2021 INSC 0348
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION 
CIVIL APPEAL NO. 1137 OF 2019
KAY BOUVET ENGINEERING LTD.     ...APPELLANT(S)
VERSUS
OVERSEAS INFRASTRUCTURE 
ALLIANCE (INDIA) PRIVATE LIMITED   ...RESPONDENT(S)
J U D G M E N T
B.R. GAVAI, J.
1. This appeal challenges the judgment and order passed by
the   National   Company   Law   Appellate   Tribunal   (hereinafter
referred to as the “NCLAT”) dated 21 st
  December 2018, thereby
allowing the appeal filed by respondent herein.  The respondent
herein   had   preferred   an   appeal   being   Company   Appeal   (AT)
(Insolvency)   No.   582   of   2018,   challenging   the   order   passed   by
the  National  Company  Law  Tribunal  (hereinafter  referred to as
1

the “NCLT”) dated 26 th
 July 2018, thereby rejecting the petition
being   C.P.   (IB)­20(MB)/2018,   filed   by   the   respondent   herein
under   Section   9   of   the   Insolvency   and   Bankruptcy   Code
(hereinafter   referred   to   as   the   “IBC”).     By   the   impugned   order
dated   21 st
  December   2018,   the   NCLAT   while   allowing   the
appeal,   has   remitted   back   the   matter   to   the   NCLT   with   a
direction   to   admit   the   petition   filed   by   the   respondent   herein
under   Section   9   of   the   IBC   after   giving   limited   notice   to   the
appellant herein so as to enable it to settle the claim.  
2. The   facts   in   brief   giving   rise   to   the   present   appeal   are   as
under:­
The   Government   of   India   extended   Dollar   Line   of   Credit
(hereinafter referred to as the “LoC”) of USD 150 Million to the
Republic   of   Sudan   through   Exim   Bank   of   India   (hereinafter
referred   to   as   the   “Exim   Bank”)   for   carrying   out   Mashkour
Sugar   Project   in   Sudan.     This   was   in   two   tranches   of   USD   25
Million   and  USD  125  Million.    On  26 th
  January   2009,  the  first
tranche   of   USD   25   Million   was   executed   between   Republic   of
2

Sudan   and   Exim   Bank   for   financing   the   Mashkour   Sugar
Project.     On   11 th
  October   2009,   Mashkour   Sugar   Company
Limited,   Sudan   (hereinafter   referred   to   as   the   “Mashkour”)
entered   into   an   agreement   with   the   respondent­Overseas
Infrastructure   Alliance   (India)   Private   Limited   (hereinafter
referred   to   as   the   “Overseas”)   for   USD   149,975,000   to   be
financed by Exim Bank.   As per the said agreement, Mashkour
was   to   nominate   a   sub­contractor.     A   subsequent   agreement
was   entered   into   on   14 th
  April   2010,   between   Mashkour   and
Overseas   for   payment   of   USD   25   Million   to   Overseas   towards
“design   and   engineering   package   and   plant   civil   package
including   site   mobilization”.     In   response   to   the   invitation   by
Mashkour,   the   appellant­Kay   Bouvet   Engineering   Limited
(hereinafter   referred   to   as   the   “Kay   Bouvet”)   submitted   its   bid
as   a   sub­contractor   for   supply,   erection   and   completion   of   the
Sugar   Plant   at   Sudan,   which   was   accepted   by   Mashkour.     On
18 th
  December   2010,   a   Memorandum   of   Understanding
(hereinafter referred to as the “MoU”) was entered into between
Mashkour, Overseas and Kay Bouvet at Khartoum, Sudan.  The
3

said MoU provided that the contract has to be governed by the
laws   of   Sudan.     The   same   MoU   also   defined   roles   and
responsibilities   of   each   of   the   parties.     On   the   same   date,   a
Tripartite   Agreement   was   also   executed   between   all   the   three
parties   vide   which,   Kay   Bouvet   was   appointed   as   a   sub­
contractor   for   executing   the   whole   work   of   designing,
engineering,   supply,   installation,   erection,   testing   and
completion   of   Factory   Plant   for   Mashkour   Sugar   Company   for
an amount of USD 106.200 Million.  
3. On   29 th
  March   2011,   Overseas   vide   an   e­mail   sent   to
Mashkour   confirmed   that   under   the   Tripartite   Agreement,
Mashkour   was   to   release   payment   of   first   tranche   of   LoC   to
Overseas   and   the   Overseas   in   turn   was   to   release   payment   of
USD   10.62   Million   to   Kay   Bouvet   on   submission   of   Advance
Bank   Guarantee   and   Performance   Bank   Guarantee   by   Kay
Bouvet   to   Mashkour.     Vide   letter   dated   21 st
  April   2011,   Exim
Bank informed Overseas that an amount of Rs.46.58 Crore had
been   remitted  to   its  bank   account.     Overseas  vide  letter   of   the
4

same   date   confirmed   to   Mashkour   about   receipt   of   funds   and
further   informed   that   it   will   release   USD   10.62   Million   to   Kay
Bouvet   on   submission   of   requisite   bank   guarantees.     On   28 th
July 2011, Kay Bouvet informed Overseas that it had submitted
necessary   Guarantees   to   Mashkour.   On   the   advice   of
Mashkour,   Overseas   paid   an   amount   of   Rs.47,12,10,000/­   to
Kay   Bouvet.     There   were   certain   disputes   with   regard   to
exchange   rate,   on   account   of   which,   Kay   Bouvet   informed
Mashkour   that   it   ought   to   have   been   paid   more   amount   in
Indian Rupees. 
4. After   execution   of   second   tranche   of   USD   125   Million   on
24 th
 July 2013, between Republic of Sudan and Exim Bank, an
agreement   was   executed   between   Mashkour   and   Overseas   on
9 th
 February 2014, for balance amount of USD 124,975,000 for
financing   the   final   part   of   the   Sugar   Factory   Project.     On   30 th
October 2014, Overseas informed Exim Bank to transfer partial
amount   of   USD   95,580,000   in   favour   of   Kay   Bouvet   from   the
funds to be received under the LoC in relation to Sugar Project.
5

5. It   appears   that   in   the   meantime,   there   was   certain
exchange   of   communications   between   the   Ministry   of   External
Affairs,   Government   of   India   (hereinafter   referred   to   as   the
“GoI”)   and   the   Sudan   Government.     In   pursuance   to   such
exchange   of   communications,   on   17 th
  April   2017,   the
Ambassador   of   Sudan   to   India   addressed   to   the   Minister   of
State   of   External   Affairs,   GoI   and   advised   to   terminate   the
contract of Mashkour with Overseas and in turn to appoint Kay
Bouvet   as   a   Contractor.     In   response   thereto,   the   Ministry   of
External Affairs informed the Ambassador of Sudan that it will
be necessary to execute an agreement with Kay Bouvet in order
to   enable   Exim   Bank   to   release   funds   to   Kay   Bouvet.     Vide
communication   dated   25 th
  April   2017,   the   Ambassador   of
Sudan   informed   Mashkour   to   enter   an   agreement   with   Kay
Bouvet   as   a   direct   contract   for   unutilized   portion   of   GoI’s   LoC
for   USD   150   Million.     It   was   also   informed   that   the   advance
amount  of Rs.47,12,10,000/­ received by   Kay   Bouvet  from   the
first   tranche   of   USD   25   Million   was   to   be   adjusted   against
supplies to be made to Mashkour for completing the project.
6

