 of the Code , passed by the National

Company Law Tribunal, Bench – VI , Delhi (hereinafter

referred to as the “Adjudicating Authority”) in Company

Petition (IB) No. 248/(ND)/2020, titled ‘Power2SME Private

Limited versus PSR Aqua and Engineers Private Limited’.

The true printout of the impugned order dated 03.03.2021 as

downloaded from the official web-portal of adjudicating

authority is annexed herewith as ANNEXURE A 1.

2. DATE ON WHICH THE IMPUGNED ORDER IS

COMMUNICATED AND THE PROOF THEREOF:
Copy of impugned order dated 03.03.2021 has not been

received by the appellant. The soft copy of the impugned order

uploaded on the official web-portal of the Adjudicating

Authority on or around 03.03.2021 has been adduced in the

present appeal, however, it is reiterated at the cost of

repetition that no copy of order has been received by the

appellant.

3. ADDRESS OF THE APPELLANT

The address of the appellant for service is set out hereunder:
i. Postal Address including Pin Code
Pankaj Bhagat, Advocate,
N-29A, LGF, Jangpura Extension,
 18
New Delhi-110014
Phone Number : 01143521415

ii. Email :[email protected]

iii. Address of Legal Representative with Phone No. Fax
No./email
Power2SME Private Limited
Registered Office at:
AD – 13, Basement (LGF),
Tagore Garden, New Delhi - 110027

4. ADDRESS OF THE RESPONDENTS

As per memo of parties filed herewith.

5. JURISDICTION OF THE APPELLATE TRIBUNAL

The Appellant humbly submits that the subject matter of the

present Appeal is within the jurisdiction of this Hon’ble

Tribunal under Section 61 read with Section 32 of the

Insolvency and Bankruptcy Code, 2016 (hereinafter referred

to as the ‘Code”), pursuant to which this Hon’ble Appellant

Tribunal is empowered to hear appeals by the persons

aggrieved from any order of the Hon’ble National Company

Law Tribunal.

6. LIMITATION
The impugned order was passed by the adjudicating authority

on 03.03.2021 and certified copy of the same has not been

received by the appellant. The soft copy of the impugned order

seems to have been uploaded on the official web-portal of the

Adjudicating Authority on or around 03.03.2020, and copy of

the order has been received by the appellant on 15.03.2021.

The present appeal is being filed on 18.03.2021, and hence is

within limitation.

7. FACTS OF THE CASE

The facts giving rise to the present appeal are as under:

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i. The present Appeal is being filed under Section 61 read

with Section 32 of the Insolvency and Bankruptcy Code,

2016 against the Impugned order passed by the

Adjudicating Authority in Company Petition (IB) No.

248/(ND)/2020, titled as Power2SME Private Limited

Versus PSR Aqua and Engineers Private Limited.

ii. That the Appellant Company (Also referred to as

“Operational Creditor”) is a Private Company duly

incorporated under the provisions of the Companies Act,

1956, having its Registered Office at AD-13, Basement

(LGF), Tagore Garden, New Delhi-110027. The Appellant

company was incorporated in 30.01.2012.

iii. That the address of the Appellant company for service of

notice, process is as stated in the cause title and is also

that of its Advocate Mr. Pankaj Bhagat, N-29 A LGF,

Jangpura Extention, New Delhi-110014.

iv. That the Appellant Company vide its Board Resolution

dated …… …. has authorized Mr. Munender Chauhan

who is conversant with the facts of the present case, to

sign, verify and institute the present petition on its behalf.

A copy of Board Resolution dated …………… is marked

and annexed herein as ANNEXURE A2.

v. That the Appellant Company is engaged inter-alia, in

business of procuring and selling of raw material,

operational supplies, industrial etc. (collectively referred to

as “Raw Materials” to micro, small and medium

enterprises (SME’s) for increase in their profitability by

demand aggregation and providing Raw Material at

 20
competitive prices by directly buying form large

manufactures and enabling its customers to increase

business efficiencies against cash payment or on credit

basis.

vi. That the respondent Company (also referred to as

“Corporate Debtor”) is a company incorporated under the

Company Act, 1956 and a certificate of incorporation

bearing No. U74899DL2005PTC141588, registration No.

141588 date of incorporation 07.10.2005 was issued by

the Registrar of companies, New Delhi certifying the

incorporation of the respondent company. That a print out

of master data is also attached herein for ready reference,

downloaded from the official website of MCA. A copy of

master data is marked and annexed herein as

ANNEXURE A3.

vii. The registered address of the respondent company as per

the Registrar of Companies record is situated at and is

having its registered office at 1589 Madrasa Road,

Kashmiri Gate, New Delhi 110006 and the said

respondent is within the local limits of the jurisdiction of

the Hon’ble Tribunal.

viii. That the Respondent Company/Corporate Debtor herein

approached the Appellant Company/Operational Creditor

and represented that it is in requirement of

goods/material manufactured by the Appellant and

requested the Appellant company to supply the same to

the respondent.

ix.
 21
x. The Respondent, issued purchase orders demanding

certain goods from the appellant as detailed in the said

purchase order. Copy of purchase orders raised by the

Appellant is annexed and marked hereto as

ANNEXURE A4.

xi. The appellant supplied the goods as demanded and upto

complete satisfaction of the Respondent and raised invoice

from time to time. However, despite assurances, promises

and part payments, various invoices are still due and

pending. That the total debt (outstanding) amount in

default is Rs. 32,08,640/- (Rupees Thirty Two Lacs Eight

Thousand Six Hundred Forty only) as on 15.06.2019

which includes Rs. 22,75,120/- towards Principal amount

and Rs. 9,33,520/- towards interest and a further interest

of Rs. 76,270/- accrued thereon from 16.06.2019 upto

19.09.2019. Needless to say that the Respondent in term

of the agreement is liable to pay future interest of @24%

per annum till realization. That the respondent is liable for

the payment of outstanding against unpaid invoices raised

by the Appellant. Copy of the invoice and debit notes

raised by the Appellant and the Respondent are annexed

and marked hereto as ANNEXURE A5. Details of the

invoices are given below:

 22

Postin Document No. Original Outstandi Due Date

g Date Amount ng/
(Rs.) unpaid
Amount
(Rs.)

