Pradeep R. Sethi, Member (T)
1. The present application is filed by AV Wires Private Limited (hereinafter referred to as Operational Creditor) for initiating Corporate Insolvency
Resolution Process (CIRP) in the case of Fortune Fasteners Private Limited (hereinafter referred to as Corporation Debtor). The application is filed
under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as Code) read with the Insolvency and Bankruptcy (Application
to Adjudicating Authority) Rules, 2016 (hereinafter referred to as Rules). The application is filed in the prescribed Form-5 and is signed by Shri Vinod
Kumar Jain, Director of the Operational Creditor. The certified copy of the Board Resolution of the Operational Creditor according consent for filing
the application and authorising Shri Vinod Kumar Jain, Director is at Annexure-5.
2. The CIN of the Corporate Debtor is stated to be U29253DL2010PTC199563 and the Corporate Debtor is stated to be incorporated on 26.02.2010.
The registered address of the Corporate Debtor is stated to be 52/58, Ramjas Road, Karol Bagh, New Delhi-110005. Therefore, the jurisdiction lies
with this Bench of the Tribunal.
3. In part IV of Form No. 5, it is stated that the total amount of debt is Rs.8,85,679/- and that the default occurred w.e.f. 7.9.2017. It is submitted that
the Operational Creditor performed job work and supply of goods during the period 3.3.2017 to 27.2.2018 and that part payment against outstanding
bill was received during the period 3.3.2017 to 27.3.2018. The copy of the ledger account of the Corporate Debtor in the books of the Operational
Creditor is placed at page 15 of the application and shows that the last receipt of payment was on 27.3.2018 of Rs.5,33,876/- and the closing debit
balance is Rs. 8,85,679/-. The statement of pending bills in respect of which payment is outstanding is filed at page 16 of the application. Copies of
invoices have been filed at page 17 to 26 of the application.
4. Demand notice in Form No. 3 and Form No. 4 is stated to be issued on 9.8.2018 (Annexure-2 of the application). The speed post receipt for
despatch of the demand notice at the registered address and factory address in Rohtak of the Corporate Debtor are filed at page 28 of the application.
The tracking report for both the consignments are filed at pages 29 and 30 of the application. It is stated that the notices were duly received by the
Corporate Debtor on 14.8.2018 at the registered address at Delhi and on 26.8.2018 at the factory office at Rohtak.
5. It is submitted that the Corporate Debtor did not file any reply nor made any payment after receiving the demand notice. The affidavit of no dispute
has been filed by Shri Vinod Kumar Jain, Director (page 13 of the application).
6. The certificate dated 01.09.2018 of Canara Bank has been filed confirming that no payment from the corporate debtor was received in the CC
account of the operational creditor since 28.3.2018 [Annexure 13 of the Application].
7. In part-III of Form No. 5, Shri Mahavir Prasad Jain registration No. IBBI/IPA-001/IP-P00894/2017-2018/11491 has been proposed as Interim
Resolution Professional (IRP). His written communication in Form No. 2 is at Annexure 14 of the application.
8. The copy of the application is stated to be sent in advance to the corporate debtor at the registered office address at Delhi and factory address at
Rohtak by speed post on 14.09.2018.
8. Vide order dated 11.10.2018, direction was given for issuing notice as to why the application for initiating the CIRP should not be admitted against
the Corporate Debtor. On the date fixed i.e. 13.11.2018, Shri Anil Kumar s/o Shri Prakash Chand, Director of the Corporate Debtor attended and
filed letter dated 13.11.2018 submitting that the liability towards the petitioner is admitted and stating that it was intended to resolve the issues amicably
and a time period of 3 months be given. Vide order dated 13.11.2018, the matter was thereupon fixed for further consideration on 20.12.2018 and time
was allowed for filing reply within 3 weeks However, on that date, none appeared on behalf of the Corporate Debtor and the reply was also not filed.
Hence, vide order dated 20.12.2018, last chance was given to file reply within 2 weeks and the case was adjourned to 06.02.2019. On the subsequent
dates of hearing of 06.02.2019, 05.03.2019 and 23.04.2019, there has been no attendance on behalf of the Corporate Debtor. The matter is, therefore,
being decided on merits after hearing the learned counsel for the Operational Creditor and perusing the record.
9. We have discussed the facts of the case above and noted that the amount claimed to be in default is Rs.8,85,679/- and the date on which the default
occurred is 07.09.2017. The compliance of the provisions of Section 9 of the Code is being examined.
