1. Advocate Mr. Shiv Shankar Banerjee filed this application Under Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 contending that he is an authorised person to act on behalf of the Operational Creditor, Shaw Traders for initiating corporate insolvency resolution process Under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereafter to be referred as I & B Code) in the case of Balaji Paper and Newsprint Pvt. Ltd. the respondent herein.

2. The operational creditor is engaged in production and supply of diverse types and quantities of waste paper, Kraft Waste, etc. The operational creditor supplied waste paper to the respondent as per the Sales Invoice/Tax Invoice issued from 1.04.2013 to 31.03.2016 (Annexure-E). The Operational Creditor/Applicant (hereafter to be referred as applicant) contents that an amount of Rs. 74,70,165/- (seventy-four lakhs seventy thousand one hundred sixty-five) with interest @ 18% p.a. is due from the respondent and that the total amount with interest as on default due from the respondent is Rs. 92,63,005/- (Ninety-two lakh sixty-three thousand five) The applicant contents that despite repeated demands the respondent failed to repay the debt and therefore filed this application for initiating Insolvency Resolution Process as against the respondent.

3. The applicant filed this application in Form-5 along with copy of demand notice in Form-3 issued by an advocate. The application was filed along with copy of served notice attached to the invoice demanding payment in Form-4, a copy of Bank Statement, a copy of Ledger account, copies of Tax invoices, copy of appointment and authorisation letter dated 04.04.2017 issued to Advocate Mr. Shiv Shankar Banerjee, copy of appointment letter issued to Mr. Tapas Mallik, an IRP, copy of consent letter issued by IRP to the applicant, copy of written communication issued by IRP to the applicant, copy of affidavit verifying petition by Mr. Mohan Shaw proprietor of Shaw Traders, copy of DD proving payment of fee and Vakalatnamas. The applicant further contents that his application is complete and that he filed supplementary affidavit deposing that no notice of dispute given by the respondent to the applicant as per Section 9(3)(b) of I & B Code and produced certified bank statement as directed by this Tribunal and therefore the application is liable to be admitted.

4. The respondent who entered appearance filed affidavit in opposition contending that the application filed is not maintainable mainly on two grounds. Firstly, respondent contends that the Form 3 demand notice and Form 4 have not been issued by the Operational Creditor but by an advocate and as such, not in consonance with the statutory provisions of the Code. Secondly respondent contends that the applicant filed the application suppressing the existence of a long existing previous dispute regarding the quality of the goods received by the respondent. The respondent further contents that application was filed without an affidavit Under. S. 9(3)(b) and financial institutions certificate Under section 9(3)(c) and therefore is incomplete. The applicant further contents that IRP's registration is expired and that the name of the respondent referred in the application is incorrect. Upon the said contentions the respondent prays for dismissal of the application as not maintainable under section 9 of I & B Code.

5. No rejoinder filed by the applicant even if time granted. However by filing an affidavit dated 22.08.2017 the applicant deposed that this Tribunal did not call for any but by an advocate and as such, not in consonance with the statutory provisions of the Code. Secondly respondent contends that the applicant filed the application suppressing the existence of a long existing previous dispute regarding the quality of the goods received by the respondent. The respondent further contents that application was filed without an affidavit Under. S. 9(3)(b) and financial institutions certificate Under section 9(3)(c) and therefore is incomplete. The applicant further contents that IRP's registration is expired and that the name of the respondent referred in the application is incorrect. Upon the said contentions the respondent prays for dismissal of the application as not maintainable under section 9 of I & B Code.

6. No rejoinder filed by the applicant even if time granted. However by filing an affidavit dated 22.08.2017 the applicant deposed that this Tribunal did not call for any rejoinder as per it's order dated 10.08.2017. On the other hand, vide order dated 02.08.2017 this Tribunal directed the applicant to file rejoinder within 3 days from the date of receipt of reply to be filed by the respondent. The applicant did not file rejoinder as directed.

7. Heard both sides. Upon hearing the argument and on perusal of the records the main points that arises for determination are 1. Whether the advocate who issued the demand notice in Form-3 has got any authority to issue the notice 2. Whether the dispute raised by the respondent/corporate debtor comes under the definition of section 5(6) of I & BC, 2016

Point No. 1.

8. The demand notice in Form 3 admittedly was issued by Advocate Mr. Ankita Mitra. A reading of the form 3 notice it is understood that (page 7) the advocate was authorised to act on behalf of the operational creditor by one Mr. Laxmi Narayan Shaw. Shaw Traders who is the operational creditor seems to be a proprietary concern. Annexure-J affidavit annexed to the application shows that proprietor of the applicant who filed the application was Mr. Mohan Shaw, son of Laxmi Narayan Shaw. Annexure - F is the Letter of appointment and Authorisation given to Advocate Mr. Shiv Shankar Banerjee by Mr. Mohan Shaw. No letter of authorisation issued by the then proprietor Mr. Laxmi Narayan Shaw or by Mr. Mohan Shaw in favour of Advocate Ankita Mitra seen produced in this application. No document also produced on the side of the applicant to show that who was the real proprietor of the applicant. Whether Mr. Mohan Shaw is the sole proprietor of the applicant and whether Laxmi Narayanan Shaw was a proprietor at the time of issuing authorisation to the advocate who issued demand notice here in this case no data. The above said discussions leads to a conclusion that the advocate who issued the demand notice in Form 3 was not an authorised person as stated in the notice or that he was holding any position in the applicant proprietary concern. The above said circumstances indicate that the applicant operational creditor not at all issued the statutory notice as provided under section 8(1) of I & B Code.

In 'Macquarie Bank Limited Vs. Uttam Galva Metallic Limited'-Company Appeal (AT) (Insol.) No. 96 of 2017, the Hon'ble NCALT has held that:-

"....In view of such provision we hold that an advocate/lawyer or Chartered Account or a Company Secretary or any other person in absence of any authority by the 'Operational Creditor', and if such person do not hold any position with or in relation to the 'Operational Creditor', cannot issue notice under Section 8 of 'I & B Code', which otherwise can be treated as a lawyer's notice/pleader's notice, as distinct from notice under Section 8 of 'I & B Code."

In Centech Engineers Private Limited & Anr. Vs. Omicron Sensing Private Limited, Company Appeal (AT) (Insolvency) No. 132 of 2017 the Hon'ble NCALT has held that:-

"In the present case, admittedly the notice has been given by 'Associate of Advocates' and there is nothing on the record to suggest that the Associate of Advocates' was authorised by the respondent-'Operational Creditor' or was holding any position with or in relation to the respondent company, the so-called notice cannot be treated as notice under Section 8 of the I & B Code."

In one another case Zapp India Ltd. Vs. Maheshwar Textiles & Anr. Comp. App. (AT) (Insolvency) No. 157 of 2017, the hon'ble NCALT has also held that:-

"From the notice dated 29th May 2017, we find that the demand notice was issued not by the operational creditor but on its behalf by one advocate namely, Saurabh Sharma, who claimed to be the counsel for the operational creditor - Maheshwar Textiles & Anr. Similar issue fell for consideration before this Appellate Tribunal in "Uttam Galva Steels Limited vs. DF Deutsche Forfait AG & Anr." (Company Appeal (AT) (Insolvency) 39 of 2017). This Appellate Tribunal by its Judgment dated 28th July 2017 held as follows: "From bare perusal of Form-3 and Form-4, read with sub-rule (1) of Rule 5 and Section 8 of the I & B Code, it is clear that an Operational Creditor can apply himself or through a person authorised to act on behalf of Operational Creditor. The person who is authorised to act on behalf of Operational Creditor is also required to state, "his position with or in relation to the Operational Creditor", meaning thereby the person authorised by Operational Creditor must hold position with or in relation to the Operational Creditor and only such person can apply". "In the present case as an advocate/lawyer has given notice and there is nothing on record to suggest that the lawyer has been authorised by 'Board of Directors' of the Respondents - 'Maheshwar Textiles & Anr.' and there is nothing on record to suggest that the lawyer hold any position with or in relation with the Respondents, we hold that the notice issued by the lawyer on behalf of the Respondents cannot be treated as a notice under section 8 of the I & B Code and for that the petition under section 9 at the instance of the Respondents against the Appellant was not maintainable."

