Ch. Mohd. Sharief tariq, J
1. Under consideration is an Application filed under Section 9 of IBC, 2016 bearing number IB-340(ND)/2019 with the prayers to initiate the
Corporate Insolvency Resolution Process (hereinafter referred as ""CIRP"") against the Corporate Debtor, declare moratorium and appoint Interim
Resolution Professional (hereinafter referred as ""IRP"") as the Corporate Debtor has failed to pay the Operational Debt and has become insolvent.
2. Heard the Ld. Counsels for the Operational Creditor, the Corporate Debtor and perused the pleadings alongwith the documents placed on the case
file.
Brief Facts:
3. The Ld. Counsel for the Operational Creditor has referred to the claim which is Rs. 40,93,859/-. The claim is based on the invoices for the years
2016-17 and 2017-18. The list of the invoices is provided under para 6 of Part-V of the Application. Copies of the invoices are placed at pages 27 to
63 of the typed set filed with the Petition. The Counsel for the Operational Creditor has submitted that the Operational Creditor is engaged in the
business of trading of chemicals and on the demand of the Corporate Debtor it has been supplying the material since long and the Corporate Debtor
has been making the payments. However, for the invoices referred to herein above, the payments have not been made.
4. The Counsel for the Operational Creditor has submitted that on 01.11.2018, notice under Section 8 (hereinafter referred as ""notice"") has been sent
to the Corporate Debtor giving the details of the invoices and the amount that was due and payable by the Corporate Debtor, which was delivered. It
is further submitted that the Corporate Debtor has replied to the notice on 14.11.2018.
5. In the reply, the Corporate Debtor has raised the issue that earlier the Operational Creditor had inter alia supplied defective and sub-standard
material to the Corporate Debtor amounting to Rs. 16,31,709/- the payment for which was withheld by the Corporate Debtor. The matter was settled
in third week of September, 2014 whereby the Corporate Debtor was allowed a claim of Rs. 15,50,000/- and the balance sum of Rs. 81,709/- was
paid by the Corporate Debtor as full and final settlement on 18.09.2014. In short, the Corporate Debtor has denied the claim that any amount is
outstanding and there is no default on the part of the Corporate Debtor.
6. The Corporate Debtor under para 2(a) of its reply has given a table, which provides details of the invoices with effect from 18.02.2017 to
18.04.2017 along with the amount and the payments made thereof. The invoices referred to in the reply are at Sl. No. 1 to 6 at para 7, Part-V of the
Application. For rest of the invoices, as per the submissions of the Ld. Counsel for the Corporate Debtor, a letter dated, 07.10.2017 was written to the
Operational Creditor that the material is defective. It has been stated the said letter that the Operational Creditor supplied weaker/sub-standard
material total amounting to Rs. 16,31,709/- during financial years 2009-10 and 2010-11 and the claim was settled for 15,50,000/- and balance amount
Rs. 81709 was paid in Sept 2014. The balance amount of Rs. 81,709/- was paid in September, 2014 to the Operational Creditor. It is specifically noted
that this letter is not referring to the invoices starting from Sl. No. 7 to 37 which are mentioned under para 7 of Part-V of the Application. It is further
noted that the Corporate Debtor has referred to the material which was supplied during 2009-10 and 2010-11 and the letter has been written on
07.10.2017 after the lapse of 6 years. It is further noted in the reply dated 07.10.2017 that the Operational Creditor has been sending defective
material in the factory of the Corporate Debtor with regard to which continuous information was given to the Operational Creditor. It is recorded in
the letter that from March, 2017 onwards defective/sub-standard quality material has been consumed and payments have been made up to April, 2017
on the assurance of the Operational Creditor to compensate. It is further noted that under para 3 of the letter dated 07.10.2017, that the chemicals
supplied from May, 2017 is lying in the factory of the Corporate Debtor and a request was made to lift the same as the material is lying rejected. It
was also requested to issue previous credit note i.e. for Rs. 15,50,000/for the material supplied during 2009-10 and 2010-11. The Counsel for the
Corporate Debtor has further made reference to the communications dated 02.04.2018 and 03.10.2018, wherein the contents of the letter dated
07.10.2017 are reiterated. Based on these submissions, the Counsel for the Corporate Debtor submitted that there exists dispute and the Application
filed by the operational creditor is liable to be dismissed.
7. The counsel for the corporate debtor submitted that the Petition under Section 9 has been filed on the name of the proprietorship firm which is not
maintainable. However, we have noted that Mr. Munish Kumar Aggarwal has filed the Application, who is the sole proprietor of M/s. R.L.
Enterprises. Therefore, this objection has been overruled. As a last leg of his arguments the Ld. Counsel for the Corporate Debtor contended that the
principal amount is Rs. 40,93,859/- on which the interest @ 24% per month is added with effect from 06.12.2018 to 06.1.2019 and the total claim
made is of Rs. 50,76,385/-. However, it is seen from the terms and conditions contained at the back side of the invoices, the interest @ 24% per
annum was to be charged, if the payment is not made by due date. Therefore, the objection raised stands rejected.
