Amatya Business Consulting Pvt. Ltd. Vs. Health Biotech Ltd. – NCLAT New Delhi

I. Case Reference Case Citation : (2023) 325 NCLAT Case Name : Amatya Business Consulting Pvt. Ltd. Vs. Health […]


I. Case Reference

Case Citation : (2023) 325 NCLAT
Case Name : Amatya Business Consulting Pvt. Ltd. Vs. Health Biotech Ltd.
Corporate Debtor : M/s Health Biotech Ltd.
Appeal No. : Company Appeal (AT) (Insolvency) No. 474 of 2023
Judgment Date : 15-May-23
Court/Bench : NCLAT New Delhi
Present for Appellant(s) : Advocate Kunal Tandon, Advocate Richa Sandilya, Advocate Varnalee Mishra.
Chairperson : Mr. Justice Ashok Bhushan
Member (Technical) : Mr. Barun Mitra
Case Status : Appeal dismissed by Supreme Court in Civil Appeal Diary No(s). 24896 of 2023 on 25.09.2023. Click here for the Order.
Original Judgment : Download

II. Full text of the judgment


15.05.2023: Heard Learned Counsel for the Appellant.

2. This Appeal has been filed against the Order dated 09.02.2023 by which the Adjudicating Authority has rejected Section 9 Application of I&B Code, 2016 filed by the Appellant.

3. Appellant who is claiming to be an Operational Creditor entered into agreement with the Corporate Debtor on 06.06.2017. The Appellant was a financial advisor to the Corporate Debtor for funding One Time Settlement for the Corporate Debtor. The Operational Creditor issued invoice on 07.02.2019 for a sum of Rs. 27,14,000/- to the Corporate Debtor. On 03rd April, 2019, a Demand Notice was issued under Section 8 of the Code to the Corporate Debtor. On 10th April, 2019, the Corporate Debtor replied the demand notice and gave a notice of dispute. Subsequently, an Application under Section 9 of the Code was filed which was replied and contested by the Corporate Debtor. Adjudicating Authority rejected Section 9 Application by the Impugned Order.

4. The Adjudicating Authority noticed that Agreement between the parties was only for six months from 06.06.2017 to 05.12.2017 and invoice was raised after 15 months.

5. Challenging the order, learned counsel for the Appellant submits that due to conduct of the parties, the time for the agreement shall be deemed to be extended and Adjudicating Authority committed error in rejecting Application on the ground that period of contract has come to an end.

6. We have considered the submissions of Learned Counsel for the Appellant and perused the record.

7. After Demand Notice was sent by the Appellant on 03.04.2019, the same was replied by the Corporate Debtor refuting the claim, in paragraph 2 of the Reply to Demand Notice, following has been stated:

“agreement and you were to perform the aforesaid responsibilities including the disbursement of amount from Banks/Financial Institution within the stipulated period of six months starting from 06.06.2017 and ending on 05.12.2017 i.e., the validity of the agreement. You had failed to perform your part within the period stipulated in the agreement & as such after the expiry of the said agreement you and Health Biotech Limited has no relation/connection to the said services.

That you have issued this notice will ill-will and mala fide intention to grab the money from the company by raising bill no:ABC/2018-19/1034 dated 07.02.2019 which itself is beyond the reasonable time frame which proves that it is an act of afterthought to grab the money from the Company.”

8. The Appellant was claiming operational debt as having provided consultancy services to the Corporate Debtor. Agreement was for a period of six months which expired much before the invoice was issued. Corporate Debtor refuting the claim of the invoice states that notice has been issued with a mala fide intention to grab the money form the company by raising bill.

9. Learned Counsel for the Appellant submits that agreement shall be treated to have been extended by the conduct of the parties and he has relied on Judgement of Hon’ble Supreme Court in AIR 1958 SC 512 Keshavlal Lallubhai Patel and Ors. V. Lalbhai Trijumlal Mills Ltd. He has relied on paragraph 8 in which following has been observed.:

“The true legal position in regard to the extension of time for the performance of a contract is quite clear under Section 63 of the Indian Contract Act. Every promise, as the section provides, may extend time for the performance of the contract. The question as to how extension of time may be agreed upon by the parties has been the subject-matter of some argument at the Bar in the present appeal. There can be no doubt, we think, that both the buyer and the seller must agree to extend time for the delivery of goods. It would not be open to the promise by his unilateral act to extend the time for performance of his own accord for his own benefit.

It is true that the agreement to extend time need not necessarily be reduced to writing. It may be proved by oral evidence. In some cases it may be proved by evidence of conduct. Forbearance on, the part of the buyer to make a demand for the delivery of goods on the due date as fixed in the original contract may conceivably be relevant on the question of the intention of the’ buyer to accept the seller’s proposal to extend time. It would be difficult to lay down any hard and fast rule about the requirements of proof of such an agreement. It would naturally be a question of fact in each case to be determined in the light of evidence adduced by the parties. Having regard to the probabilities in this case, and to the conduct of the parties at the relevant time, we think the appellants are entitled to urge that their oral evidence about the acceptance of the respondent’s proposal for the extension of time should be believed and the finding of the learned trial judge on this question should be confirmed.”

10. The Judgement which has been relied by Learned Counsel for the Appellant arises out of a suit filed for recovery from the defendant that is for damages and for breach of contract, for non-delivery of certain cotton goods. In the above context, observation was made by Hon’ble Supreme Court that oral evidence can be looked into. Present is a matter which arises out of summary proceeding under Section 9. When the notice of dispute was given by the Corporate Debtor after receipt of Demand Notice, the Adjudicating Authority has rightly rejected Section 9 Application. We do not find any error in the Order impugned. The Appeal is dismissed.

[Justice Ashok Bhushan]

[Mr. Barun Mitra]
Member (Technical)

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