ASR Logistics India Pvt. Ltd. vs M/s Leo Creations Pvt. Ltd.

PER: MANNI SANKARIAH SHANMUGA SUNDARAM, MEMBER (J)

This instant application was filed by ASR Logistics India Pvt. Ltd (hereinafter referred as ‘Applicant’/ ‘Operational Creditor’) through its authorized representative Mr. Rajendra Singh Rao (Director), having registered office at Room no 26, 2nd floor, 282 Khandke Building Shahid Bhagat Singh Road, Fort Mumbai, Maharashtra-400001, under Section 9 of the Insolvency and Bankruptcy Code, 2016 (for brevity ‘the Code’) with a prayer to initiate Corporate Insolvency Resolution Process in respect of M/s Leo Creations Pvt. Ltd. (hereinafter referred as ‘Respondent’ or ‘Corporate Debtor’) for defaulting the payment of outstanding amount of Rs. 6,47,780/-(Rupees six lacs forty seven thousand seven hundred and eighty rupees only) along with interest @ 18% per annum to be paid by the Corporate Debtor.

The present application was filed dated 30.10.2019 before this Adjudicating Authority. The present petition is filed before this Adjudicating Authority on the ground that the Corporate Debtor has failed to make payment of a sum of Rs. 6,47,780/- along with interest @ 18% per annum.

The Threshold amount at the time of filing this Application was Rupees One lakh Only and therefore the present application falls within the pecuniary Jurisdiction of this Adjudicating Authority.

The Respondent Company M/s Leo Creations Pvt. Ltd. having CIN: Ul8101DL2004PTC131677, incorporated on 30.12.2004 under the provisions of the Companies Act, 1956, is having its registered office situated at G25-A, Flat No 1, LGF, Basement Vishwakarma Colony, New Delhi South Delhi DL 110044. Since the registered office of the respondent corporate debtor is in New Delhi, this Tribunal having jurisdiction over the NCT of Delhi 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. A copy of the Master Data of the Respondent/Corporate Debtor as accessed from the MCA website is annexed at Annexure II (c) at Pg. 64 of the Application.

Briefly stated the facts of the present case as averred by the Applicant/ Operational Creditor are: -

The Operational Creditor/ Applicant is engaged in the business of customs clearing & freight forwarding including consignment storage and management of logistic processes.

It is submitted by the Applicant that the Corporate Debtor had placed orders and requested the Applicant/ Operational Creditor to provide services, i.e. clearing the shipping from the Port of Nhavasheva etc. from time to time.

It is placed on record that the Operational Creditor had raised 10 invoices for a period between from 13.07.2016 to 31.10.2018 for an aggregate amount of Rs. 13,97,780/-. It has been submitted by the Corporate Debtor was required to make payments against invoices within 7 days from date of issuance of invoices.

The Corporate Debtor has made part payment to the said invoices. However, the Corporate Debtor started making defaults in payment and thereby forced the Operational Creditor to terminate the business transaction. After adjusting the part payments made to the Operational Creditor, an amount of Rs. 6,47,780/- along with an interest of 18% per annum from the date of default is due and payable by the Corporate Debtor.

The Applicant served the Operational Creditor with a demand notice under Section 8 of the Code dated 31.10.2018 as prescribed in Form 3 demanding the repayment of the Operational debt.

The date of default as per the Part IV of the Form 5 of the Application is 07.11.2016 and the default amount is Rs. 6,47,780/- along with an interest of 18% per annum from the date of default.

Submissions of the Ld. Counsel appearing for the Respondent/Corporate Debtor are:

Respondent/Corporate Debtor appeared through its counsel and filed Reply denying various averments made in the Application. The Corporate debtor alleged that there has been no written and signed contract between both the parties and that Respondent/Corporate Debtor has paid each and every amount due to the Operational Creditor and there exist no default for Rs. 6,47,780/- as alleged by the Applicant / Operational Creditor.

It is submitted by the Corporate Debtor that a Demand notice dated 31.10.2018 was duly received by them dated 28.11.2018 and a reply to this Demand notice was sent to the Operational Creditor dated 05.12.2018 along with the ledger account which stated payments that been made to the Operational Creditor.

It has been alleged by the Corporate Debtor that the dispute between the parties is in the year for 2016, whereas the Applicant/Operational Creditor had served upon them with a demand notice in 2018 after 2 years.

It has been submitted by the Corporate Debtor that they had paid a full amount of Rs. 8,77,392/- to the Applicant/operational creditor and that there was no demand raised whatsoever by the Applicant/Operational Creditor from the Respondent/Corporate Debtor before sending the demand notice dated 31.10.2018.

It has been placed on record by the Corporate Debtor that the invoices so raised by the Applicant/ Operational Creditor in the present Application are contrary in the nature to the Invoices received in Section 8 Demand notice. The Corporate debtor has raised dispute with the invoices generated.

The Corporate Debtor has stated there were no demand raised by the Operational Creditor before the demand notice issued dated 31.10.2018.