18.11. T/ 1,86,180 1,86,180 18.12.201

2017 HR02/1718/557 7
4

18.11. T/ 27,462 27,462 18.12.201

2017 HR02/1718/557 7
5

18.11. T/ 3,10,299 3,10,299 18.12.201

2017 HR02/1718/557 7
8

18.11. T/ 3,62,319 3,62,319 18.12.201

2017 HR02/1718/557 7
7

21.11. T/ 7,700 7,700 21.12.201

2017 HR02/1718/570 7
2

21.11. T/ 43,881 43,881 21.12.201

2017 HR02/1718/570 7
3

21.11. T/ 3,43,020 3,43,020 21.12.201

2017 HR02/1718/570 7
4

18.12. T/ 4,95,146 4,95,146 17.01.201

2017 HR02/1718/651 8
5

25.12. T/ 4,99,113 4,99,113 24.01.201

2017 HR02/1718/684 8
3

15.06. T/ 9,33,520 9,33,520 15.06.201

2019 HR02/1920/008 7

32,08,640 32,08,640
 23
xii. That the Appellant made several reminder/requests demanding

its payments vide correspondences Email, letters, Phone Calls

but to the dismay of the appellant, the respondents still has not

paid the outstanding Debt.

xiii. That the respondent issued cheque bearing no. 886620

dated 24.10.2018 from Canara Bank for an amount of

Rs.15,00,000/- and handed over to Appellant company,

against goods so received by them and towards invoices so

raised. But the same got dishonored vide return memo

dated 15.01.2019. Copy of cheque dated 24.10.2018

issued by the respondent is annexed hereto and marked

as ANNEXURE – A6

xiv. It is stated that no payment has been received from the

respondent till now. Thus, a total amount of

Rs. 32,08,640/- (Rupees Thirty Two Lacs Eight Thousand

Six Hundred Forty only) including principal and interest

amount is due and payable.

xv. That the appellant reminded the respondent on various

occasions vide various communications demanding for the

balance payment. The respondent after using the said

goods/material for its business defaulted in the payment

of the goods supplied by the Appellant.

xvi. Thus, there is an admitted debt of Rs.32,08,640/- (Rupees

Thirty Two Lacs Eight Thousand Six Hundred Forty only)

as on 15.06.2019, including Rs. 22,75,120/- towards

Principal amount and Rs. 9,33,520/- towards interest and

a further interest of Rs. 76,270/-.

 24
xvii. It is respectfully submitted that the Appellant Company

has completed its obligations with utmost diligence and

there is no complaint by Respondent Company with regard

to fulfillment of any obligation by Appellant Company.

Therefore, the liability of the Respondent Company is

determined and specific, and it is admitted by the

Respondent Company.

xviii. That there is no dispute of any nature whatsoever between

the Appellant Company and the Respondent Company, so

far as the supply of goods, raising of invoices, quality of

material etc is concerned. It is stated that the dispute

raised is completely alien to the amount for which

payment was sought.

xix. That the cause of action arose as on 18.12.2017, when the

invoice raised got unpaid and also on 24.10.2018 when

the cheque was dishonoured. That the cause of action

arose when the Appellant company has sent demand

notice to respondent company on 18.06.2019 to which no

reply has been received from the respondent company.

Copy Demand notice dated 18.06.2019 issued by

Appellant is annexed and marked hereto as ANNEXURE A

7.

xx. Leading to which the Appellant company filed petition

under section 8 & 9 read with sections 14, 33 of the

Insolvency and Bankruptcy Code, 2016 (IBC)and Rules 6

of the Insolvency and Bankruptcy. (Application to

Adjudicating Authority) Rules, 2016 interalia, praying for

 25
initiation of Corporate Insolvency Resolution Process

under IBC, 2016, against the Respondent Company.

xxi. The appellant filed a petition titled as, Power2SME Pvt.

Ltd. filed C.P (IB) No. 248 of 2020 against PSR Aqua and

Engineers Private Limited (Also referred to as “Corporate

Debtor”) under Section 9 of the Insolvency and

Bankruptcy Code (“hereinafter referred to as Code”). A

copy of company petition filed by the appellant being C.P

(IB) - 248/(ND)/2020 against PSR Aqua Pvt. Ltd.

alongwith annexures is collectively annexed hereto and

marked as ANNEXURE A 8.

xxii. That the respondent has failed to reply to the statutory

demand notice issued by the appellant

xxiii. Reply was filed by the respondent on 19.02.2020 A copy of

reply as filed by the respondent on 19.02.2020 alongwith

annexures is annexed hereto and marked as ANNEXURE

A9.

xxiv. That Rejoinder was filed by the appellant with supporting

affidavit on 03.03.2020. Copy of Rejoinder is annexed

hereto and marked as Annexure A 10.

xxv. That after hearing the counsel for both the parties the

Hon’ble Tribunal directed the parties for filing of the

Written Arguments. The appellant company filed the

same through the e-filing portal on 29.01.2021 vide E-

filing no. generated 0710102148542019. Copy of Written

Argument is marked and annexed herein as Annexure –

A 11.
 26
xxvi. The Respondent filed its written arguments on

27.01.2021 A copy of written arguments as filed by the

respondent on 27.01.2021 is annexed hereto and marked

as ANNEXURE A12.

xxvii. That the Ld. Adjudicating Authority heard both the

parties, wherein the Appellant raised all the valid

contentions and grounds, which the Ld. Adjudicating

Authority failed to appreciate and thereafter dismissed

the Petition under Section 9 of the Code filed by the

Appellant vide impugned order dated 03.03.2021. It shall

be imperative to state that none of the arguments raised

by the Appellant were either considered or dealt with by

the Ld. Adjudicating Authority.

8A. FACTS IN ISSUE:

a. That the Ld. Adjudicating Authority failed to appreciate that

the Respondent has explicitly admitted the debt upon it

without disputing the invoices raised by the Appellant or the

quality of the materials supplied by the Appellant thereby

admitted the liability upon it.

b. That the Ld. Adjudicating authority failed to appreciate that

the Respondent having admitted its liability ought to have

passed orders initiating the CIRP against the Respondent. It

is pertinent to mention that Respondent placed purchase

orders and accordingly upon supply of materials the

Appellant raised invoices, which have not been disputed by

the Respondent. Further, the act of issuance of the cheque

bearing No. 886620 amounting to Rs. 15,00,000/- (Rupees

 27
Fifteen Lakhs Only) and the debit note for an amount of

Rs. 12.5 Lakhs only goes on to establish admission of such

sum being payable and due towards the materials supplied by

the Appellant.

c. That the Ld. Adjudicating Authority failed to appreciate that

the Respondent admits all the invoices so raised by the

Appellant and also admits the invoiced amount of

Rs. 22,75,120 /- and also states that they prepared 02

cheques dated 03.07.2018 for Rs. 10,25,119.75 /- (Rupees

Ten Lakhs Twenty Five Thousand One Hundred and Nineteen

Only) for payment and adjusted the debit note of Rs. 12.5

lakhs. Thus, the Respondent admitted the entire liability and

showed no protest against the invoices raised, the material

supplied and also admitted that it intended to pay Rs.

