10. Following the receipt of this reply, the Operational Creditor sent another Demand Notice dated 20.09.2018, recalling its earlier Demand Notic
dated 06.09.2018 on the ground of “typographical errors,†and that a fresh Demand Notice was being issued. In terms of this Demand Notice, th
Operational Creditor called upon the Corporate Debtor to make payment of a sum of Rs. 35,14,802.06 which remained due and payable afte
factoring in the payments made by the Corporate Debtor.
18. Per contra, Learned Counsel for the Operational Creditor has relied on a judgment of the Hon'ble Calcutta High Court in S hree Balaji Steels v.
Gontermann-Peipers (India) Limited,2002 SCC OnLine Cal 821: (2003) 114 Comp Cas 193 (Ca ld)ecided on 15.05.2002 in the context of winding-up
under the Companies Act, 1956, wherein it was held as follows:â€
“9. … In our view, in order to bring the winding-up petition within the bar as contemplated in section 69(2) of the Partnership Act, two
things are to be considered. The first one is whether the winding-up petition can be construed to be a “suit†within the meaning of
section 69(2) of the Partnership Act, and the other is whether a winding up petition has been filed on a cause of action to enforce a right
arising from a contract or conferred by the Partnership Act. So far as the first condition is concerned in this case, it is an admitted position
that petition for winding up filed by the unregistered firm cannot be construed to be a “suit†within the meaning of section 69(2) of the
Partnership Act …â€
19. A plain reading of the provisions of section 69(2) of the Indian Partnership Act, 1932, reveals that the term “suit†has been used instead of the
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term “proceedings.†In Gaurav Hargovindbhai Dave v. Asset Reconstruction Company decided by the Hon'ble Supreme Court while
addressing the applicability of the provisions of the Limitation Act, 1963, it was held that Article 62 (of the Limitation Act, 1963) is not applicable on
the ground that it would only apply to suits. It was held in that case as follows:â€
“The present case, being “an application under section 7, would fall only within the residuary Article 137.â€
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20. This view was further reiterated by the Hon'ble Supreme Court in Sagar Sharma v. Phoenix ARC Private Limited, wherein the Court noted
that applications under the IBC are petitions.
21. We, therefore, hold that the provisions of section 69(2) of the Indian Partnership Act, 1932, applies to “suits†and therefore, cannot apply to
“proceedings†under the IBC.
22. We now come to the issue as to whether the Operational Creditor suppressed material information, as alleged by the Corporate Debtor.
23. Learned Counsel for the Corporate Debtor relied on the judgment of the Hon'ble Supreme Court inS P Chengalvaraya Naidu (Dead) by
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LRs v. Jagannath (Dead) by LRs, to support his contention that the petition ought not to be admitted since the Operational Creditor has not
approached this Tribunal with clean hands. In particular, he relied on the following extractsâ€
“5. … The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands.
We are constrained to say that more often than not, process of the court is being abused. Property-grabbers, tax-evaders, bank-loan-
dodgers and other unscrupulous persons from all walks of life find the court-process a convenient lever to retain the illegal gains
indefinitely. We have no hesitation to say that a person whose case is based on falsehood, has no right to approach the court. He can be
summarily thrown out at any stage of the litigation.
“6. … Non-production and even non-mentioning of the release deed at the trial is tantamount to playing fraud on the court. …. A
litigant who approaches the court is bound to produce all the documents executed by him which are relevant to the litigation. If he withholds
a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the court as well as on the
opposite party.â€
24. Learned Counsel for the Corporate Debtor further relied on Hon'ble Supreme Court's judgment inD alip Singh v. State of Uttar
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Pradesh, wherein the Hon'ble Court stated as follows:
“9. In Sunil Poddar v. Union of India, the Court held that while exercising discretionary and equitable jurisdiction under Article 136 of the
Constitution, the facts and circumstances of the case should be seen in their entirety to find out if there is miscarriage of justice. If the
appellant has not come forward with clean hands, has not candidly disclosed all the facts that he is aware of and he intends to delay the
proceedings, then the Court will non-suit him on the ground of contumacious conduct.