Section 9(1):- The demand notice u/s.8 of the Code in Form No. 3 and Form No.4 is dated 09.08.2018 and as discussed above, the notice was
received by the Corporate Debtor on 14.08.2018 at the registered address and on 26.08.2018 at the factory address at Rohtak. No reply/payment is
stated to be received and the Operational Creditor filed the present application on 26.09.2018.
Section 9(2):- The application is filed in the prescribed Form No. 5.
Section 9(3):- The Operational Creditor has filed a copy of the ledger account of the Corporate Debtor in its books of account showing debit balance
of Rs.8,85,679/-. The statement of the pending bill for the outstanding payment alongwith the copies of the invoices have also been filed. Affidavit of
no dispute has been filed by Shri Vinod Kumar Jain, Director of the Operational Creditor (page 13 of the application). Certificate dated 08.09.2018
from Canara Bank has been filed certifying that as per Bank Statement of CC account of the Operational Creditor, no payment is received in the
account from the Corporate Debtor since 28.03.2018.
11. The provisions of Section 9(5)(i) of the Code are as follows:
(5) The Adjudicating Authority shall within fourteen days of the receipt of the application under sub-section (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 not record of dispute in the information utility; and
(e) There is no disciplinary proceeding pending against any resolution professional proposed under sub-section (4), if any.
12. We find that the application in Form 5 is complete; no payment of the unpaid operational debt of Rs.8,85,679/- has been made; demand notice in
Form No. 3 and 4 was sent but no reply was received; the affidavit of no dispute has been filed. We may add here that as discussed above, Shri Anil
Kumar s/o Shri Prakash Chand Director of the Corporate Debtor has attended on 13.11.2018 and has furnished a letter admitting the liability. In view
of this discussion, the requirement of Section 9(5)(i)(a) to (d) are satisfied. As regards Section 9(5)(e), the proposed IRP has filed Form 2 certifying
that there are no disciplinary proceedings pending against him with the Board or the Indian Institute of Insolvency Professionals of ICAI.
13. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, we admit the application and direct the initiation of CIRP in
the case of M/s. Fortune Fasteners Private Limited.
14. We also declare moratorium in terms of Section 14 of the Code. The necessary consequences of imposing the moratorium flows from the
provisions of Section 14(1)(a)(b)(c)&(d). Thus, the following prohibitions are imposed:
“(a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree
or order in any court of law, tribunal, arbitration panel or other authority;
(b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;
(c) any action to foreclose, recover, or enforce any security interest created by the corporate debtor in respect of its property including any action
under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
(d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.â€
It is further directed that:
(a) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during
moratorium period;
(b) The provision of sub-section 14 of the Code shall not apply to such transactions as may be notified by the Central Government in consultation with
any financial sector regulator and the surety in a contract of guarantee to a Corporate Debtor.
(c) The order of moratorium shall have effect from the date of this order till the completion of the corporate insolvency process as per Sub-section (4)
of section 14 of the Code.
14. The Applicant has named the Interim Resolution Professional (IRP), as shri Mahavir Prasad Jain having registration number IBBI/IPA-001/IP-
P00894/2017-18/11491, (email-jain.mp54@gmail.com), duly registered with Insolvency and Bankruptcy Board of India, as the Interim Resolution
Professional who is appointed as IRP in present application.
14. The Interim Resolution Professional shall perform all his functions contemplated, inter alia, by Sections 15,17,18,19,20 & 21 of the Code and
transact proceedings with utmost dedication, honesty and strictly in accordance with the provisions of the ‘Code’, Rules and Regulations. It is
further made clear that all the personnel connected with the Corporate Debtor, its promoters or any other person associated with the Management of
the Corporate Debtor are under legal obligation under Section 19 of the Code to extend every assistance and cooperation to the Interim Resolution
Professional as may be required by him in managing the day to day affairs of the ‘Corporate Debtor’. In case there is any violation, the Interim
Resolution Professional would be at liberty to make appropriate application to this Tribunal with a prayer for passing an appropriate order. The Interim
Resolution Professional shall be under duty to protect and preserve the value of the property of the ‘Corporate Debtor’ as a part of its obligation
imposed by Section 20 of the Code and perform all his functions strictly in accordance with the provisions of the Code, Rules and Regulations.
15. A copy of the order shall be communicated to the Applicant as well as to the Corporate Debtor above named by the Registry. In addition, a copy
of the order shall also be forwarded to IBBI for its records. Further the IRP above named be also furnished with copy of this order forthwith by the
Registry.