10,25,119.75/-. The fact remains that despite admitting the

same the Respondent was unable to discharge its

liability/debt.

d. That the Ld. Adjudicating authority fell into error by not

differentiating between the different transactions between the

Appellant and Respondent as the dispute as alleged by the

Respondent pertains a transaction completely unrelated and

independent of the present transaction, hence a dispute or

difference pertaining to that transaction cannot be read in

tandem with the transaction under the present proceedings.

e. That the Ld. Adjudicating Authority failed to appreciate that

the Respondent placed purchase orders for materials and the

contract between the parties were not of a running nature nor

were any running accounts being maintained; the payments

 28
were made as per the invoices raised and within the time

stipulated in the invoice. In the absence of any evidence to

the contrary, the non-payment of dues pertaining to those

invoices wherein there are neither any disputes nor

differences is irrational and unreasonable.

f. That the Ld. Adjudicating Authority failed to appreciate that

the alleged ‘pre-existing dispute’ does not pertain to the

transaction in question and is completely unrelated, rather

the same pertains to supply of some more goods. The

Respondent merely alleges that at the petitioner did not

supply more goods as sought by the respondent. It is stated

that since payments were pending, there is neither any

obligation nor any rational to supply more goods. It is also

stated that non supply of goods cannot be a ground for not

paying the admitted debt.

8B. QUESTIONS OF LAW:

a. Whether non supply of more goods can be a ground for not

paying the admitted debt for goods already supplied to

complete satisfaction?

b. Whether the Ld. Adjudicating Authority failed to appreciate

and implement the law laid down by the Hon’ble Supreme

Court in Mobilox Innovations Private Limited v. Kirusa

Software Private Limited (citation) wherein it was held that

the Adjudicating Authority needs to test the veracity of the

plea of ‘pre-existing dispute’ and ensure that the same is not

a feeble legal argument unsupported by evidence?

c. Whether the Ld. Adjudicating Authority failed to appreciate

and implement the law laid down by the Hon’ble Supreme

 29
Court in Mobilox Innovations Private Limited (Supra)

wherein it has been stated that the Adjudicating Authority

must ensure the genuineness of the plea of ‘pre-existing

dispute’ and reject spurious defence which is mere bluster?

d. Whether the Ld. Adjudicating Authority to failed to appreciate

and consider the independence of the transactions between

the parties, and further failed to appreciate that the alleged

‘pre-existing dispute’ pertains to a transaction entirely

independent and unrelated to the transaction qua which the

application under Sections 8 & 9 of the Code?

e. Whether the Ld. Adjudicating Authority fell into error by

considering the false plea of ‘pre-existing dispute’ and

dismissing the application, especially when no such notice of

dispute was raised by way of reply to the demand notice

issued by the Appellant?

f. Whether the Ld. Adjudicating Authority failed to appreciate

that the plea of ‘pre-existing dispute’ taken by the Respondent

is merely an afterthought?

g. Whether the Ld. Adjudicating Authority fell into err by relying

upon the forged and fabricated documents adduced by the

Respondent, which suffered from various discrepancies due to

the forgery and fabrication?

h. Whether the Ld. Adjudicating Authority failed to appreciate

that the entire debt as against the Respondent has been

acknowledged and admitted by the Respondent?

i. Whether the Ld. Adjudicating Authority erred by disallowing

the application of the Appellant despite such liability and

debts being explicitly admitted by the Respondent?

 30
j. Whether the Ld. Adjudicating Authority fell into error by not

considering the unpaid outstanding amounts which have

been explicitly admitted by the Respondent?

k. Whether or not ‘pre-existing dispute’ must be in relation to a

common transaction or transaction upon which the

application has been filed?

l. Whether or not ‘pre-existing dispute’ would include any form

of dispute and would a nexus with the transaction at hand

not required to be proved?

9. GROUNDS OF APPEAL:

a. That the Ld. Adjudicating Authority failed to appreciate and

implement the law laid down by this Hon’ble Appellate

Tribunal in “Vineet Khosla Versus Edelweiss Asset

Reconstruction Company Ltd. and Others” 2019 SCC

OnLine NCLAT 487, interalia elucidating the principle that if

the debt is more than one (01) lakh and admitted by the

Corporate Debtor, then the petition deserves to be admitted.

The relevant portion of the said matter is being reproduced

herein for ready reference:

“From the above, it is clear that at the stage of

admission of Application under Section 7, the
requirement is to give limited Notice and the
considerations would be to see whether or not
satisfaction by Adjudicating Authority could be
reflected on the basis of Sub-Section (5) of Section 7.
If there is a financial debt, which is more than Rs.1
Lakh and there is a default and if the Application is
complete, the Application would have to be
admitted......"

Copy of judgment passed by the Hon’ble National

Company Law Appellate Tribunal in “Vineet Khosla

 31
Versus Edelweiss Asset Reconstruction Company Ltd.

and Others” 2019 SCC OnLine NCLAT 487 is being

annexed herewith and marked as ANNEXURE A13.

b. The above quoted verdict was again reproduced, relied

upon and reiterated by this Hon'ble Tribunal in

Company Appeal (AT) (Ins) No.271 of 2020 in the case

of Mr. Subhash Agarwal versus AU Small Finance

Bank Limited, wherein this Hon'ble Tribunal held as

under:

"8................. As far as the admission of the

Application is concerned, question required to be
considered by Adjudicating Authority, was to see if
financial debt was due and if default was of
Rupees One Lakh. If the Application is otherwise
complete, the Application is required to be
admitted."
Similar view was adopted by three (03) judges bench of

this Hon'ble Tribunal in Company Appeal (AT)

(Insolvency) No. 549 of 2020 in the case of Narendra

Kumar Agrawal versus Montorone Leasing Private

Limited, in the following dictum as passed by this

Hon'ble Tribunal:

"20 It is also clear that the Corporate Debtor has

not paid the amount due and more than Rs.1 (one)
lac. The Application is complete. Therefore, the
Adjudicating Authority was justified in admitting
the petition. We do not find any reason to interfere
with the Adjudicating Authority's order in
admitting the petition. Thus, Appeal is devoid of
merit hence dismissed. No order as to costs."
Copy of the judgment in Company Appeal (AT) (Ins)

No.271 of 2020 in the case of Mr. Subhash Agarwal

versus AU Small Finance Bank Limitedand Company

Appeal (AT) (Insolvency) No. 549 of 2020 in the case of

Narendra Kumar Agrawal versus Montorone Leasing

 32
Private Limited are being annexed herewith as

ANNEXURES A14&A15 respectively.