6. On   15 th
  June   2017,   Mashkour   terminated   the   contract
with   Overseas   for   failure   on   its   part   to   perform   the   duties.
Overseas   filed   a   Civil   Suit   being   No.   785   of   2017   before   the
High Court of Bombay seeking specific performance of contract
and   an   order   of   injunction   from   appointing   Kay   Bouvet   as   a
Contractor in the Mashkour Project.  Notice of Motion No. 1314
of   2017   was   also   moved   for   injunction.   Vide   order   dated   27 th
June 2017, prayer for ad interim relief made by Overseas came
to be rejected by the Bombay High Court.
7. Vide   communication   dated   5 th
  July   2017,   Mashkour
informed   Kay   Bouvet   about   the   developments   and   termination
of   contract   and   further   informed   that   the   advance   payment   of
Rs.47,12,10,000/­  received  by   Kay   Bouvet  from   Overseas,  was
to   be   adjusted   against   supplies   to   be   made   to   Mashkour   for
completion   of   the   Project.     It   was   further   informed   that
Overseas will not claim back the said amount from Kay Bouvet.
Accordingly,   on   the   same   day   an   agreement   came   to   be
executed   between   Mashkour   and   Kay   Bouvet.   The   same   was
7

informed   by   the   Ambassador   of   Sudan   to   the   Ministry   of
External Affairs on 11 th
 July 2017.
8. A   Demand   Notice   under   Section   8   of   the   IBC   was   served
upon   Kay   Bouvet   by   Overseas   alleging   default   under   the
Tripartite   Agreement   and   claiming   an   amount   of   USD   10.62
Million,   paid   by   Overseas   to   Kay   Bouvet.     Kay   Bouvet   vide
communication   dated   6 th
  December   2017,   denied   the   claim   of
Overseas.     It   was   specifically   pointed   out   that   the   amount
which   was   paid   to   Kay   Bouvet   by   Overseas,   was   received   on
behalf   of   Mashkour   and   it   was   only   routed   through   Overseas
and   the   same   stands   adjusted   under   new   agreement.   On   27 th
December   2017,   Overseas   claiming   itself   to   be   an   Operational
Creditor,   filed   a   petition   under   Section   9   of   the   IBC   before
NCLT,   Mumbai   being   CP   (IB)   No.20(MB)/2018.     Vide   order
dated   26 th
  July   2018,   the   NCLT   dismissed   the   petition.
Overseas carried the same in an appeal being Company Appeal
(AT)   (Insolvency)   No.   582   of   2018   before   the   NCLAT.     By   the
impugned order dated 21 st
  December 2018, NCLAT allowed the
8

appeal as aforesaid.  Being aggrieved thereby, the appellant­Kay
Bouvet has approached this Court.
9. Shri   Jayant   Bhushan,   learned   Senior   Counsel   appearing
on   behalf   of   the   appellant­Kay   Bouvet   submitted   that   by   no
stretch   of   imagination,   the   claim   made   by   Overseas   could   be
considered to  be an  “Operational  Debt”  and  as such, Overseas
cannot   be   an   “Operational   Creditor”,   enabling   it   to   invoke   the
jurisdiction of NCLT under Section 9 of the IBC.  Shri Bhushan
further   submitted  that   Kay   Bouvet  could   not  have   moved   as  a
Financial   Creditor   and   as   such,   by   stretching   the   definition   of
“Operational   Creditor”,  though  it  does   not   fit   in   the   same,  has
filed  the   proceedings  under  Section   9  of   the  IBC.    The  learned
Senior   Counsel   submitted   that   no   amount   is   receivable   by
Overseas from Kay Bouvet in respect of the provisions of goods
or   services,   including   employment   or   a   debt   in   respect   of   the
payment of dues and as such, it will not fit in the definition of
“Operational   Debt”   as   provided   under   sub­section   (21)   of
Section   5   of   the   IBC.     The   learned   Senior   Counsel   submitted
9

that   by   the   same   analogy,   Overseas   would   also   not   fall   under
the definition of “Operational Creditor”.
10. Shri   Bhushan  further   submitted   that   as   a   matter   of   fact,
the payment which was made to Kay Bouvet by Overseas, was
from the amount received by it from Mashkour.   He submitted
that   the   material   placed   on   record   would   clearly   fortify   this
position.     The   learned   Senior   Counsel   submitted   that,   in   any
case, perusal of Clause 14.1 of the Tripartite Agreement would
clearly show that the amount so paid, was paid by Mashkour to
Overseas.   It is submitted that in any case, the material placed
on record and specifically the Demand Notice and reply thereto,
clearly showed that there was an “existence of dispute” and as
such,   the   NCLT   had   rightly   dismissed   the   petition.   It   is
submitted   that,   however,   the   NCLAT   has   misconstrued   the
provisions   and   allowed   the   appeal   and   directed   admission   of
Section   9   petition.     It   is   submitted   that   the   jurisdiction   of   the
adjudicating   authorities   under   IBC   is   limited   and   it   can
10

adjudicate   only  on   the   limited   areas   that   are   delineated   in   the
Statute. 
11. Shri C.A. Sundaram, learned Senior Counsel appearing for
respondent–Overseas, on the contrary, asserts that the amount
which  was   paid  to   Kay   Bouvet,  was   the  amount   paid   from   the
funds of Overseas and not from Mashkour.   He submitted that
perusal   of   material   placed   on   record   would   reveal   that   Kay
Bouvet   has   admitted   of   receiving   the   amount   from   Overseas
and once the party  admits of any claim, the same would come
in   the   definition   of   “Operational   Debt”   as   defined   under   sub­
section   (21)   of   Section   5   of   the   IBC   and   enable   the   party   to
whom admission is made to file the proceedings under Section
9   of   the   IBC   being   an   “Operational   Creditor”.     The   learned
Senior   Counsel   therefore   submitted   that   NCLAT   rightly
considered   the   provisions   and   allowed   the   appeal   of   Overseas
and   directed   admission   of   Section   9   petition.     He   therefore
submitted that the present appeal deserves to be dismissed. 
11

