Alkesh Govindbhai Patel vs M/s. Ashapuri Metals Private Limited

[Per: Ms. Manorama Kumari, Member (Judicial)]

That, the instant application is filed by Mr. Alkesh Govindbhai Patel, the applicant/operational creditor, under Section 9 of the Insolvency and Bankruptcy Code, 2016 [hereinafter referred to as "the Code"] read with Rule 6 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 to trigger Insolvency Resolution Process against M/s. Ashapuri Metals Private Limited (hereinafter called as respondent/corporate debtor).

That, the applicant/operational creditor M/r. Alkesh Govindbhai Patel, Vrundavan Fadiyu, At and Post Popda, Taluka Choryasi, Surat 394 235, Gujarat State is engaged in the business of providing labour services such as melting labour of copper wire and brass ingot.

That, the respondent/corporate debtor M/s. Ashapuri Metals Private Limited is a company incorporated under the Companies Act, 1956 on 12.03.2001 and having its registered office at Plot No. 705, Road No. 7, GIDC, Sachin, Dist. Surat, Gujarat State, having identification No. U27203GJ2001PTC039308. That, authorised share capital of the corporate debtor is Rs. 1,00,000/- and paid up share capital is Rs. 1,00,000/-.

It is submitted by the applicant that he has been providing labour services to the respondent since the year 2003-2004 and till date the respondent has not raised any complaint or issues relating to the quality of labour services provided by him. That, the applicant had raised various invoices for an aggregate amount of Rs. 7,40,580/- and the said debt has been acknowledged by the respondent by various letters dated 24.02.2005, 27.03.2007, 15.10.2009, 04.01.2012, 26.12.2014, 12.10.2017 and 02.02.2018. That the respondent has made part payment of Rs. 48,000/- on 15.01.2018, 18.01.2018 and 20.01.2018 and as on 02.02.2018 principal sum of Rs. 6,92,043/ (Rupees six lacs ninety-two thousand forty-three only) is outstanding in favour of the applicant along with interest at the rate of 18% per annum from 02.02.2018 till the date of actual realisation of payment. That, the transaction is a continuous transaction and the claim is within limitation. That, the applicant has produced copies of all the invoices and correspondence made between the applicant and respondent.

It is further submitted by the applicant that demand notice dated 13.09.2018 was issued vide speed post on 15.09.2018 and the same has been delivered to the respondent company on 18.09.2018 at its registered office address.

The applicant has submitted copies of the following documents in support of the claim: -

On perusal of the record, it is found that learned lawyer appearing on behalf of the respondent filed an affidavit admitting the outstanding amount of Rs. 6,92,043.00 stating that appropriate order may be passed.

On perusal of the material available on record it is found that, the respondent has not raised any dispute against the claim.

While examining an application under Section 9 of the Act, will have to determine the following: -

Whether there is an "operational debt" as defined exceeding Rs. 1.00 lac (See Section 4 of the Act)

Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid And

Whether there is existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute?

In view of the aforesaid discussions and before rejecting and/or admitting the application, we must refer to the legislation guide on Insolvency Law of United Nations Commission on International Trade Law. One of the things the Legislative Guide spoke about was whether the debt is subject to a legitimate dispute or set off, in an amount equal to or greater than the amount of the debt.

Thus, under the facts and circumstances and as discussed above, in the light of the Hon'ble Supreme Court Judgement and the provisions thereof as enshrined in Insolvency & Bankruptcy Code, this adjudicating authority is of the considered view that operational debt is due to the Applicant and in support of that operational creditor has placed copy of the invoices at page No. 38 to 45 to the application. That, service is complete and no dispute has been raised by the respondent. That, Applicant is an Operational Creditor within the meaning of sub-section (5) of Section 20 of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default.

That, the Application filed by the Applicant is complete in all respects.

The applicant/operational creditor has proposed the name of Mr. Kailash T. Shah to act as Interim Insolvency Professional. This Adjudicating Authority hereby appoint Mr. Kailash T. Shah, 505, 21st Century Business Centre, Near World Trade, Ring Road, Surat 395 0023 ([email protected]) having registration No. IBBI/IPA-001/IP-P00267/2016-17/10511 to act as an interim resolution professional under Section 13(1)(c) of the Code.

Section 13 of the Code enjoins upon the Adjudicating Authority to exercise its discretion to pass an order to declare a moratorium for the purposes referred to in Section 14, to cause a public announcement of the initiation of corporate insolvency resolution and call for submission of claims as provided under Section 15 of the Code. Sub-section (2) of Section 13 says that public announcement shall be made immediately after the appointment of Interim Insolvency Resolution Professional. This Adjudicating Authority directs the Insolvency Resolution Professional to make public announcement of initiation of Corporate Insolvency Process and calls for submission of claims under Section 15 as required by Section 13(1)(b) of the Code.

From the above stated discussion and on the basis of material available on record it is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code.

The petition is, therefore, admitted and the moratorium is declared for prohibiting all of the following in terms of sub-section (1) of Section 14 of the Code: -

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;

transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;

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);

the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.

It is further directed that the supply of goods and essential services to the Corporate Debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period. The provisions of sub-section (1) shall, however, not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.

The order of moratorium shall have effect from the date of receipt of authenticated copy of this order till the completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of corporate debtor under Section 33 as the case may be.

This Petition stands disposed of accordingly with no order as to costs.

Communicate a copy of this order to the Applicant, Financial Creditor, Corporate Debtor and to the Interim Insolvency Resolution Professional.