c. It shall be worth mentioning that the above quoted

verdict and dictum passed by this Hon'ble Tribunal is a

constant view taken time and again in numerous matters

and again by three judges bench in Company Appeal

(AT) (Insolvency) No. 720 of 2018 in the case of

Pedersen Consultants India Pvt. Ltd. Vs. Nitesh

Estates Limited, wherein it was held as under:

"8. From the aforesaid decision, it is clear that the

existence of dispute must be pre-existing i.e. it must
exist prior to issuance of the demand notice or
invoice. If it comes to the notice of the Adjudicating
Authority that the ‘operational debt’ is exceeding
Rs. 1 lakh and the application shows that the
aforesaid debt is due and payable and has not
been paid, in such case, in absence of existence of a
dispute between the parties or the record of the
pendency of a suit or arbitration proceeding filed
before the receipt of the demand notice of the
unpaid ‘operational debt’, the 13 Company Appeal
(AT) (Insolvency) No. 720 of 2018 application under
Section 9 cannot be rejected and is required to be
admitted. "
10. From the aforesaid findings, it is clear that the
claim means a right to payment even if it is
disputed. Therefore, merely because the ‘Corporate
Debtor’ has disputed the claim by showing that
there is certain counter claim, it cannot be held that
there is pre-existence of dispute."
12. The Respondent disputed that the alleged debt is
not the amount as shown in the Form. However, on
mere dispute of amount, the application under
Section 9 cannot be rejected, as in terms of Section
3(6) which defines ‘claim’ to mean a right to
payment even if it is disputed. The Hon’ble 18
Company Appeal (AT) (Insolvency) No. 720 of 2018
Supreme Court in “Innoventive Industries Ltd. v.
ICICI Bank and Anr.” (Supra) noticed the definition
of ‘claim’ and held that even if the right of payment
is disputed, the Code gets triggered the moment
default is of rupees one lakh or more (Section 4). In
the circumstances, in absence of any pre-existing
dispute, it was not open for the Adjudicating
Authority to reject the application under Section 9.
 33
Thus, this Hon'ble Tribunal has constantly taken a view

that counter claim cannot be considered as "pre-existing

dispute" and cannot defeat the petition if the debt

admitted is more than Rupees one Lakh. It is humbly

submitted that the present case of the Appellant is

squarely covered by the judgments quoted above and are

binding on the Ld. Adjudicating Authority.Copy of the

judgment passed by the Hon’ble NCLAT in Company

Appeal (AT) (Insolvency) No. 720 of 2018 in the case of

Pedersen Consultants India Pvt. Ltd. Vs. Nitesh Estates

Limited is being annexed herewith and marked as

ANNEXURE A16

d. That the Ld. Adjudicating Authority failed to appreciate and

implement the law laid down by this Hon’ble Appellate

Tribunal in Ahluwalia Contracts (India) Ltd v Raheja

Developers Ltd. (2019 SCC OnLine NCLAT 942). Copy of the

judgment passed by the Hon’ble NCLAT in Ahluwalia

Contracts (India) Ltd v Raheja Developers Ltd. (2019 SCC

OnLine NCLAT 942) is being annexed herewith and marked as

ANNEXURE A17.

e. That the Ld. Adjudicating Authority failed to appreciate and

implement the law laid down by the Hon’ble Supreme Court

in Mobilox Innovations Pvt Ltd v Kirusa Software (P) Ltd

(2018) 1 SCC 353 which had observed that

"What is important is that the existence of the

dispute and/or the suit or arbitration proceeding
must be pre-existing – i.e. it must exist before the
receipt of the demand notice or invoice, as the case
may be."
 34
Copy of the judgment of Mobilox Innovations Pvt Ltd v

Kirusa Software (P) Ltd (2018) 1 SCC 353 is being annexed

herewith and marked as ANNEXURE A18.

f. That the Ld. Adjudicating Authority failed to appreciate and

implement the law laid down by this Hon’ble Appellate

Tribunal in Rajeev K Aggarwal vs Panipat Texo Fabs. Pvt. Ltd.

and Anr. in Company Appeal (AT) (INsolvency) No. 715 of

2018 wherein:

"Raising of dispute in regard to quality of

goods being inferior/substandard of
defective for the first time in reply to demand
notice or in response to notice served by the
Adjudicating Authority would not constitute a
prior and pre-existing dispute contemplated
under laws as a defence to the initiation of
corporate Insolvency Resolution Process..."

Further in Company Appeal (AT) (Insolvency) No. 327 of 2018

in the case of Sudhir Sales vs D-Art Furnitures:

"ii. In Innoventive Industries Ltd. (Supra) the

Hon'ble Supreme court held that pre-existing
dispute is the dispute raised before demand
notice or invoices was received by the "Corporate
Debtor". Any subsequent dispute raised while
replying to the demand notice under Section 8(1)
cannot be taken into consideration to hold that
there is a pre-existing dispute. Therefore, in the
present case the reply given by the "Corporate
Debtor" on 09th September.2017 is to be ignored
for finding out whether there is pre-existence of
dispute or not"
Copies of the judgments in Rajeev K Aggarwal vs Panipat Texo

Fabs. Pvt. Ltd. and Anr.&Sudhir Sales vs D-Art Furnitures

are being annexed herewith and marked as ANNEXURES

A19&A20 respectively.

g. That the Ld. Adjudicating Authority failed to appreciate that

the Respondent admits all the invoices so raised by the

 35
Appellant and also admits the invoiced amount of

Rs. 22,75,120 /- and also states that they prepared 02

cheques dated 03.07.2018 for Rs. 10,25,119.75 /- for

payment and adjusted the debit note of Rs. 12.5 lakhs. Kind

attention of this Hon’ble Tribunal is invited to

Part IV on internal page 7 of the Reply filed by the

Respondent wherein the Respondent has explicitly admitted

the liability upon it and the debt. Thus, the Respondent

admitted the entire liability and showed no protest against

the invoices raised, the material supplied and also admitted

that it intended to pay Rs. 10,25,119.75/-. Kind attention of

this Hon’ble Tribunal is invited to para 10 of internal page 6

of the reply by the Respondent in this regard.