We have heard the Ld. Counsel on behalf of the Applicant/Operational Creditor and further perused the averments made in the application, reply filed by the Corporate Debtor, and written submission presented by Operational Creditor and Corporate Debtor. Since, the registered office of the Respondent/ Corporate Debtor is in Delhi, this Adjudicating Authority is having territorial jurisdiction as the Adjudicating Authority in relation to prayer for initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of The Insolvency and Bankruptcy Code, 2016, against the Corporate Debtor. Further, the present petition is filed within the period of limitation.

From the perusal of the material available on record, it transpires that the ‘Operational Creditor’/ ‘Applicant’ had sent a demand notice dated 31.10.2018 to the ‘Corporate Debtor’ under Section 8 of the Insolvency and Bankruptcy Code, 2016 for payment of outstanding dues worth Rs. 6,47,780/- (Six Lakh Forty Seven Thousand Seven Hundred Eighty). The present Application was filed before the 24.03.2020 when the Pecuniary jurisdiction was Rs. 1 lakh rupees for Application under Section 9 of the Code, therefore present application meets the pecuniary threshold limit of Rs. 1 lakh, in terms of Section 4 of the Code. The Applicant has tabulated a total of 10 invoices included in its claim as mentioned in Part IV of the Application from the date 13.07.2016 to 31.10.2016. We observe that this demand notice dated 31.10.2018 under Section 8 was served to the Opposite party and was accordingly received by the Corporate Debtor. From the records placed before this Adjudicating Authority, it transpires that the Corporate Debtor had replied to this Demand notice dated 05.12.2018 though the fact receiving of such a reply to Demand notice has been categorically denied by the Operational Creditor.

In order to determine the admissibility of petition for initiating CIRP under section 9 of the Code, the judgment of the Hon’ble Supreme Court in Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd., (2018) 1 SCC 353, is to be taken into consideration. The said judgment makes it clear that in order to initiate CIRP proceedings under Section 9 of the Code, the Adjudicating Authority has to determine:

The first instance, to determine whether the impugned amount claimed by the Operational Creditor would fall under the ambit of Operational Debt, it is pertinent to analyze the definition of ‘Operational Debt’ as mentioned under Section 5(21) of The Insolvency and Bankruptcy Code, 2016. Under the said section, ‘Operational Debt’ is defined as:

While analyzing the present facts in the light of the abovementioned provision, it is pertinent to keep in mind that the Operational Creditor was approached for business of custom clearing and freight forwarding including consignment storage and management of logistic process. The Operational Creditor provided the service for the same as required by the Corporate. Debtor and issued the invoices in the regular course of business.

On a perusal of the ledger account maintained in the books of the Corporate Debtor as submitted by the Corporate Debtor, this Adjudicating Authority observe that Corporate Debtor has raised 10 invoices for an aggregate amount of Rs.13,97,780/- against which only part payments of Rs. 7,50,000/- were received. It has been submitted that the amount mentioned in invoice is not disputed by the Corporate Debtor.

The corporate debtor has accordingly issued cheques for the payment of invoices to the operational creditor and part payments to the tune of Rs. 7,50,000/- were made by the Operational Creditor and thereafter the said default has occurred. It is submitted that the Corporate Debtor has failed to substantiate any pre-existing dispute regarding claim of the operational creditor.

With regards to the issue of Operational Debt being disputed, it is the contention of the Corporate Debtor in its reply that there has been no written and signed contract between the parties and has disputed the very existence as well as nature of invoices so raised by the Operational Creditor. But the said contention is not found rational as on one hand the Operational creditor questions the authenticity of the said invoices and on the other hand it has made part-payment to the Operational Creditor. The Hon'ble Supreme Court in catena of Judgements has laid down the principle that 'pre-existing dispute' which may be ground to thwart an application under Section 9 has to be a real dispute, a conflict or controversy. The Corporate Debtor is not to raise bogie of disputes, but there has to be real substantial dispute.

In the present case, the Applicant has placed sufficient documents to show that the debt is due and that there has been default in payment to the said invoices. Therefore, we are of the opinion that the claim of the Applicant is arising out of the provisions of services rendered, hence, it is an operational debt and there is no pre-existing dispute between the parties. This leaves no doubt that the default has occurred for the payment of the operational debt to the Applicant. Hence, despite the fact that, the corporate debtor had raised dispute, in our view, the said dispute raised by the Corporate Debtor is a patently feeble argument and is moonshine. Hence, we do not find the alleged dispute to be genuine.

The debt of more than Rs.1 Lakh has become due to the Applicant. We are also strengthened by the law laid down by the Hon'ble Supreme Court in "Innoventive Industries Ltd. v. ICICI Bank and Ors. - (2018) 1 SCC 407” wherein it is observed as follows: -

In view of the above facts and circumstances, we are of the considered view that the present petition filed by the Operational Creditor fulfils the criteria laid down under the provisions of the Code. The Applicant has established that the Corporate Debtor is in default of a debt due arising out of services rendered by the operational creditor and the same is payable. Further, that the default amount is more than the minimum amount stipulated under section 4 (1) of the Code, stipulated at the relevant point of time. In the light of the above facts and circumstances, it is, hereby ordered as follows: