Amit Verma vs Awsum Proteins Limited

PER: (Dr.)P.S.N PRASAD, HON’BLE MEMBER

Amit Verma, claiming as the operational creditor has filed this application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (for brevity ‘the Code’) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rule, 2016 (for brevity ‘the Rules’) for initiation of Corporate Insolvency Resolution Process in respect of Respondent Company Awsum Proteins Limited claimed to be the Corporate Debtor.

The Respondent Awsum Proteins Limited against whom initiation of Corporate Insolvency Resolution Process has been prayed for, is a company incorporated on 18.10.2010 under the provisions of the Companies Act, 1956 having its registered office at office A-47 F/F, F, L/S/B/P,KH.NO. 136, Gali No. 1, Harijan Colony, Neb Sarai, South West Delhi, New Delhi. Since the registered office of the respondent corporate debtor is in Delhi, this Tribunal having territorial jurisdiction over the place, is the Adjudicating Authority in relation to the prayer for initiation of Corporate Insolvency Resolution Process in respect of respondent corporate debtor under sub-section (1) of Section 60 of the Code.

The applicant is a person who was duly appointed as the Sr. Manager-finance & accounts of “Awsum Proteins Limited”a company limited by shares.

The pleaded case of the Operational Creditor is as under:

The operational-creditor on 14.06.2019 sent a demand Notice to the Corporate-debtor to pay outstanding debt amount a sum of Rs.15, 89,000/- (Principal debt of Rs. 14, 00,000 along with an additional amount of Rs. 1, 89,000/- on account of interest at the rate of (18%) from the date of default. The Corporate-debtor has failed to file his reply to the demand notice which was sent by the Operational-creditor on 14.06.2019.

In support of its contention applicant has placed on record the Appointment letter dated 01.07.2017, the workings for computation of default in tabular form and the copy of the letter of resignation dated 20.11.2018 showing computation of amounts due and the date of default.

Respondent company has filed its reply on 30.09.2019 mainly with the contention that the Corporate Debtor is into the business of manufacturing bakery premixes and also into the business of trading and marketing of whey proteins and milk products mainly manufactured by Mahaan Proteins Limited. However, Corporate Insolvency Resolution Process was initiated against Mahaan Proteins vide order dated 27.06.2017 passed by this Tribunal and consequently the manufacturing units could not be used by the Company as the same was taken over by the Insolvency Resolution Professional. Hence, the Corporate Debtor has requested the applicant to grant some more time to pay the outstanding amount as the corporate debtor is facing financial difficulty. There is an admission in the reply that balance outstanding claimed amount has remained unpaid as on date and the respondent has sought for some more time to pay the outstanding amount.

It is pertinent to mention here that "default" is defined in Sec 3(12) in very wide terms as meaning non-payment of a debt once it becomes due & payable, which includes non-payment of even part thereof. Even part of the dues, once becomes payable comes within the meaning of debt and if not paid will amount to "default".

In the present case it is seen that there is a clear admission of non-payment of balance part debt and therefore there has been occurrence of default in payment of the claimed debt by the respondent corporate debtor.

Needless to say, that the expressions “Operational Creditor” and “Operational debt” have been defined in Section 5 (20) and 5 (21) of the Code, which are reproduced below.

From the definition of “operational creditor” and “operational debt”, it can be seen that the following persons can claim to be an “operational Creditor”.

It is thus seen that the unpaid petitioner, who rendered services to the Corporate Debtor, comes within the purview of ‘Operational creditor’.

The procedure in relation to the Initiation of Corporate Insolvency Resolution Process by the “Operational Creditor” is delineated under Section 9 of the Code. The present application filed by operational creditor, accordingly, has to be dealt with in terms of Section 9 of the Code.

Sub-section (1) of Section 9 mandates filing of the petition only after expiry of the period of 10 days from the date of delivery of notice or invoice demanding payment under sub-section (1) of Section 8.

In the present case admittedly the demand notice in Form-3 as per Section 8 of the Code was sent on 14.06.2019. It is thus seen that before filing the present application under Section 9 of the Code, requisite notice under Section 8 was duly served on the Respondent. In response to Section 8 notice, respondent corporate debtor has filed its reply acknowledging the outstanding amount and expressed its inability to pay the debt due to financial difficulty. In other words, the corporate debtor had not disputed the claim in its reply given in terms of sub-section (2) of Section 8 of the Code.

The present application under Section 9 of the Code has been filed in requisite Form-5, wherein it was specifically mentioned that in the reply received from the corporate debtor there has been admission of debt and default and no dispute was raised against the claim of the applicant operational creditor. The application under Section 9 is thus complete and the required particulars have been furnished along with details of subsistence of default.

That apart in compliance of sub-section (3) (b) and (C) of Section 9 of the Code, the petitioner has affirmed that respondent corporate debtor has not raised any dispute in respect of the unpaid operational debt.

It is reiterated that in the present case the default committed by the corporate debtor is not denied. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the applicant operational creditor. In fact, there is a clear admission of debt and default and therefore there is no need to comply with any additional requirement as provided in Clauses (d) and (e) of sub-section (3) of Section 9 of the Code.

In terms of sub-section (4) of Section 9 of the Code the Petitioner Operational Creditor has proposed the name of Shri. Manish Aggarwal, for appointment as Interim Resolution Professional. There is a declaration made by him that no disciplinary proceedings are pending against him in Insolvency and Bankruptcy Board of India or elsewhere.

It is also pertinent to note that the default of operational debt clearly exceeds the ceiling of Rs. 1 lakh, as provided in Section 4 of the Code. The corporate debtor has also not raised any dispute in respect of the claims of the applicant operational creditor. Rather the respondent has sought time to repay the balance outstanding claim debt. It is thus seen that the application preferred by the operational creditor is complete in all respect and there is default committed by corporate debtor in making payment of the operational debt.

Hon'ble Supreme Court in the case of Mobilox Innovations Private Limited V. Kirusa Software Private Limited, reported in AIR 2017 SC 4532 has held that:

In the present application all the aforesaid requirements have been satisfied. It is seen that the application preferred by applicant operational creditor is complete in all respect. The material on record clearly shows that the respondent committed default in payment of the claimed operational debt even after demand made by the applicant operational creditor. Respondent company also did not raise any dispute regarding the existence of operational debt. In fact, the claim of default committed by the corporate debtor has not been denied. Once the application is complete and in the absence of any dispute and with the subsistence of default, the application is liable to be admitted.

Therefore, on fulfilment of requirements of Section 9 (5) (i) (a) to (d) of the Code, the present application is admitted.

In terms of sub-section (6) of Section 9 of the Code the Corporate Insolvency Resolution Process in respect of respondent corporate debtor shall commence from the date of this admission order.

Accordingly, we appoint Shri. Manish Aggarwal, having registration number IBBI / IPA-002 /IP-N00223 / 2017-18 / 10904 with email-id [email protected] as an Interim Resolution Professional.

The petitioner is directed to pay a sum of Rupees one lakhs to the Interim Resolution Professional to meet the expenses to perform the functions assigned to him in accordance with Regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations, 2016. This shall however be subject to adjustment by the Committee of Creditors as accounted for by Interim Resolution Professional and shall be paid back to the petitioner.

In pursuance of Section 13 (2) of the Code, we direct that public announcement shall be made by the Interim Resolution Professional immediately (3 days as prescribed by Explanation to Regulation 6(1) of the IBBI Regulations, 2016) with regard to admission of this application under Section 9 of the Insolvency & Bankruptcy Code, 2016.

We also declare moratorium in terms of Section 14 of the Code, which shall have effect from the date of this order till the completion of Corporate Insolvency Resolution Process as per sub-section (4) 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) of the Code. Thus, the following prohibitions are imposed:

It is made clear that the provisions of moratorium shall not apply to transactions which might be notified by the Central Government or the supply of the essential goods or services to the Corporate Debtor as may be specified, are not to be terminated or suspended or interrupted during the moratorium period. In addition, as per the Insolvency and Bankruptcy Code (Amendment) Act, 2018 which has come into force w.e.f. 06.06.2018, the provisions of moratorium shall not apply to the surety in a contract of guarantee to the corporate debtor in terms of Section 14 (3) (b) of the Code.

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 committed by the ex-management or any tainted/illegal transaction by ex-directors or anyone else, 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.

Let the copy of the order be communicated to the Operational Creditor and the Corporate Debtor in accordance with Section 9 (5) (i) of the Code. The office is also directed to communicate a copy of the order additionally to the Interim Resolution Professional and the Registrar of Companies, NCT of Delhi and Haryana at the earliest possible but not later than seven days from today. The Registrar of Companies shall update its website by updating the status of 'Corporate Debtor' and specific mention regarding admission of this petition must be notified to the public at large.