Thus, the present case being admittedly more than

Rs. 1 Lakh, coupled with the admission of the Respondent up

to Rs. 10,25,119.75/-, as per pecuniary jurisdiction in the

year 2019 is liable to be admitted. The fact remains that

despite admitting the same the Respondent was unable to

discharge its liability/debt.

h. That the Ld. Adjudicating Authority failed to appreciate that

for the balance Rs. 12.5 Lakhs, Respondent alleges having

raised a debit note for losses suffered by it due to "non-

supply of materials as per fresh purchase order" so raised

by it. Kind attention of this Hon’ble Tribunal is invited to Part

IV on internal page 7 of the reply of the Respondent. It is

submitted that the said issue is what has been considered to

be the alleged ‘pre-existing dispute’ wherein the said Rs. 12.5

Lakhs has been allegedly adjusted vide debit notes. It is

 36
submitted that the said debit note of Rs. 12.5 Lakhs or the

quantum of Rs. 12.5 Lakhs is in the nature of damages and a

counter claim, which is independent to the debt of the

Appellant. Thus, such imaginary and vexatious counter

claims deserves to be rejected..

i. That the Ld. Adjudicating Authority ought to have appreciated

that Debit Note by its very definition means "request for

deduction of some amount from the Principal payable". In the

present case, the Principal payable as admitted is

Rs.22,75,120/-. Thus, the petition as filed by the Petitioner

ought to have been admitted, for the reasons that the

respondent despite having admitted its liability failed to pay

its debt.

j. That the Ld. Adjudicating Authority failed to appreciate that

apart from the abovementioned, there is no allegation against

or dispute for the invoices raised and the goods supplied,

either on its quality or otherwise. The only allegation is that

further goods were not supplied for the fresh purchase order.

k. That the Ld. Adjudicating Authority failed to appreciate that

this cannot be a valid “pre-existing dispute” for holding

payments for invoices/goods, against which there is no

allegation/dispute whatsoever. The invoices for which the

payments are being sought has till date not been disputed

including in the reply filed by Respondent. There is also no

objection to the quality and/or quality of goods supplied.

l. That the Ld. Adjudicating Authority failed to appreciate that

since admittedly purchase orders were raised from time to

time and the entire transactions between the parties were for
 37
supply of material and the same was neither a running

contract nor anywhere alleged or evidenced by the

Respondent thus, there is no rationale for not paying for the

invoices against which there are neither any disputes nor any

differences, only on the allegation that the Appellant did not

supply more goods. It is stated that since payments were

pending, there is neither any obligation nor any rational to

supply more goods.

m. That the Ld. Adjudicating Authority failed to appreciate that

the Respondent in the documents annexed with the reply, on

pages 19 and 32 has adduced the alleged work order dated

15.12.2017 wherein there are discrepancies in both the

documents as on the document on page 19 at serial no. 7 the

quantity of material differs from the one at serial no. 7 of the

document on page 32. It is submitted that the documents

annexed by the Respondent in this regard is forged and

fabricated and hence inadmissible.

n. That the Ld. Adjudicating Authority failed to appreciate that

the reason as stated in the debit note is also for non supply of

material as stated in page 35 of the reply. In absence of any

agreement to the contrary, the Appellant cannot be forced to

supply more goods to satisfy newly raised Purchase Orders,

moreso, when not even a single invoice for earlier supply of

goods were paid by the Respondent. Thus, the alleged Debit

note cannot be forced on the Appellant.

o. The Ld. Adjudicating Authority failed to appreciate that the

Respondent is also contradicting on the amount of debit note

as in the reply on page 39, in the e-mail dated 26.02.2018

 38
issued by the Respondent to the Appellant, the alleged

amount of debit note of Rs. 12.5 lakhs is mentioned as Rs.

22,75,119.75. Thus, the same is an afterthought as the same

evidently shows that the Respondent wanted to evade the

liability of paying its dues by way of raising a concocted

dispute.

p. That the Ld. Adjudicating Authority fell into error by

considering the deposition by the Respondent on para 4 on

page 4 of the reply which falsely states that one

Mr. Prakhar Chauhan, employee of the Appellant company

accepted the said debit notes, whereas the said individual

through e-mails dated 26.02.2018 and 04.07.2018 on

internal pages 38 and 40 of the reply has explicitly and

categorically stated that the debit notes are not being

accepted. It is further submitted that not even a single

document has been filed to support the allegation that the

debit note was ever accepted.

q. That the Ld. Adjudicating Authority fell into error as the

reliance on MoM dated 16.02.2018 by the respondent is bad

as the same is incomplete. It is submitted that the same

contains one sided statements, contains signature of third

party only as the Appellant never participated in the same,

and further the signatures are before minutes so recorded, all

of which raises reasonable doubts. The final outcome of the

meeting is also missing. It is further submitted that para 5 of

MoM dated 16.02.2018 states about the debit note raised i.e

raised on or before 16.02.2018 but debit note itself is dated

 39
17.02.2018 which clearly establishes that the MoM dated

16.02.2018 is a forged and fabricated document.

r. That the Ld. Adjudicating Authority failed to appreciate that

on page 41 in the e-mail dated 25.10.2018 the modified offer

given by Respondent was also rejected by the Appellant.

Hence the entire concocted story of debit note and acceptance

of the same falls flat.

It is submitted that once modified offer comes in existence,

there is no occasion for accepting earlier offer as per Section 7

of Indian Contract Act which mandates “acceptance must be

Absolute”.

s. That the Ld. Adjudicating Authority failed to appreciate that

the debit note was towards damages. Damages are to be

proved, else cannot be granted. Reliance is placed on Section

73 and 74 of Indian Contract Act. Further, there was neither

any consensus nor ever agreed between the parties that non-

supply of material for a newly raised PO would entail

damages. It was also never disclosed by the Respondent

either to the Appellant nor stated in their pleadings that they

shall suffer damages, in case of non-supply and the same

would be borne by the Appellant. Thus, in absence of any

such agreement, understanding or prior intimation, the same

cannot be forced upon the Respondent.