9. In view of the aforesaid discussion and bear in mind the principles laid down in the above referred decisions it is certain that a demand notice issued in the instant case was not issued in terms of the provisions of the Adjudicating Authority Rules and I & B Code. We hereby hold that the demand notice issued by the applicant advocate was not issued Under S. 8(1) of I & B Code, and therefore the contention on the side of the respondent that Annexure A notice is not a notice issued under S. 8(1) of I & B code is sustainable. This point is answered accordingly.

Point No. 2.

10. The second and main contention of the respondent is that since the respondent already raised a dispute as against the claim of the applicant and issued reply notice raising the dispute already pending in between the applicant and the respondent the instant application is not maintainable. The learned Counsel for the respondent highlighting Annexure G reply notice as well as Annexure A to Annexure D and Annexure F submits that respondent already raised dispute as against the claim of the applicant from 15.04.2013 onwards and that applicant by suppressing the dispute raised by the respondent filed the application. According to him respondent being raised a dispute in reply to the demand notice it would be sufficient to attract sub clause (d) of clause (ii) of sub-section (5) of Section 9 of I & B code and therefore this application is liable to be rejected.

11. A careful screening of the above referred notices issued by the respondent produced along with the reply affidavit proves undoubtedly that respondent challenged the quality of the waste paper supplied to the respondent long before the issuance of demand notice. All the notices seen received by the proprietor Shri M. Shaw. It is good to quote the challenge raised by the respondent in one among the notices issued by the respondent to the applicant on 15.04.2013, it read as follows:-

"We regret to inform you that despite our repeated request regarding quality of waste paper you have continued supplies mixed with lots of dust particles, lifeless, antique, very old waste paper. You are requested to go through the "RAW Materials Quality Analysis report" given against each consignment and issue credit notes in our favour accordingly."

(Annexure - A at page 14 in the reply affidavit). In the reply notice issued by the respondent on 23.03.2017 (Annexure G) also very same challenge was raised by the respondent against the supply of the goods received by the respondent. Annexure E is the copy of the notice issued by the applicant under section 271 of the Companies Act, 2013 demanding Rs. 131,20,165/- with interest @ of 18% to the respondent on 12.01.2017. Annexure F is the reply issued by the respondent to the applicant contending that respondent is not able to utilise the waste paper because the paper supplied was unusable waste paper. The contention of the respondent that a dispute in regards the claim of the applicant was raised long before the issuance of demand notice is therefore stand proved in this case.

12. The learned counsel for the applicant attempted to show that the dispute raised by the respondent is not a genuine dispute and that no dispute is pending consideration before a court of law or adjudicating authority and therefore the dispute raised by the respondent never falls under sub clause (d) of clause (ii) of sub-section (5) of section 9 of I & B Code.

13. Here in this case respondent has no case that the dispute he already raised with the applicant is pending for any consideration before any adjudicating authority or in any Court. However, it has come out in evidence that respondent disputed quality of the goods received upon receipt of the goods and communicated the complaint in writing to the applicant in appropriate time. No explanation forth coming from the applicant regarding the disputes highlighted in the notices issued by the respondent to the applicant. More over the copy of reply notice evidently received by the applicant not at all produced along with the application. The documents produced on the side of the respondent not at all challenged on the side of the applicant. Therefore, the respondent succeeded in proving that a dispute regarding quality of the goods and the money liable to be paid by the respondent was pending for consideration with the applicant even before the statutory notice issued by the applicant and that it is a genuine dispute which according to us comes under the purview of section 5(6) of I & B code.