8. The Ld. Counsel for the Operational Creditor, in rebuttal to the arguments advanced by the Ld. Counsel for the Corporate Debtor has submitted
that letters dated 07.10.2017, 02.04.2018, 18.05.2018 and 03.10.2018 were never communicated to the Operational Creditor. It is further submitted
that, the Corporate Debtor in reply has admitted the supply of the material till September, 2018 and the issue of defective and sub-standard, which is
raised at the first time. The Ld. Counsel for the Operational Creditor has referred to the ledger account with effect from 01.04.2009 to 31.03.2016
which contains the confirmation being made by the Corporate Debtor by putting the seal and signatures of the authorized person except for the period
from 01.04.2014 to 31.03.2015, which has been received through e-mail dated 22.08.2015.
9. The Ld. Counsel for the Operational Creditor has clarified that since all the ledger statements are being confirmed by the Corporate Debtor with
effect from the year 2009 to 2011. Therefore, there does not appear any force in arguments of the Ld. Counsel for the Corporate Debtor that any
debit note was raised or the matter was got settled, as referred to in the letter dated 07.10.2017, and other communications, which as per the
submissions of the Ld. Counsel the Operational Creditor were never received by his client.
10. A clarification has been sought from the Ld. Counsel for the Operational Creditor that for the material supplied during 2017-18, there is no ledger
confirmation being done by the Corporate Debtor, the Ld. Counsel for the Operational Creditor submitted that the material has been supplied and the
same is accepted, but the issue is with regard to the defective material supplied which is raised for the first time. The Ld. Counsel for the Corporate
Debtor further submitted that at the time of receipt of the material, the Corporate Debtor is at liberty to inform the Operational Creditor about the
quantum of the defective material and raise the debit note and to refuse to accept the material. The Ld. Counsel for the Operational Creditor clarified
that no debit note has been raised for the supplies made during 2017-18 and 2018-19 and some of the material has been consumed and rest of the
material is still lying in the factory. The Ld. Counsel for the Operational Creditor has referred to invoice dated 08.09.2018 placed at page 63 of the
typed set filed with the Petition, of which the payment was due on 06.12.2018. In other words, the payment was to be made within 90 days. Similar is
the position of other invoices, which also bear the seal and signatures of the Corporate Debtor. It is submitted by the Counsel for the Operational
Creditor that the supplies were made and part payments were made and if at all the material was defective then the Corporate Debtor would not have
made payments till August, 2018. It is specifically denied by the Operational Creditor in the rejoinder that the letter dated 07.10.2017, and other
communications were ever sent to him and there is no proof of delivery of the same. Further, there is no mention of these letters or debit note in the
reply given to the notice issued under Section 8 of the Code by the Operational Creditor.
11. The issue raised by the Corporate Debtor pertaining to pre-existing dispute was never raised prior to the notice issued under Section 8 of the Code,
as no sufficient proof is placed on record to show that the letter dated 07.10.2017 and other communications, if any, were sent by the Corporate
Debtor and were actually delivered to the Operational Creditor. Thus, the defence raised by the corporate debtor is spurious and a mere bluster.
Therefore, this Bench is satisfied that the Corporate Debtor has committed default in making payment of the outstanding debt as claimed by the
Operational Creditor.
12. The Operational Creditor has fulfilled all the requirements of law for admission of the Application. Therefore, Application is admitted in terms of
Section 9(5) of the IBC, 2016 and the commencement of the Corporate Insolvency Resolution Process is ordered, which ordinarily shall be completed
within 180 days, reckoning from the day this order is passed.
13. The moratorium is declared which shall have effect from the date of this Order until the completion of CIRP, for the purposes referred to in
Section 14 of the IBC, 2016. It is ordered to prohibit all of the following, namely: -
(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 Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 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.
14. The supply of essential goods or services of the Corporate Debtor shall not be terminated or suspended or interrupted during moratorium period.
The provisions of Sub-section (1) of Section 14 shall not apply to such transactions, as notified by the Central Government.
15. The Operational Creditor has not proposed the name of any Resolution Professional for appointment as IRP. Therefore, this Bench based on the
list provided by the IBBI hereby appoints Mr. Uma Nath Pandey as an IRP subject to the condition that no disciplinary proceedings are pending
against the IRP. The IRP is directed to take charge of the Respondent Corporate Debtor's management immediately. He is directed to cause public
announcement as prescribed under Section 15 of the IBC, 2016 within three days from the date the copy of this order is received, and call for
submissions of claim in the manner as prescribed. The details of IRP are as under:
Name: Mr. Uma Nath Pandey
Registration number: IBBI/IPA-001/IP-P01254/2018-2019/11996, E-mail: uma@unpfca.com Mobile: 9873992257
16. The IRP shall comply with the provisions of Sections 13(2), 15, 17 & 18 of IBC, 2016. The Directors of the Corporate Debtor, its Promoters or
any person associated with the Management of the Corporate Debtor are/is directed to extend all assistance and cooperation to the IRP as stipulated
under Section 19, so that he could discharge his functions under Section 20 of the IBC, 2016.
17. The Operational Creditor and the Registry are directed to send the copy of this Order to IRP, so that he could take charge of the Corporate
Debtor's assets etc., and make compliance with this Order as per the provisions of IBC, 2016.
18. The Registry is directed to communicate this Order to the Operational Creditor and the Corporate Debtor with immediate effect.
19. The Order is pronounced in the open court.