Thus, the alleged debit note was raised as an afterthought,

does not relate to the goods supplied and the invoices raised,

both invoices and the amount being admitted, however not

paid shows the incapacity of Respondent company to pay the

same.
 40
t. That the Ld. Adjudicating Authority failed to appreciate that

in the absence of any dispute against the invoices and the

material supplied, the Respondent issued a cheque in favour

of the Appellant. This cheque got dishonoured vide return

memo dated 15.01.2019. The issuance of cheque further

amounts to admission of debt. This is without prejudice to

the fact that there is no dispute regarding goods supplied and

invoices raised.

u. That the Ld. Adjudicating Authority failed to appreciate that

the stance of the Respondent regarding the alleged lost

cheque is merely a concocted and false story. Kind attention

of this Hon’ble Tribunal is invited to document annexed by

the Respondent on internal page 44 of the reply, wherein an

alleged online FIR has been relied upon by the Respondent,

the perusal of which would clearly show that the said website

is neither the official website of any concerned police station

nor is functional; furthermore does not mention any details

pertaining to the FIR. It is clear from the same that the said

document is a forged and fabricated document and ought to

have been not admitted or relied upon. Further in the reply of

the Respondent, although not annexed as a document, in the

index of the same ANNEXURE R-7 mentions a copy of a

complaint dated 16.01.2019 for the alleged lost cheque,

however the said document was brought on record vide an

application for placing additional documents, and the

document on page 45 marked as ANNEXURE R-7 is an

alleged whatsapp chat with one Mr. Dheeraj who is not even

linked or connected to the Appellant. It is pertinent to

 41
mention that the said complaint dated 16.01.2019 again

raises various questions regarding the genuineness, as the

return memo of the dishonoured cheque is dated 15.01.2019,

and soon a day after the Respondents got the said complaint

lodged, which clearly establishes the malafide and

afterthought of the Respondent.

v. It is humbly reiterated that the Respondent has admitted

having received all the invoices and the goods, there is no

allegation against the goods supplied or the invoice raised on

the Respondent and further states that the Respondent

prepared the cheques for the said payment. Since this

admission is more than Rs.1 lakh it squarely falls under the

pecuniary jurisdiction at the time when the petition under

Sec. 9 IBC, 2016 was filed i.e on 20.112019. For the

remaining amount of Rs. 12.5 lakhs the Respondent alleges

to have raised a debit note towards alleged damages for non

supply of goods for fresh purchase order so placed by the

Respondent.

w. It is further submitted that the Appellant cannot be fastened

with the liability of the alleged damages for non supply of

materials and by stopping the payments for earlier invoices

for which there is no dispute. It is stated that merely by

raising any allegation of loss being suffered, does not

disqualify the Appellant from claiming or receiving its

admitted debt. Thus, the Respondent suo-moto on its whims

and fancies cannot force upon the Appellant, debit note

(which debit note is unrelated to the transaction admitted in

this matter). Judgments starting from Fateh Chand Vs.

 42
BalkishanDass (AIR 1963 SC 1405), Maula Bux v. Union of

India(1970 (1) SCR 928), Shree Hanuman Cotton Mills and

Anr. v. Tata Aircraft Limited (1970 (3) SCR 127), Satish Batra

v. Sudhir Rawal (2013) 1 SCC 345, Kailash Nath Associates

Vs. Delhi Development Authority and Another {(2015) 4 SCC

136}, ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705, M.C.

Luthra vs. Ashok Kumar Khanna 2018 (248) DLT 161, Rajbir

Singh vs. Jaswant Yadav, RFA No.404 of 2018 decided on

14.05.2018 etc. are relied upon wherein all the courts in our

country including the Hon'ble Supreme Court has

unanimously held that damages are to be proved as also

stipulated under Sections 73 and 74 of Indian Contract Act.

Copies of the judgments of Fateh Chand Vs. BalkishanDass

(AIR 1963 SC 1405), Maula Bux v. Union of India(1970 (1)

SCR 928), Shree Hanuman Cotton Mills and Anr. v. Tata

Aircraft Limited (1970 (3) SCR 127), Satish Batra v. Sudhir

Rawal (2013) 1 SCC 345, Kailash Nath Associates Vs. Delhi

Development Authority and Another {(2015) 4 SCC 136},

ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705, M.C. Luthra

vs. Ashok Kumar Khanna 2018 (248) DLT 161, Rajbir Singh

vs. Jaswant Yadav, RFA No.404 of 2018 decided on

14.05.2018 are being annexed herewith and marked as

ANNEXURE A21 Colly.

x. The Ld. Adjudicating Authority failed to appreciate that the

Respondent admits that the notice was received at the

registered address, despite which no reply to statutory notice

was given, further shows there was no pre-existing dispute

 43
and it is only in the reply that the Respondent as an

afterthought raises such plea.

y. That the Ld. Adjudicating Authority failed to appreciate and

implement the law laid down by the Hon’ble Supreme Court

in Mobilox Innovations Pvt. Ltd. (Supra) wherein the Ld.

Adjudicating Authority while dealing with pleas of ‘pre-

existing dispute’ must ensure that the same is not merely an

illusory defence and must be genuine. The relevant portion of

the judgment is being reproduced for ready reference:

“40. 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. ....................”
It is submitted that despite the Appellant raising all the valid

and genuine contentions the Ld. Adjudicating Authority has

failed to appreciate the same and has erroneously passed the

impugned order which on the face of it is bad in law and facts

and deserves to be set aside.

10. MATTER NOT PREVIOUSLY FILED OR PENDING WITH ANY

OTHER TRIBUNAL

The appellant declares that the appellant has not previously

filed any writ petition, suit or other proceeding regarding the

issues raised in the present appeal, before any other Tribunal

or judicial authority, nor is any such writ petition, suit or other

proceeding, pending before any Tribunal or judicial authority.

11. SPECIFY BELOW EXPLAINING THE GROUNDS FOR SUCH

RELIEF (S) AND THE LEGAL PROVISIONS, IF ANY RELIED
UPON
 44
As mentioned in Para 9 above.
12. DETAILS OF INTERIM APPLICATION IF ANY PREFERRED
ALONG WITH APPEAL
None

13. DETAILS OF APPEAL/S, IF ANY PREFERRED BEFORE THIS

APPELLATE TRIBUNAL AGAINST THE SAME IMPUGNED
ORDER/ DIRECTION, BY APPELLANTS AND INTERIM
ORDER, IF ANY PASSED IN THAT APPEAL (IF KNOWN).
NOT AWARE
14. DETAILS OF INDEX
An index containing the details of the documents in
chronological order relied upon is enclosed herewith.
15. PARTICULARS OF FEE PAYABLE AND DETAILS OF BANK
DRAFT IN FAVOUR OF PAY AND ACCOUNTS OFFICERS,
MINISTRY OF CORPORATE AFFAIRS, NEW DELHI
The Bank Draft of Rs. …………/- drawn on ............... having
DD No. dated ..........2021 in favour of Pay and
accounts officer, Ministry of Corporate Affairs, New Delhi is
enclosed herewith as Tribunal fees.

