Supreme Court of India Rajratan Babulal Agarwal vs Solartex India Pvt. Ltd. on 13 October, 2022 ‘REPORTABLE’ IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 2199 OF 2021 RAJRATAN BABULAL AGARWAL ...APPELLANT(S) VERSUS SOLARTEX INDIA PVT. LTD. & ORS. ...RESPONDENT(S) JUDGMENT K. M. JOSEPH, J. 1. By the impugned order, the National Company Law Appellate Tribunal (hereinafter referred to as ‘NCLAT’ for brevity) has dismissed the appeal filed by the appellant challenging the order passed by the National Company Law Tribunal (hereinafter referred to as ‘NCLT’ for brevity) dated 28.05.2020. By the said order, the NCLT admitted an application filed by the first respondent Signature Not Verified under Section 9 of the Insolvency and Digitally signed by SNEHA Bankruptcy Code, 2016 (hereinafter referred to as ‘IBC’) Date: 2022.10.13 15:20:37 IST Reason: 1 CA NO. 2199/ 2021 against the second respondent. The third respondent was appointed as the Interim Resolution Professional and a moratorium followed. The appellant is an exdirector of the second respondent. 2. The question which falls for decision is whether the appellant has raised a dispute which can be described as ‘a preexisting dispute’ as understood by this Court in the decision in Mobilox Innovations Private Limited v. Kirusa Software Private Limited1. NCLT has rejected the version of the appellant that there exists a preexisting dispute which stands affirmed by the NCLAT. 3. The facts necessary for resolution of the lis can be stated as follows: On 24.09.2016, there were two High Seas Sale Agreements. One was between respondent No. 2 and one Rawalwasia Textile Industries Private Limited. The other High Seas Sale agreement was between the same seller and one company, the name of which is shortened as STDPL. 4. STDPL, according to the appellant, is a sister concern of the second respondent. This arrangement, which 1 (2018) 1 SCC 353 2 CA NO. 2199/ 2021 was essentially made on the representation of one Mr. Sameer Agrawal, was not honoured. Mr. Sameer Agrawal offered to supply 500 Metric Tonnes of coal each to the second respondent and its sister concern through the first respondent. The purchase order in respect of STDPL was dated 11.10.2016. The purchase order in respect of second respondent is dated 27.10.2016. The purchase order contemplated Gross Calorific Value of 5400. The total moisture content was put as less than 40% +/ 2%. Out of 500 Metric Tonnes, the second respondent was supplied 412 Metric Tonnes. The supply began from 28.10.2016 and ended on 02.11.2016. According to the appellant, the coal was to be used in boilers which manufactures starch and allied products. The coal is placed over the boilers in silos which are nearly 15 feet in height and hold upwards of 200 metric tonnes of coal at once. The appellant lays stress on certain lab reports of tests, which were actually conducted allegedly at its own labs indicating that the quality of coal did not conform to what was promised and what was more, allegedly it led to the malfunctioning of the boiler. On 30.10.2016, an email was sent to the first respondent. It reads as follows: 3 CA NO. 2199/ 2021 “Dear sir, With reference to 5400 gcv imp coal supply to (stdpl) dhule and (Hdpl) jammer, following issues are to be shared. For dhule plant: high moisture and powder percentage is to be found, already discussed to you. For jammer plant: recently supply include high level of powder percentage and moisture too. Kindly consider the issues and please make us assure about quality of coal should not be down the level. Pics attached for your reference.” Hdpl referred to in the communication is the second respondent. 5. The next correspondence to notice is email dated 03.11.2016. It is addressed to the first respondent by the second respondent. It reads as follows: “M/s. Sortex India Pvt. Ltd. 105,