12. Though, elaborate submissions have been made on behalf
of   both   the   parties,   we   are   of   the   considered   view   that   the
present appeal can be decided on a short ground without going
into the other aspects of the matter.   It will be relevant to refer
to Sections 8 and 9 of the IBC:­
“ 8.   Insolvency   resolution   by   operational
creditor . —(1)   An   operational   creditor   may,   on
the   occurrence   of   a   default,   deliver   a   demand
notice   of   unpaid   operational   debtor   copy   of   an
invoice   demanding   payment   of   the   amount
involved in the default to the corporate debtor in
such form and manner as may be prescribed.
(2) The corporate debtor shall, within a period of
ten   days   of   the   receipt   of   the   demand   notice   or
copy   of   the   invoice   mentioned   in   sub­section   (1)
bring to the notice of the operational creditor—
( a )   existence   of   a   dispute,   [if   any,   or]   record
of   the   pendency   of   the   suit   or   arbitration
proceedings   filed   before   the   receipt   of   such
notice or invoice in relation to such dispute;
( b )   the   [payment]   of   unpaid   operational   debt
—
( i )   by   sending   an   attested   copy   of   the
record   of   electronic   transfer   of   the
unpaid   amount   from   the   bank   account
of the corporate debtor; or
( ii ) by sending an attested copy of record
that   the   operational   creditor   has
12

encashed   a   cheque   issued   by   the
corporate debtor.
Explanation .—For the purposes of this section, a
“demand   notice”   means   a   notice   served   by   an
operational   creditor   to   the   corporate   debtor
demanding   [payment]   of   the   operational   debt   in
respect of which the default has occurred.
9.   Application   for   initiation   of   corporate
insolvency   resolution   process   by   operational
creditor . —(1) After the expiry of the period of ten
days   from   the   date   of   delivery   of   the   notice   or
invoice   demanding   payment   under   sub­section
(1)   of   Section   8,   if   the   operational   creditor   does
not receive payment from the corporate debtor or
notice   of   the   dispute   under   sub­section   (2)   of
Section   8,   the   operational   creditor   may   file   an
application   before   the   Adjudicating   Authority   for
initiating   a   corporate   insolvency   resolution
process.
(2) The application under sub­section (1) shall be
filed in such form and manner and accompanied
with such fee as may be prescribed.
(3) The  operational  creditor  shall,  along   with  the
application furnish—
( a ) a copy of the invoice demanding payment
or   demand   notice   delivered   by   the
operational creditor to the corporate debtor;
( b )   an   affidavit   to   the   effect   that   there   is   no
notice  given  by   the   corporate   debtor   relating
to a dispute of the unpaid operational debt;
( c ) a copy of the certificate from the financial
institutions   maintaining   accounts   of   the
operational   creditor   confirming   that   there   is
13

no   payment   of   an   unpaid   operational
debt   [by the corporate debtor, if available;]
[( d )   a   copy   of   any   record   with   information
utility confirming that there is no payment of
an   unpaid   operational   debt  by   the   corporate
debtor, if available; and]
[( e )   any   other   proof   confirming   that   there   is
no payment of an unpaid operational debt by
the   corporate   debtor   or   such   other
information, as may be prescribed.]
(4)   An   operational   creditor   initiating   a   corporate
insolvency resolution process under this section,
may   propose   a   resolution   professional   to   act   as
an interim resolution professional.
(5)   The   Adjudicating   Authority   shall,   within
fourteen   days   of   the   receipt   of   the   application
under sub­section (2), by an order—
( i )   admit   the   application   and   communicate
such decision to the operational creditor and
the corporate debtor if,—
( a )   the   application   made   under   sub­
section (2) is complete;
( b )   there   is   no   [payment]   of   the   unpaid
operational debt;
( c )   the   invoice   or   notice   for   payment   to
the   corporate   debtor   has   been   delivered
by the operational creditor;
( d ) no notice of dispute has been received
by the operational creditor or there is no
record   of   dispute   in   the   information
utility; and
( e )   there   is   no   disciplinary   proceeding
pending   against   any   resolution
14

professional  proposed  under  sub­section
(4), if any.
( ii )   reject   the   application   and   communicate
such decision to the operational creditor and
the corporate debtor, if—
( a )   the   application   made   under   sub­
section (2) is incomplete;
( b )   there   has   been   [payment]   of   the
unpaid operational debt;
( c )   the   creditor   has   not   delivered   the
invoice   or   notice   for   payment   to   the
corporate debtor;
( d ) notice of dispute has been received by
the   operational   creditor   or   there   is   a
record   of   dispute   in   the   information
utility; or
( e )   any   disciplinary   proceeding   is
pending against any proposed resolution
professional:
Provided that Adjudicating Authority, shall before
rejecting   an   application   under   sub­clause   ( a )   of
clause ( ii ) give a notice to the applicant to rectify
the defect in his application within seven days of
the   date   of   receipt   of   such   notice   from   the
Adjudicating Authority.
(6)   The   corporate   insolvency   resolution   process
shall   commence   from   the   date   of   admission   of
the   application   under   sub­section   (5)   of   this
section.”
15

13. Perusal   of   the   aforesaid   provisions   would   reveal   that   an
“Operational Creditor”, on the occurrence of default, is required
to deliver a “Demand Notice” of unpaid “Operational Debt” or a
copy of invoice, demanding  payment of amount involved in the
default to the “Corporate Debtor” in such form and manner as
may   be   prescribed.     Within   10   days   of   the   receipt   of   such
“Demand   Notice”   or   copy   of   invoice,   the   “Corporate   Debtor”   is
required   to   either   bring   to   the   notice   of   the   “Operational
Creditor”   “existence   of   a   dispute”   or   to   make   the   payment   of
unpaid “Operational Debt” in the manner as may be prescribed.
Thereafter,   as   per   the   provisions   of   Section   9   of   the   IBC,   after
the  expiry   of the  period  of 10 days from  the  date of  delivery  of
notice   or   invoice   demanding   payment   under   sub­section   (1)   of
Section   8   and   if   the   “Operational   Creditor”   does   not   receive
payment   from   the   “Corporate   Debtor”   or   notice   of   the   dispute
under  sub­section (2) of Section 8 of the IBC, the “Operational
Creditor”   is   entitled   to   file   an   application   before   the
adjudicating   authority   for   initiating   the   Corporate   Insolvency
Resolution Process.
16