16. LIST OF ENCLOSURES:

Enclosures are set out highlighted as annexures in the list
contained in the Index.
17. WHETHER THE ORDER APPEALED AS COMMUNICATED
IN ORIGINAL AS FILED IF NOT, EXPLAIN THE REASON
FOR NOT FILING THE SAME:
True printout from the official website of the Ld. Adjudicating
Authority (National Company Law Tribunal, Delhi Bench)
18. WHETHER THE APPELLANT IS READY TO FILE WRITTEN
SUBMISSIONS/ARGUMENTS BEFORE THE FIRST
RESPONDENTS
That the appellant craves leave of this Hon’ble Tribunal to file
written submissions/ Arguments/after the first hearing of the
above mentioned appeal.
 45
19. WHETHER THE COPY OF MEMORANDUM OF APPEAL
WITH ALL THE ENCLOSURES HAS BEEN FORWARDED TO
ALL THE RESPONDENTS AND ALL INTERESTED PARTIES,
IF SO, ENCLOSE POSTAL RECEIPT/COURIER RECEIPT IN
ADDITION TO PAYMENT OF PRESCRIBED PROCESS FEE:

The copy of the memorandum of appeal along with all

enclosures has been served on the respondents. The postal
receipt/acknowledgment of receipt in this regard is enclosed.
20. ANY OTHER RELEVANT OR MATERIAL
PARTICULARS/DETAILS WHICH THE APPELLANTS (S)
DEEMS NECESSARY TO SET OUT:
The appellant has already made all relevant averments and
disclosures in the exordium and the same is not repeated
herein for the sake of brevity.

21. RELIEF SOUGHT:

In view of the facts and circumstances as well as the
questions of law set out hereinabove along with the grounds,
the appellant prays for the following relief (s) that this Hon’ble
Tribunal may graciously be pleased to:
a. Set aside the impugned order dated 03.03.2021 passed by
the Hon’ble National Company Law Tribunal, Delhi Bench
in Company Petition 248(IB)/ND/2020 titled as
‘Power2SME Pvt. Ltd v. PSR Aqua & Engineers Pvt. Ltd.’.
b. Allow the petition under section 9 of the Code filed by the
Appellant and pass orders for admission of Company
Petition 248(IB)/ND/2020 and initiation of CIRP against
the Respondent;
c. Pass any other relief that this Hon’ble Tribunal deems fit
and appropriate in favour of the Appellant and against the
Respondent in view of the facts and circumstance and in
the interest of justice.

FOR WHICH THE APPELLANTS SHALL AS IN DUTY BOUND EVER

PRAY
 46
APPELLANT

THROUGH

PANKAJ BHAGAT
ADVOCATE FOR THE APPELLANT
N29-A, LGF, JANGPURA EXTENSION
NEW DELHI-110 014
PH: 01143521415, 8800791415,9871441415
[email protected]
DATED: 18.03.2021
NEW DELHI

DECLARATION BY THE APPELLANT

The appellant above-named hereby solemnly declares that nothing

material has been concealed or suppressed in the present appeal,
and further declares that the Annexures/enclosures to the present
appeal and/ or typed copies of documents filed herewith and relied
upon by the appellants are true copies of their originals/ fair
reproduction of the originals/true translation thereof.

Verified at New Delhi on this the 18th March, 2021.

APPELLANT

THROUGH

PANKAJ BHAGAT
ADVOCATE FOR THE APPELLANT
N29-A, LGF, JANGPURA EXTENSION
NEW DELHI-110 014
PH: 01143521415, 8800791415,9871441415
[email protected]
DATED: 18.03.2021
NEW DELHI
 47
VERIFICATION

I, Munender Chauhan AR of Power2SME Pvt Ltd, being the

appellant herein do hereby verify that the contents of paragraphs
01 to 21 and their sub paras are true to my personal
knowledge/derived from official records of the company and
downloaded from web portal of Ld. Adjudicating Authority, and that
contents of paragraphs 20 are believed by me to be true based on
the legal advice received by me and paragraphs 21 are prayers
made to this Hon’ble appellate Tribunal. I also verify that, I have
not suppressed any material fact in the present appeal, which has
been drafted under my instructions.

DEPONENT
 48
IN THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL

AT NEW DELHI
APPELLATE JURISDICTION
COMPANY APPEAL (A.T) INSOLVENCY NO. OF 2021

IN THE MATTER OF:

POWER2SME PVT. LTD. …APPELLANT
VERSUS
PSR AQUA AND ENGINEERS PVT. LTD. …RESPONDENT

AFFIDAVIT

I, Munendra Chauhan, aged about 40 years, S/o Sh. Netrapal

Singh Chauhan, General Manager – Legal & Authorized

Representative of the Appellant Company having its registered

office at AD-13, Basement (LGF), Tagore Garden, New Delhi –

110027, do hereby solemnly affirm and state as under :-

1. That the deponent is the AR of the Appellant Company in the

present appeal and is fully conversant with the facts of the

case and the accompanying appeal and is competent to swear

the present affidavit.

2. That the accompanying appeal has been drafted by my

counsel under my instructions and the same has been read,

understood and found to be correct.

DEPONENT

VERIFICATION:

Verified on this day of March, 2021 at New Delhi that the

contents of the above certificate are true and correct to the best of

my knowledge and as per the records maintained by the Appellant

Company and nothing material has been conceal there from.

DEPONENT
 49
IN THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL

AT NEW DELHI
APPELLATE JURISDICTION
COMPANY APPEAL (A.T) INSOLVENCY NO. OF 2021

IN THE MATTER OF:

POWER2SME PVT. LTD. …APPELLANT
VERSUS
PSR AQUA AND ENGINEERS PVT. LTD. …RESPONDENT

APPLICATION SEEKING EXEMPTION FROM FILING CERTIFIED

COPY OF THE IMPUGNED ORDER ON BEHALF OF THE
APPELLANT

MOST RESPECTFULLY SHOWETH:

1. That the above noted appeal is pending adjudication before

this Hon’ble Appellate Tribunal and the contents of the same

may be read as part and parcel of the present application and

the same is not being repeated herein for the sake of brevity.

2. That the Appellant has not yet received a copy of the

impugned order dated 03.03.2021, and as such is not being

able to file the certified copy of the same along with the

present appeal.

3. The Appellant is filing the true printout of the order dated

03.03.2021 retrieved from the official website of the

Ld. Adjudicating Authority (National Company Law Tribunal,

Mumbai Bench) and the same is true copy of the original.

4. The Appellant seeks the leave of this Hon’ble Appellate

Tribunal to be exempted from filing the certified copy of the

order and to accept the true printout as adduced in the

present appeal.
 50
PRAYER

It is therefore most, humbly prayed that this Hon’ble Appellate

Tribunal be pleased to allow the present application and exempt

the appellant from filing the certified copy of the impugned order.

Any other relief that this Hon’ble Appellate Tribunal deems fit and

necessary in view of the facts and circumstances of the case and in

the interest of justice.