14. In a similar case filed under section 9 of I & B code, (Kirusa Software Private Ltd. Vs. Mobilox Innovations Private Ltd) the Hon'ble NCLT, Mumbai Bench has rejected the application holding that the "claim made by the petitioner is hit by S. 9(5)(ii)(d) of the I & B Code". It has been held that:

"On perusal of this notice dated 27.12.2016 disputing the debt allegedly owed to the petitioner, this Bench, looking at the Corporate Debtor disputing the claim raised by the Petitioner in this CP, hereby holds that the default payment being disputed by the Corporate Debtor, for the petitioner has admitted that the notice of dispute dated 27th December 2016 has been received by the operational creditor, the claim made by the Petitioner is hit by Section 9(5)(ii)(d) of The Insolvency and Bankruptcy Code, hence this Petition is hereby rejected."

Aggrieved by the order of rejection the petitioner/Kirusa Software Private Ltd. filed appeal before NCALT, Delhi. The Hon'ble NCALT allowed the appeal. It is good to read para 39 to 41 in the above said judgment. It read as follows:-

"39. In the present case the adjudicating authority has acted mechanically and rejected the application under sub-section (5)(ii)(d) of Section 9 without examining and discussing the aforesaid issue. If the adjudicating authority would have noticed the provisions as discussed above and what constitutes 'dispute' in relation to services provided by operational creditors then it would have come to a conclusion that condition of demand notice under sub-section (2) of Section 8 has not been fulfilled by the corporate debtor and the defence claiming dispute was not only vague, got up and motivated to evade the liability.

40. For the reasons aforesaid we set aside the impugned order dated 27.1.2017 passed by adjudicating authority in CP No. 01/I & BP/NCLT/MAH/2017 and remit the case to adjudicating authority for consideration of the application of the appellant for admission if the application is otherwise complete.

41. The appeal is allowed with the aforesaid observations. However, in the facts and circumstances there shall be no order as to cost".

15. As against the above said order of NCALT the respondent Mobilox Innovation Private Ltd. filed appeal before the Hon'ble Supreme Court. The Hon'ble Supreme Court has dealt with in detail what it means "existence of dispute". The appellant in the said case issued a reply notice as against the demand notice disputing the liability to pay the amount demanded. It is not the merit of the dispute but whether the dispute was in existence on the date of issuance of the demand notice is to be considered in a case of this nature that is what we understood from the above said judgment of the Hon'ble Supreme Court. It is good to read Para 40 and 45 to 47 of the Judgment of the Hon'ble Supreme court in the above referred case. It read as follows:-

"40. it is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the "existence" of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the "dispute" is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application".

45. Going by the aforesaid test of "existence of a dispute", it is clear that without going into the merits of the dispute, the appellant has raised a plausible contention requiring further investigation which is not a patently feeble legal argument or an assertion of facts unsupported by evidence. The defence is not spurious, mere bluster, plainly frivolous or vexatious. A dispute does truly exist in fact between the parties, which may or may not ultimately succeed, and the Appellate Tribunal was wholly incorrect in characterizing the defence as vague, got-up and motivated to evade liability.

46. Learned counsel for the respondent, however, argued that the breach of the NDA is a claim for unliquidated damages which does not become crystallized until legal proceedings are filed, and none have been filed so far. The period of limitation for filing such proceedings has admittedly not yet elapsed. Further, the appellant has withheld amounts that were due to the respondent under the NDA till the matter is resolved. Admittedly, the matter has never been resolved. Also, the respondent itself has not commenced any legal proceedings after the e-mail dated 30th January 2015 except for the present insolvency application, which was filed almost 2 years after the said e-mail. All these circumstances go to show that it is right to have the matter tried out in the present case before the axe falls.

47. We, therefore, allow the present appeal and set aside the judgment of the Appellate Tribunal. There shall, however, be no order as to cost".

16. The fact in this case is similar to the fact in the above referred case. From a reading of the above referred decision of the Hon'ble Supreme Court it appears to us that respondent has succeeded in proving existence of a genuine dispute prior to issuance of demand notice and, therefore, this application is liable to be rejected.

17. In view of our findings on points No. 1 and 2 we are inclined to reject this application. Accordingly, the application is rejected. No order as to cost.

Let the copy of the order be supplied to both parties upon usual terms.