14. The issue is no more  res integra . It will be relevant to refer
to   paragraph   38   of   the   judgment   of   this   Court   in   the   case   of
Mobilox   Innovations   Private   Limited   v.   Kirusa   Software
Private Limited 1
:­
“38.   It   is,   thus,   clear   that   so   far   as   an
operational   creditor   is   concerned,   a   demand
notice   of   an   unpaid   operational   debt   or   copy   of
an   invoice   demanding   payment   of   the   amount
involved   must   be   delivered   in   the   prescribed
form. The corporate debtor is then given a period
of 10 days from the receipt of the demand notice
or copy of the invoice to bring to the notice of the
operational creditor  the existence of a dispute, if
any.   We   have   also   seen   the   notes   on   clauses
annexed to the Insolvency and Bankruptcy Bill of
2015, in which “the existence of a dispute” alone
is   mentioned.   Even   otherwise,   the   word   “and”
occurring in Section 8(2)( a ) must be read as “or”
keeping in mind the legislative intent and the fact
that   an   anomalous   situation   would   arise   if   it   is
not read as “or”. If read as “and”, disputes would
only  stave off the bankruptcy  process if they  are
already   pending   in   a   suit   or   arbitration
proceedings   and   not   otherwise.   This   would   lead
to   great   hardship;   in   that   a   dispute   may   arise   a
few   days   before   triggering   of   the   insolvency
process,   in   which   case,   though   a   dispute   may
exist,   there   is   no   time   to   approach   either   an
Arbitral   Tribunal   or   a   court.   Further,   given   the
fact   that   long   limitation   periods   are   allowed,
where   disputes   may   arise   and   do   not   reach   an
Arbitral Tribunal or a court for up to three years,
1   (2018) 1 SCC 353
17

such   persons   would   be   outside   the   purview   of
Section   8(2)   leading   to   bankruptcy   proceedings
commencing   against   them.   Such   an   anomaly
cannot   possibly   have   been   intended   by   the
legislature nor  has it so  been intended. We have
also seen that one of the objects of the Code qua
operational debts is to ensure that the amount of
such debts, which is usually smaller than that of
financial   debts,   does   not   enable   operational
creditors   to   put   the   corporate   debtor   into   the
insolvency   resolution   process   prematurely   or
initiate   the   process   for   extraneous
considerations.   It   is   for   this   reason   that   it   is
enough   that   a   dispute   exists   between   the
parties.”
15. It could thus be seen that this Court has held that one of
the   objects   of   the   IBC   qua   operational   debts   is   to   ensure   that
the amount of such debts, which is usually smaller than that of
financial debts, does not enable operational creditors to put the
corporate   debtor   into   the   insolvency   resolution   process
prematurely   or   initiate   the   process   for   extraneous
considerations. It has been held that it is for this reason that it
is enough that a dispute exists between the parties.
16. It   will   further   be   apposite   to   refer   to   the   following
observations   of   this   Court   in   Mobilox   Innovations   Private
18

Limited   (supra) ,  wherein   this   Court  has   considered   the  terms
“existence”, “genuine dispute” and “genuine claim” and various
authorities construing the said terms:­
“45.   The   expression   “existence”   has   been
understood as follows:
“ Shorter   Oxford   English   Dictionary   gives   the
following meaning of the word “ existence ”:
( a ) Reality, as opp. to appearance.
( b )   The   fact   or   state   of   existing;   actual
possession   of   being.   Continued   being   as
a living creature, life, esp. under adverse
conditions.
Something that exists; an entity, a being. All that
exists. (P. 894,   Oxford English Dictionary )”
46.   Two   extremely   instructive   judgments,   one   of
the   Australian   High   Court,   and   the   other   of   the
Chancery   Division  in   the   UK,  throw   a   great  deal
of light on the expression “existence of a dispute”
contained   in   Section   8(2)( a )   of   the   Code.   The
Australian   judgment   is   reported   as   Spencer
Constructions   Pty   Ltd.   v.   G   &   M   Aldridge   Pty
Ltd.   [ Spencer   Constructions   Pty   Ltd.   v.   G   &   M
19

Aldridge   Pty   Ltd. ,   1997   FCA   681   (Aust)]   The
Australian   High   Court   had   to   construe   Section
459­H   of   the   Corporations   Law,   which   read   as
under:
“(1)***
( a )   that   there   is   a   genuine   dispute
between   the   company   and   the
respondent   about   the   existence   or
amount   of   a   debt   to   which   the   demand
relates;
( b )***”
47.   The   expression   “genuine   dispute”   was   then
held to mean the following:
“Finn,   J.   was   content   to   adopt   the
explanation   of   “genuine   dispute”   given   by
McLelland,   C.J.   in   Eq   in   Eyota   Pty
Ltd.   v.   Hanave   Pty   Ltd.   [ Eyota   Pty
Ltd.   v.   Hanave  Pty Ltd. , (1994) 12 ACSR  785
(Aust)]   ACSR   at   p.   787   where   his   Honour
said:
‘In my  opinion  [the]  expression  connotes
a   plausible   contention   requiring
investigation, and raises much the same
sort   of   considerations   as   the   “serious
question   to   be   tried”   criterion   which
arises   on   an   application   for   an
interlocutory   injunction   or   for   the
extension   or   removal   of   a   caveat.   This
20

does   not   mean   that   the   court   must
accept   uncritically   as   giving   rise   to   a
genuine   dispute,   every   statement   in   an
affidavit   ‘however   equivocal,   lacking   in
precision,   inconsistent   with   undisputed
contemporary   documents   or   other
statements   by   the   same   deponent,   or
inherently   and   probable   in   itself,   it   may
be   not   having   ‘sufficient   prima   facie
plausibility to merit further investigation
as   to   [its]   truth’   (cf   Eng   Mee
Yong   v.   Letchumanan   [ Eng   Mee
Yong   v.   Letchumanan ,   1980   AC   331   :
(1979)   3   WLR   373   (PC)]   AC   at   p.   341G),
or ‘a patently feeble legal argument or an
assertion   of   facts   unsupported   by
evidence’:   cf   South
Australia   v.   Wall   [ South   Australia   v.   Wall ,
(1980)   24   SASR   189   (Aust)]   SASR   at   p.
194.’
His   Honour   also   referred   to   the   judgment   of
Lindgren,   J.   in   Rohalo   Pharmaceutical   Pty
Ltd.   [ Rohalo   Pharmaceutical   Pty   Ltd.   v.   RP
Scherer ,   (1994)   15   ACSR   347   (Aust)]   where,
at p. 353, his Honour said:
‘The provisions [of Sections 459­H(1) and
(5)]   assume   that   the   dispute   and
offsetting   claim   have   an   “objective”
existence   the   genuineness   of   which   is
capable   of   being   assessed.   The   word
“genuine”   is   included   [in   “genuine
dispute”] to sound a note of warning that
the propounding of serious disputes and
21

claims   is   to   be   expected   but   must   be
excluded from consideration.’
There   have   been   numerous   decisions   of
Single   Judges   in   this   Court   and   in   State
Supreme   Courts   which   have   analysed,   in
different   ways,   the   approach   a   court   should
take   in   determining   whether   there   is   “a
genuine dispute” for the purposes of Section
459­H of the Corporations Law. What is clear
is   that   in   considering   applications   to   set
aside   a   statutory   demand,   a   court   will   not
determine   contested   issues   of   fact   or   law
which have a significant or substantial basis.
One finds formulations such as:
‘…   at   least   in   most   cases,   it   is   not
expected that the court will embark upon
any   extended   enquiry   in   order   to
determine   whether   there   is   a   genuine
dispute   between   the   parties   and
certainly   will   not   attempt   to   weigh   the
merits   of   that   dispute.   All   that   the
legislation   requires   is   that   the   court
conclude that there is a dispute and that
it is a genuine dispute.’
See   Mibor   Investments   Pty   Ltd.   v.   Commonwealth
Bank   of   Australia   [ Mibor   Investments   Pty
Ltd.   v.   Commonwealth   Bank   of   Australia ,   (1993)
11   ACSR   362   (Aust)]   ACSR   at   pp.   366­67,
followed   by   Ryan,   J.   in   Moyall   Investments
Services   Pty   Ltd.   v.   White   [ Moyall   Investments
Services   Pty   Ltd.   v.   White ,   (1993)   12   ACSR   320
(Aust)] ACSR at p. 324.
22