APPELLANT

THROUGH

PANKAJ BHAGAT
ADVOCATE FOR THE APPELLANT
N29-A, LGF, JANGPURA EXTENSION
NEW DELHI-110 014
PH: 01143521415, 8800791415,9871441415
[email protected]
DATED:
NEW DELHI
 51
IN THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL
AT NEW DELHI
APPELLATE JURISDICTION
COMPANY APPEAL (A.T) INSOLVENCY NO. OF 2021

IN THE MATTER OF:

POWER2SME PVT. LTD. …APPELLANT
VERSUS
PSR AQUA AND ENGINEERS PVT. LTD. …RESPONDENT

AFFIDAVIT

I, Munendra Chauhan, aged about 40 years, S/o Sh. Netrapal

Singh Chauhan, General Manager – Legal & Authorized

Representative of the Appellant Company having its registered

office at AD-13, Basement (LGF), Tagore Garden, New Delhi –

110027, do hereby solemnly affirm and state as under :-

1. That the deponent is the AR of the Appellant Company in the

present appeal and is fully conversant with the facts of the

case and the accompanying appeal and is competent to swear

the present affidavit.

2. That the accompanying application has been drafted by my

counsel under my instructions and the same has been read,

understood and found to be correct.

DEPONENT

VERIFICATION:

Verified on this day of March, 2021 at New Delhi that the

contents of the above certificate are true and correct to the best of

my knowledge and as per the records maintained by the Appellant

Company and nothing material has been conceal there from.

DEPONENT
 52
IN THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL
AT NEW DELHI
APPELLATE JURISDICTION
COMPANY APPEAL (A.T) INSOLVENCY NO. OF 2021

IN THE MATTER OF:

POWER2SME PVT. LTD. …APPELLANT
VERSUS
PSR AQUA AND ENGINEERS PVT. LTD. …RESPONDENT

INDEX

S.NO. PARTICULARS PAGES

1. Memo of Parties

2. Synopsis and List of Dates & Events

3. Appeal preferred under Section 61 read with

Section 32 of the Insolvency and Bankruptcy
Code, 2016 against order dated
03.03.2021passed by the Hon’ble National
Company Law Tribunal, New Delhi Bench in
Company Petition (IB) No. 248 of 2020
alongwith supporting affidavit.

4. ANNEXURE A 1

True printout of the impugned order dated

03.03.2021 as downloaded from the official
web-portal of the adjudicating authority

5. ANNEXURE A 2

Copy of Board Resolution dated ……….2021 of

the Appellant company.

6. ANNEXURE A3

Copy of master data of the respondent

company.

7. ANNEXURE A4

Copy of purchase orders placed by the

Respondent.

8. ANNEXURE A5

Copy of the invoice and debit notes raised by

the appellant.

9. ANNEXURE A6
 53
Copy of cheque dated 24.10.2018 issued by the
respondent.

10. ANNEXURE A7

Copy of statutory demand notice dated

18.06.2019 issued by the appellant

11. ANNEXURE A8

A copy of company petition filed by the

appellant being C.P (IB) - 248/(ND)/2020
against PSR Aqua Pvt. Ltd. alongwith
annexures.

12. ANNEXURE A9

A copy of reply along with documents as filed

by the respondent on 19.02.2020

13. ANNEXURE A10

That Rejoinder was filed by the appellant with

supporting affidavit on 03.03.2020.

14. ANNEXURE A11

Copy of Written argument filed by the

Appellant

15. ANNEXURE A12

Copyof the Written arguments filed by the

Respondent

16. ANNEXURE A13

Copy of judgment passed by the Hon’ble

National Company Law Appellate Tribunal in
“Vineet Khosla Versus Edelweiss Asset
Reconstruction Company Ltd. and Others”
2019 SCC OnLine NCLAT 487

17. ANNEXURE A14

Copy of the judgment passed by the Hon’ble

NCLAT in Company Appeal (AT) (Ins) No.271 of
2020 in the case of Mr. Subhash Agarwal
versus AU Small Finance Bank Limited

18. ANNEXURE A15

Copy of the judgment passed by the Hon’ble

NCLAT in Company Appeal (AT) (Insolvency)
No. 549 of 2020 in the case of Narendra Kumar
 54
Agrawal versus Montorone Leasing Private
Limited

19. ANNEXURE A16

Copy of the judgment passed by the Hon’ble

NCLAT in Company Appeal (AT) (Insolvency)
No. 720 of 2018 in the case of Pedersen
Consultants India Pvt. Ltd. Vs. Nitesh Estates
Limited

20. ANNEXURE A17

Copy of the judgment passed by the Hon’ble

NCLAT in Ahluwalia Contracts (India) Ltd v
Raheja Developers Ltd. (2019 SCC OnLine
NCLAT 942)

21. ANNEXURE A18

Copy of the judgment passed by the Hon’ble

Supreme Court of India in Mobilox Innovations
Pvt Ltd v Kirusa Software (P) Ltd (2018) 1 SCC
353

22. ANNEXURE A19

Copy of the judgment passed by the Hon’ble

NCLAT in Rajeev K Aggarwal vs Panipat Texo
Fabs. Pvt. Ltd. and AnrCompany Appeal (AT)
(INsolvency) No. 715 of 2018

23. ANNEXURE A20

Copy of the judgment passed by the Hon’ble

NCLAT in Company Appeal (AT) (Insolvency)
No. 327 of 2018Sudhir Sales vs D-Art
Furnitures

24. ANNEXURE A21 Colly

Copies of judgments Fateh Chand Vs.

BalkishanDass (AIR 1963 SC 1405), Maula
Bux v. Union of India(1970 (1) SCR 928), Shree
Hanuman Cotton Mills and Anr. v. Tata
Aircraft Limited (1970 (3) SCR 127), Satish
Batra v. Sudhir Rawal (2013) 1 SCC 345,
Kailash Nath Associates Vs. Delhi Development
Authority and Another {(2015) 4 SCC 136},
ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC
705, M.C. Luthra vs. Ashok Kumar Khanna
2018 (248) DLT 161, Rajbir Singh vs. Jaswant
Yadav, RFA No.404 of 2018 decided on
 55
14.05.2018.

25. Application on behalf of the Appellant seeking

exemption from filing certified copy of the
impugned order dated 03.03.2021 along with
affidavit

APPELLANT

THROUGH

PANKAJ BHAGAT
ADVOCATE FOR THE APPELLANT
N29-A, LGF, JANGPURA EXTENSION
NEW DELHI-110 014
PH: 01143521415, 8800791415,9871441415
[email protected]
DATED: 18.03.2021
NEW DELHI