“10. In KD Sharma v. SAIL, the Court held that the jurisdiction of the Supreme Court under Article 32 and of the High Court under
Article 226 of the Constitution is extraordinary, equitable and discretionary and it is imperative that the petitioner approaching the writ
court must come with clean hands and put forward all the facts before the Court without concealing or suppressing anything and seek an
appropriate relief. If there is no candid disclosure of relevant and material facts or the petitioner is guilty of misleading the Court, his
petition may be dismissed at the threshold without considering the merits of the claim. The same rule was reiterated in G.
Jayashree v. Bhagwandas S. Patel.â€
25. During the hearing, the Learned Counsel for the Corporate Debtor has submitted that there were long-standing business relations between the
Corporate Debtor and the Operational Creditor, Sarneshwar Infra Private Limited and Technotrade Impex India Private Limited. When the goods in
question were supplied by the Operational Creditor to the Corporate Debtor, Mr. Afghan Babu Khan, the authorised signatory of the Operational
Creditor-Partnership firm, was a director in Sarneshwar Infra Private Limited. The Registered Office of Sarneshwar Infra Private Limited is the
same as that of the Operational Creditor.
26. The crux of the matter is that there was a dispute between the partners of the Operational Creditor, who were also directors in Sarneshwar Infra
Private Limited and Technotrade Impex Private Limited. The Operational Creditor as well as Sarneshwar Infra Private Limited and Technotrade
Impex Private Limited had business dealings with the Corporate Debtor.
27. We notice that the second Demand Notice dated 20.09.2018 issued by the Operational Creditor has been materially changed and it is not merely to
correct “typographical errors.†In particular, paras 8, 9 and 10 at pp.92-94 of the Petition have been added in the second Demand Notice. There
is visible improvement in the second Demand Notice after factoring in the reply of the Corporate Debtor to the first Demand Notice dated 03.09.2018.
This fact has been explained away as mere “correction of typographical errors†when such is not the case. The material placed on record reveals
that there is some force in the contention of the Corporate Debtor that the second Demand Notice was issued after factoring in the reply of the
Corporate Debtor (which was received by the Operational Creditor one day before the issue of the second Demand Notice on 20.09.2018). Further,
producing only the copy of the email dated 10.08.2018 without placing the relevant communications in context [which have been placed on record by
the Corporate Debtor as Exhibit ‘E’ [pp.205-206 of the Reply] and Exhibit ‘F’ [pp.207-211 of the Reply] reveals the mala fide intent
of the Operational Creditor.
28. Once we read the reply of the Corporate Debtor, the position is much clearer. There is a trinity of entities which were dealing with the Corporate
Debtor. All the three entities were being managed by the same set of individuals. There were inter se business transactions between the triad of
entities controlled by the same set of individuals and the Corporate Debtor. There was a fallout between the partners of the Operational Creditor, and
the remaining partner decided to use this position to advantage by issuing a Demand Notice to the Corporate Debtor even though he was fully aware
of the assurances given by the other partner of the Operational Creditor to the Corporate Debtor in regard to set off/adjustment of accounts between
the three entities on the one hand and the Corporate Debtor on the other.
29. The Learned Counsel for the Operational Creditor fairly admitted during the hearings that there was material change in the second Demand
Notice which cannot strictly be termed “correcting typographical errors.â€
30. In this view of the matter, admitting the petition against the Corporate Debtor would cause grave prejudice to it. It may be prudent to leave the
parties to work out their remedies under other laws before a civil court, rather than decide the issue under summary proceedings which the IBC
contemplates. Admitting the petition in such circumstances would amount to gross misuse of the IBC and abuse of process of law.
31. for the reasons stated above, the application fails and therefore, the same is rejected.
32. We make it clear that any observations made in this order should not be construed as expressing opinion on merits. The right of the petitioner
before any other judicial forum shall not be prejudiced on grounds only of dismissal of the present petition by this Adjudicating Authority.
33. Let a copy of this order be communicated to the parties in terms of the provisions of section 9(5)(ii) of the IBC.