Another   formulation   has   been   expressed   as
follows:
‘It   is   clear   that   what   is   required   in   all
cases   is   something   between   mere
assertion   and   the   proof   that   would   be
necessary   in   a   court   of   law.   Something
more   than   mere   assertion   is   required
because  if  that  were  not  so  then  anyone
could merely say it did not owe a debt.…’
See   John   Holland   Construction   and   Engg.   Pty
Ltd.   v.   Kilpatrick   Green   Pty   Ltd.   [ John   Holland
Construction   and   Engg.   Pty   Ltd.   v.   Kilpatrick
Green Pty Ltd. , (1994) 12 ACLC 716 (Aust)] ACLC
at   p.   718,   followed   by   Northrop,   J.   in   Aquatown
Pty   Ltd.   v.   Holder   Stroud   Pty   Ltd.   [ Aquatown   Pty
Ltd.   v.   Holder   Stroud   Pty   Ltd. ,   Federal   Court   of
Australia, 25­6­1996, Unreported]
In   Morris   Catering   (Australia)   Pty   Ltd.   [ Morris
Catering   (Australia)   Pty   Ltd.,   In   re ,   (1993)   11
ACSR   601   (Aust)]   ACSR   at   p.   605,   Thomas,
J. said:
‘There   is   little   doubt   that   Div   3   is
intended   to   be   a   complete   code   which
prescribes   a   formula   that   requires   the
court to  assess the position between the
parties,   and   preserve   demands   where   it
can   be   seen   that   there   is   no   genuine
dispute   and   no   sufficient   genuine
offsetting   claim.   That   is   not   to   say   that
the   court   will   examine   the   merits   or
settle the dispute. The specified limits of
23

the   court's   examination   are   the
ascertainment   of   whether   there   is   a
“genuine dispute” and whether there is a
“genuine claim”.
It   is   often   possible   to   discern   the
spurious, and to identify mere bluster or
assertion.   But   beyond   a   perception   of
genuineness   (or   the   lack   of   it)   the   court
has   no   function.   It   is   not   helpful   to
perceive   that   one   party   is   more   likely
than   the   other   to   succeed,   or   that   the
eventual   state   of   the   account   between
the parties is more likely to be one result
than another.
The   essential   task   is   relatively   simple   —
to   identify   the   genuine   level   of   a   claim
(not the likely result of it) and to identify
the   genuine   level   of   an   offsetting   claim
(not the likely result of it).’
In   Scanhill Pty Ltd.   v.   Century 21 Australasia Pty
Ltd.   [ Scanhill   Pty   Ltd.   v.   Century   21   Australasia
Pty Ltd. , (1993) 12 ACSR 341 (Aust)] ACSR at p.
357 Beazley, J. said:
‘… the test  to be applied for  the purposes of
Section   459­H   is   whether   the   court   is
satisfied   that   there   is   a   serious   question   to
be   tried   that   the   applicant   has   an   offsetting
claim.’
In   Chadwick   Industries   (South   Coast)   Pty
Ltd.   v.   Condensing Vaporisers Pty Ltd.   [ Chadwick
24

Industries   (South   Coast)   Pty   Ltd.   v.   Condensing
Vaporisers   Pty   Ltd. ,   (1994)   13   ACSR   37   (Aust)]
ACSR at p. 39, Lockhart, J. said:
‘… what  appears clearly  enough from  all the
judgments   is   that   a   standard   of   satisfaction
which   a   court   requires   is   not   a   particularly
high   one.   I   am   for   present   purposes   content
to   adopt   any   of   the   standards   that   are
referred to in the cases…. The highest of the
thresholds is probably the test enunciated by
Beazley,   J.,   though   for   myself   I   discern   no
inconsistency   between   that   test   and   the
statements in the other cases to which I have
referred. However, the application of Beazley,
J.'s   test   will   vary   according   to   the
circumstances of the case.
Certainly   the   court   will   not   examine   the
merits   of   the   dispute   other   than   to   see   if
there is in fact a genuine dispute. The notion
of   a   “genuine   dispute”   in   this   context
suggests   to   me   that   the   court   must   be
satisfied   that   there   is   a   dispute   that   is   not
plainly   vexatious   or   frivolous.   It   must   be
satisfied that there is a claim  that may  have
some substance.’
In   Greenwood   Manor   Pty
Ltd.   v.   Woodlock   [ Greenwood   Manor   Pty
Ltd.   v.   Woodlock ,   (1994)   48   FCR   229   (Aust)]
Northrop,   J.   referred   to   the   formulations   of
Thomas, J. in   Morris Catering (Australia) Pty Ltd.,
In   re   [ Morris   Catering   (Australia)   Pty   Ltd.,   In   re ,
(1993) 11 ACSR 601 (Aust)] ACLC  at p. 922 and
25

Hayne,   J.   in   Mibor   Investments   Pty
Ltd.   v.   Commonwealth   Bank   of   Australia   [ Mibor
Investments   Pty   Ltd.   v.   Commonwealth   Bank   of
Australia , (1993) 11 ACSR 362 (Aust)] , where he
noted   the   dictionary   definition   of   “genuine”   as
being   in   this   context   “not   spurious   …   real   or
true” and concluded (at p. 234):
‘Although   it   is   true   that   the   Court,   on   an
application under Sections 459­G and 459­H
is   not   entitled   to   decide   a   question   as   to
whether  a  claim  will  succeed or   not,  it must
be   satisfied   that   there   is   a   genuine   dispute
between   the   company   and   the   respondent
about   the   existence   of   the   debt.   If   it   can   be
shown   that   the   argument   in   support   of   the
existence   of   a   genuine   dispute   can   have   no
possible   basis   whatsoever,   in   my   view,   it
cannot   be   said   that   there   is   a   genuine
dispute.   This   does   not   involve,   in   itself,   a
determination   of   whether   the   claim   will
succeed or not, but it does go to the reality of
the   dispute,   to   show   that   it   is   real   or   true
and not merely spurious'.
In our view a “genuine” dispute requires that:
( i )   the   dispute   be   bona   fide   and   truly
exist in fact;
( ii ) the grounds for alleging the existence
of   a   dispute   are   real   and   not   spurious,
hypothetical, illusory or misconceived.
26

We   consider   that   the   various   formulations
referred   to   above   can   be   helpful   in   determining
whether   there   is   a   genuine   dispute   in   a
particular   case,   so   long   as   the   formulation   used
does not become a substitute for the words of the
statute.””
17. It   is   thus   clear   that   once   the   “Operational   Creditor”   has
filed   an   application   which   is   otherwise   complete,   the
adjudicating   authority   has   to   reject   the   application   under
Section   9(5)(ii)(d)   of   IBC,   if   a   notice   has   been   received   by
“Operational   Creditor”   or   if   there   is   a   record   of   dispute   in   the
information   utility.     What   is   required   is   that   the   notice   by   the
“Corporate   Debtor”   must   bring   to   the   notice   of   “Operational
Creditor”   the   existence   of   a   dispute   or   the   fact   that   a   suit   or
arbitration proceedings relating to a dispute is pending between
the   parties.     All   that   the   adjudicating   authority   is   required   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
27

from the chaff and to reject a spurious defence which is a mere
bluster.   It   has   been   held   that   however,   at   this   stage,   the
Court is not required to be satisfied as to whether the defence is
likely   to   succeed   or   not.     The   Court   also   cannot   go   into   the
merits   of   the   dispute   except   to   the   extent   indicated
hereinabove.     It   has   been   held   that   so   long   as   a   dispute   truly
exists   in  fact   and   is   not   spurious,   hypothetical   or   illusory,   the
adjudicating   authority   has   no   other   option   but   to   reject   the
application.
18. In   the   light   of   the   law   laid   down   by   this   Court   stated
hereinabove,   we   will   have   to   examine   the   facts   of   the   present
case.  We clarify that though arguments have been advanced at
the Bar with regard to the questions as to whether the so­called
claim   made   by   Overseas   would   be   considered   to   be   an
“Operational   Debt”   and   as   to   whether   Overseas   could   be
considered   to   be   an   “Operational   Creditor”,   we   do   not   find   it
necessary   to   go   into   said   questions,   inasmuch   as   the   present
appeal   can   be   decided   only   on   a   short   question   as   to   whether
28

Kay   Bouvet   has   been   in   a   position   to   make   out   the   case   of
“existence of dispute” or not.
19. For   considering   the   rival   submissions,   it   will   be
appropriate   to   refer   to   the   Demand   Notice/Invoice   dated   23 rd
November 2017, addressed to Kay Bouvet by Overseas:­
“7.     Due   to   termination   of   the   EPC   contract   by
Mashkour,   the   tripartite   sub­contract   also   came
to an automatic end by virtue of the clause 15.2
of   the   Particular   Conditions   of   the   said   sub­
contract.  
8.     On   or   about   14 th
  July   2017,   the   Corporate
Debtor   filed   its   affidavit   dated   14 th
  July   2017   in
the Notice of Motion (L) No. 1314 of 2017 in Suit
(1) No. 382 of 2017 in reply to the said Notice of
Motion   (hereinafter   referred   to   as   the   “said
Reply”).     In   the   said   reply,   the   Corporate   Debtor
has   categorically   stated   and   admitted   that
Mashkour   has   now,   in   replacement   of   the
Operational   Creditor,   appointed   the   Corporate
Debtor   itself   as   its   EPC   Contractor   for   the   said
Project   under   and   the   EPC   Contract   dated   5 th
July 2017.   Consequently the tri­partite contract
dated   18 th
  April   2010   between   Mashkour,   the
Corporate   Debtor   and   the   Operational   Creditor
stands   vitiated   and   superseded   by   the   fresh
Contract   executed   between   Mashkour   and
29

Corporate Debtor.   In view thereof the Corporate
Debtor can no longer perform under the said tri­
partite   contract   dated   18 th
  April   2010   between
Mashkour,   the   Corporate   Debtor   and   the
Operational   Creditor   as   the   same   stands
superseded   by   the   fresh   contract   dated   5 th
  July
2017   executed   between   Mashkour   and   the
Corporate Debtor.
9.  The Operational Creditor therefore states that
in   the   light   of   the   Corporate   Debtors   admission
in the said reply, the Corporate Debtor is liable to
refund the said Advance Amount forthwith to the
Operatinal   Creditor.     The   Operational   Creditor
further   states   that   the   said   Advance   Amount
became due and payable as and by way of refund
to   the   Operational   Creditor   by   the   Corporate
Debtor on or about 5 th
  July 2017 i.e. the date on
which the Corporate Debtor was appointed as an
EPC Contractor by Mashkour.
10.   The   Corporate   Debtor   has,   therefore,
defaulted in refunding the said Advance Amount”
20. It   can   thus   be   seen   that   the   claim   of   Overseas   is   that   in
the   reply   filed   to   its   Notice   of   Motion   by   Kay   Bouvet,   it   has
admitted   that   Mashkour   has,   as   a   replacement   of   Overseas,
30

appointed   Kay   Bouvet   as   the   Contractor.     As   such,   the
Tripartite Agreement dated 18 th
 December 2010, stands vitiated
and   superseded.     As   such,   Kay   Bouvet   cannot   perform   under
the said Tripartite Agreement. According to Overseas, therefore,
in   view   of   the   admission   in   the   reply,   Kay   Bouvet   is   liable   to
refund the advance amount forthwith.  
21. It will be relevant to refer to the Reply dated 6 th
  December
2017,   addressed   by   Kay   Bouvet   to   Overseas   as   per   the
provisions   of   Clause   (a)   of   sub­section   (2)   of   Section   8   of   the
IBC:­
“3.     We   state   that   Key   Bouvet   expressly   denied
the   claim   of   10.62   million   of   equivalent   to
Rs.47,12,10,000/­   (Rupees   47   Crores   Twelve
Lakhs   Ten   Thousand   Only).     We   state   that   Key
Bouvet had received advance monies on behalf of
Mashkour   Sugar   Company   Limited   (hereinafter
Mashkour)   as   per   the   Agreement   executed
between   the   parties.     We   state   that   thereafter
Mashkour has terminated an agreement with you
vide   their   letter   dated   17.05.2017   and   therefore
Kay Bouvet has monetary liability towards OIA.
31

4.     We   state   that   on   05.07.2017   Mashkour   has
entered into a fresh contract with Key Bouvet.  In
the said Agreement Mashkour has considered the
earlier   Advance   Payment   of   USD   10.62   Million
equivalent   to   Rs.47,12,10,000/­   (Rupees   47
Crores   Twelve   Lakhs   Ten   Thousand   Only)   made
to Key Bouvet from Mashkour.   The execution of
the   fresh  contract  in   favour  of   Kay   Bouvet  in   no
manner   creates   an   automatic   liability   on   Kay
Bouvet to refund any amount.   There is no such
legal   and   contractual   monetary   liability
between   the   OIA   and   Kay   Bouvet.   The   very
perusal   of   the   definition   of   “debt”   and
“operational   Creditors”   would   establish   that
termination   of   contract   by   Mashkour   with
you   does   not   create   any   debt   due   from   Key
Bouvet towards OIA.  It expressly denied that
Kay   Bouvet   is   an   Operational   Creditor
towards OIA.
5.  We state that, as per the pleadings in the Suit
(L)   No.   382   of   2017,   you   have   sought   a   relief   of
release   of   the   amount   of   USD   10,745,000/­
under the letter of agreement of 2th March 2014.
Thereafter there is an existence of dispute of
the existence of such amount of debt claimed
by   you.     In   such   event   your   demand   notice   is
erroneous,   illegal   and   bad   in   law   considering
provisions   of   Insolvency   and   Bankruptcy   Code,
2016 and more particularly Section 5(6), Section
9(5)(i)(d) and Section 9(5)(ii)(d).”
32

[emphasis supplied]
22. It can thus be seen that Kay Bouvet has clearly stated that
the said amount of Rs.47,12,10,000/­ was received as advance
money   on   behalf   of   Mashkour.     It   has   been   specifically   stated
that in the agreement entered into between Mashkour and Kay
Bouvet   on   5 th
  July   2017,   the   said   advance   payment   of
Rs.47,12,10,000/­   has   been   duly   considered.     It   is   stated   that
the   execution   of   the   fresh   contract   in   favour   of   Kay   Bouvet   in
no   manner   creates   an   automatic   liability   on   Kay   Bouvet.     As
such,   Kay   Bouvet   has   pressed   into   service   the   “existence   of
dispute” for opposing the demand made by Overseas.
23. We   will   have   to   examine   as   to   whether   the   claim   of   Kay
Bouvet   with   regard   to   the   “existence   of   dispute”,   can   be
considered   to   be   the   one   which   is   spurious,   illusory   or   not
supported by any evidence.  It will be relevant to refer to Clause
14.1   of   the   Tripartite   Agreement   dated   18 th
  December   2010,
between Mashkour, Overseas and Kay Bouvet:­
33

“1.  10% of the sub contract Price as interest free
advance   payment   by   way   of   telegraphic   transfer
directly   to   the   bank   account   of   the   Sub­
Contractor   against   submission   of   invoice   and
Advance Payment Bank Guarantee for 10% of the
sub contract Price, from any Indian public sector
bank   acceptable   to   Mashkour   upon   receipt   of
amounts   from   EXIM   Bank.     The   Advance
Payment Bank Guarantee shall be as per  format
attached   herewith   (Uniform   Rules   for   Demand
guarantees,   Publication   No.758,   International
Chamber   of   Commerce)   and   its   value   may   be
reduced   in   proportion   to   the   value   of   amounts
invoiced   as   evidenced   by   shipping   documents
and receipt of payment from EXIM Bank.”
24. It will further  be relevant  to refer  to  the e­mail dated 29 th
March 2011, from Overseas to Mashkour:­
“1.   Mashkour   Sugar   Company   will   release
payment   of   two   invoices   to   OIA   against   factory
DDE   for   USD   10.5   Million   (USD   9.00   M   +   USD
1.50M).
2.  OIA will release payment of USD 10.62 Million
to   Kay   Bouvet   on   submission   of   Advance   Bank
Guarantee   and   Performance   Bank   Guarantee   to
Mashkour   and   its   confirmation   and   acceptance
34

by   Mashkour   and   discharge   of   OIA   Bank
Guarantee of USD 7.5 Millions.
3.  Mashkour will release Second payment of two
Invoices of USD 4.375 Million (USD 3.50M + USD
0.875M) … civil work to OIA.
4.     OIA   will   release   advance   payment   of   USD
1.113   Million   to   Civil   Contractor   after   signing   of
contract between OIA and civil contractor and on
confirmation   from   Mashkour   regarding
acceptance   or   ABG/PBG   of   the   Civil   Contractor
as per Contract.
You are requested to please accept this proposal
and send authorization letters to EXIM.”
25. A perusal thereof would clearly reveal that Mashkour was
to   release   payment   of   two   invoices   of   Overseas   for   USD   10.5
Million   (USD   9.00   Million   +   USD   1.50   Million).     It   will   further
reveal   that   Overseas   was   to   release   payment   of   USD   10.62
Million   to   Kay   Bouvet   on   submission   of   Advance   Bank
35

Guarantee and Performance Bank Guarantee to Mashkour and
its confirmation and acceptance by Mashkour.  
26. It   will   further   be   relevant   to   refer   to   the   communication
addressed by Exim Bank to Overseas dated 21 st
 April 2011:­
“GOI   supported   Exim   Bank’s   Line   of   Credit   for
USD   25   Million   to   Government   of   Sudan
Approval   No.   Exim/GOILOC­82/1.Disbursement
advice:3.
We   advise   that   an   amount   of
Rs.46,58,75,853/­   has   been   remitted   to   India
Overseas Bank, Nehru Place, New  Delhi  through
RTGS   Code   –   IOBA0000543   to   the   credit   of
account   of   Overseas   Infrastructure   Alliance
(India)   Private   Limited.     The   disbursement   is
made   against   the   contract   between
Mashkour   Sugar   Company,   Sudan   and
Overseas   Infrastructure   Alliance   (India)
Private   Limited.     Details   of   the   disbursement
are as under:­
Amt. in USD
36

Disbursement
No. Invoice Value
(CIF) 100% Eligible Value
100% Net Remitted Value
Date
2 15,000,000.00 10,500,000.00 10,476,781.85 April
18,
2011
2.     The   breakup   of   the   disbursement   made   as
follows:­
USD
Eligible Value 10,500,000.00 465,911,250.00
  Less
Negotiation   Charges
(Service Tax) 23,218.15 10,30,247.00
Currency   Conversion
Chg. And Service Tax 110.00
Net Remittance 10,476,781.85 46,48,80,893.00
3.  Please confirm receipt of the credit.”
 [emphasis supplied]
37

27. It   will   further   be   relevant   to   refer   to   the   communication
addressed by Overseas of the same date to Mashkour:­
“ We   have   been   paid   the   advance   amount   to
10.05   million   USD   in   INR   by   Exim   Bank
because   of   Stringent   Sanction   entrancement
by   the   United   State   Office   of   Foreign   asset
Control   (OFAC)   as   per   the   letter   enclosed
herewith.    The amount has been delivered to us
@ Rs.44.37 per disbursement advice of the Exim
bank attached herewith.
Further   OIA   will   release   payment   of   USD
10.62 Million to Kay Bouvet on Submission of
Advance   Bank   Guarantee   and   Performance
Bank   Guarantee   to   Mashkour   Sugar
Company   and   its   confirmation   and
acceptance   by   Mashkour   Sugar   Company
and discharge of OIA Bank Guarantee of USD
7.5 Million (As per mail dated 29.03.2011) of
Mr. Ghodgankar .”
[emphasis supplied]
38

28. The   communication   dated   28 th
  July   2011,   addressed   by
Mashkour  to Overseas would further clarify the position which
reads thus:­
“We   are   please   to   inform   you   that   nominated
sub­contractor   messres   Kay   Bouvet
Engineering   Private   Limited   has   submitted
Advance Payment Bank Guarantee as well as
Performance   Bank   Guarantee   to   us   as   per
the   sub­contract   agreement   and   we   are
satisfied with the same.
In   the   light   of   the   above   we   request   your
good   self   to   release   the   10%   of   the   Sub­
contract   value   as   per   letter   dated
21.04.2011 addressed to Mashkour.
The payment to be released as under:­
Name of the Beneficiary : M/s Kay Bouvet
Engineering
Private Ltd.
39

Name of Bank : M/s Bank of   
Maharashtra,
Satara,   City
Branch
IFSC Code : MAH80000134
Account No. : 60018168457
Mode of Payment : RTGS
+   amount   of   Rs.47,12,10,000/­   (Rupees   Forty
Seven Crores Twelve Lakhs Ten Thousand only)
As   soon   as   we   get   confirmation   from   your   side
regarding   release   of   payment   we   shall   release
your Bank Guarantee USD 7.5 Million.
As I discussed today with Mr. Suresh I will be in
India   with   original   discharge   bank   Guarantee   in
the beginning of last week.”
[emphasis supplied]
29. As   already   discussed   hereinabove   that   Kay   Bouvet   had
certain   grievances   with   regard   to   payment   of   less   money   on
account   of   exchange   rate,   the   communication   dated   21 st
September 2011, addressed by Kay Bouvet to Mashkour would
clarify the said position which reads thus:­
“We   have   been   paid   Rs.47,12,10,000/­   by   M/s.
Overseas   Infrastructure   Alliance   (India)   Ltd.   On
30 th
  August   2011   equivalent   to   USD   10.62
Million   converted   1   USD   @   Rs.44.37/­,   whereas
40

on   that   day   the   conversion   rate   as   per   the
attached   list   was   1   USD   –   Rs.46.26/­,   so   the
amount   would   have   been   Rs.49,12,08,012/­,   so
they have underpaid a sum of Rs.1,99,98,012/­.
So   you   are   requested   to   advise   OIA   to   release
amount   of   Rs.1,99,98,012/­   to   us   without   any
delay.”
30. The   last   nail   in   the   case   of   the   Overseas   would   be   in   the
nature   of   communication   addressed   by   the   Ambassador   of
Sudan to Mashkour dated 25 th
 April 2017, which reads thus:­
“With reference to the earlier correspondence, we
have   received   the   DO   No.   1425/Secy(ER)/2017
dated   18 th
  April,   2017   from   Mr.   Amar   Sinha,
Secretary   (Economic   Relations)   Ministry   of
External Affairs, Government of India, New Delhi,
India expediting the termination of the agreement
with   Overseas   Infrastructure   Alliance   (India)
Private   Limited   (OIA)   and   that   an   agreement   be
signed   with   Kay   Bouvet   Engineering   Ltd.   (KBEL)
as a direct contractor for the unutilized portion of
the   GOI’s   Line   of   Credit   for   US   Dollars
150,000,000 for the Mashkour Sugar Project.
It   is   on   the   record   that   a   sum   of
Rs.47,12,10,000/­   (US   $   10.62   Million)   was
paid   by   OIA   to   Kay   Bouvet   Engineering   Ltd.
“KBEL”   on   behalf   of   Mashkour   Sugar
Company   from   the   funds   released   to   OIA   by
Exim Bank from the 1 st
  disbursed tranche of
US $ 25 Million.
41

Kindly   make   a   note,   while   signing   the
revised   contract   with   KBEL   that   the   above
mentioned amount of US  Dollars 10.62 shall
be   adjusted   by   Kay   Bouvet   Engineering   Ltd.
against the supplies to be made to Mashkour
Sugar   Company   Ltd.   for   the   purpose   of
completing the project.
Naturally,   it   should   be   borne   in   mind   that   the
termination   of   OIA   contract   with   Mashkour
should   not   absolve   them   of   any   liability   for   the
balance   of   the   LoC   1 st
  tranche   of   25   Million
disbursed   to   them,   other   than   the   US   Dollars
10.62   already   paid   to   KBEL   and   which   will   be
adjusted when a contract is signed with KBEL as
a main contractor.”
[emphasis supplied]
31. It   is   thus   abundantly   clear   that   the   case   of   Kay   Bouvet
that   the   amount   of   Rs.47,12,10,000/­  which   was   paid   to   it   by
Overseas,   was   paid   on   behalf   of   Mashkour   from   the   funds
released   to   Overseas   by   Exim   Bank   on   behalf   of   Mashkour,
cannot be said to be a dispute which is spurious, illusory or not
supported   by   the   evidence   placed   on   record.   The   material
placed on record amply clarifies that the initial payment which
was made to Kay Bouvet as a sub­Contractor by Overseas who
42

was   a   Contractor,   was   made   on   behalf   of   Mashkour   and   from
the funds received by Overseas from Mashkour.   It will also be
clear   that   when   a   new   contract   was   entered   into   between
Mashkour and Kay Bouvet directly, Mashkour had directed the
said   amount   of   Rs.47,12,10,000/­   to   be   adjusted   against   the
supplies  to   be  made   to   Mashkour   Sugar  Company   Ltd.  for   the
purpose   of   completing   the   Project.     On   the   contrary,   the
documents   clarify   that   the   termination   of   the   contract   with
Overseas   would   not   absolve   Overseas   of   any   liability   for   the
balance  of  the LoC  1 st
  tranche of 25 Million disbursed to them
other than USD 10.62 paid to Kay Bouvet.
32. In   these   circumstances,   we   find   that   NCLT   had   rightly
rejected   the   application   of   Overseas   after   finding   that   there
existed   a   dispute   between   Kay   Bouvet   and   Overseas   and   as
such, an order under Section 9 of the IBC would not have been
passed.     We   find   that   NCLAT   has   patently   misinterpreted   the
factual as well as legal position and erred in reversing the order
of NCLT and directing admission of Section 9 petition.  
43

33. Resultantly,   this   appeal   is   allowed   and   the   impugned
order dated 21 st
  December  2018, passed by  NCLAT is quashed
and set aside.  The order passed by NCLT dated 26 th
 July 2018,
is maintained. 
34. In   view   of   the   above,   all   the   pending   IAs   shall   stand
disposed of.
…..….......................J.
[R.F. NARIMAN]
…….........................J.       
[B.R. GAVAI]
NEW DELHI;
AUGUST 10, 2021.
44