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Judgment
O R D E R
Per: Harish Chander Suri, Member (Technical)
The Court is convened by video conference today.
This petition under section 9 of the Insolvency and Bankruptcy Code, 2016 has been filed by Chaitanya Alloys Private Limited, for initiation of corporate insolvency resolution process of the Corporate Debtor for its default in making payment of the outstanding undisputed dues of the Operational Creditor to the tune of Rs.52,67,90,407/-(Rupees Fifty Two Crore Sixty Seven Lac Ninety Thousand Four Hundred Seven only) which is inclusive of Principal amount of Rs.32,14,82,191.74/-( Rupees Thirty Two Crore Fourteen Lac Eighty Two Thousand One Hundred Ninety One and Seventy Four Paise) and interest amount of Rs. 20,53,08,216/-( Rupees Twenty Crore Fifty Three Lac Eight Thousand Two Hundred Sixteen).
It is submitted that the Operational Creditor is, inter alia, engaged in the business of trading of Iron and steel situated in the State of West Bengal and similarly Corporate Debtor is also engaged in the business of trading of Iron and steel. It is submitted that pursuant to the various orders placed by the Corporate Debtor from time to time, the Operational Creditor has supplied the materials to the Corporate Debtor and Corporate Debtor has also from time to time made payments to the Operational Creditor.
It is further submitted that the Ledger statements for the Financial Year 2016-2017, 2017-2018, 2018-2019 and till July 2019 (Annexure-A) indicate the details of sales made by the Operational Creditor to the Corporate Debtor. The Operational Creditor has enclosed certified true copy of the Ledger accounts from 1st August 2019 to 3rd November, 2019, 1st April, 2019 to 31st July, 2019, 1st April, 2018 to 31st March 2019, 1st April,2017 to 31st March, 2018 and 1st April 2018 to 31st March, 2017 and finally the sum of Rs.32,14,69,891.74 is stated to be due as on 1st August 2019 witch together with interest comes to Rs. 52,67,90,407/-up to 31st October, 2019. It is stated that the Operational Creditor has written various letters/reminders including dated 10.08.2016, 07.06.2017, 06.03.2018, 11.04.2018, 05.10.2018 for payment of the outstanding dues and in response to which, the Corporate Debtor has written letters dated 14.10.2016, 17.08.2017, 29.05.2018 and 11.02.2019. In all correspondences exchanged between the parties, the Corporate Debtor has shown its helplessness in making payment and sought more and more time to make payment. The Corporate Debtor in is letter dated 14.10.2016 submitted as under:-
“ To, Chaitanya Alloys Pvt. Ltd. 1,British Indian Street, Kolkata-700069,West Bengal
Ref: Your Letter dated 10.08.2016
Dear Sir,
We are in receipt of your letter dated 10.08.2016 by ref no. CAPL/S1&APL/01 relating to our outstanding dues for an amount of Rs. 32,14,82,191.74 ( Rupees Thirty Two Crores Fourteen Lacs Eighty Two Thousand One Hundred Ninety One and Seventy Four Paisa only).
Further we would like to request you to grant us six (6) months time to make the payment. The payment will be done from our company at the earliest. Your support will be highly appreciated.
Thanking you.
Yours Faithfully, For Shyama Iron & Alloys Pvt. Ltd. Director”
Similarly in letter dated 17th August, 2017 the Corporate Debtor admitted and acknowledged the liability of Rs. 32,14,82,191.74 and agreed to pay the said amount in 12 monthly instalments from 19th September 2017 to 19th August 2018. Vide letter 29.05.2018, the Corporate Debtor again sought time from the Operational Creditor to make the payment in the following words:-
To, Chaitanya Alloys Pvt. Ltd. 1, British Indian Street, Kolkata-700069 West Bengal.
Ref: Your Letter dated 06.03.2018 and 11.04.2018
Dear Sir,
We are in receipt of your letter dated 06.03.2018 and 11.04.2018 relating to our outstanding dues of Rs. 32,14,82,191.74/- (Rupees Thirty Two Crores Fourteen Lacs Eighty Two Thousand One Hundred Ninety One and Seventy Paisa only) .
In our earlier letters, we have asked you to provide time to make the payment, but we are not in a position to make payment due to bad market conditions.
Hence,we request you to kindly allow some more time to make the outstanding payment.
Thanking you,
Yours Faithfully, For Shyama Iron & Alloys Pvt. Ltd. Director And finally on 11.02.2019, the Corporate Debtor while admitting the dues as aforesaid replied to the Operational Creditor that “ In response to your earlier various letters, we have already informed you that our trading activity is running through bad phase. We are trying to realize fund from our customers and therefore we are not in a position to pay the outstanding dues immediately. Hence, we humbly request to you to kindly support us and give us some more time to make outstanding payment”.
The Corporate Debtor in its letter dated 10.05.2018 admitted that they have reconciled their ledger with ledger sent to them by the Operational Creditor and found that there is a difference of Rs.4,668/-
The Operational Creditor issued a Demand Notice dated 06.08.2019 under section 8 of the IBC, 2016 claiming its unpaid operational debt which was duly received by the Corporate Debtor on 6th August 2019 itself because this demand notice is stated to have been delivered by hand. What is surprising is that the Corporate Debtor did not choose to reply to this demand notice duly delivered to them, which would indicate that the Corporate Debtor had no dispute or defence as regards the amount being claimed by the Operational Creditor in the said demand notice.
It is submitted that the Ld. Counsel for the Operational Creditor has also placed on record the Bank statement indicating that the amount claimed by Operational Creditor has not been received by the Operational Creditor from the Corporate Debtor even after the receipt of demand notice.
The Operational Creditor has proposed the name of Mr. Sushanta Kumar Choudhury, IRP in Part-III Form-1 being Reg. No. IBBI/IPA-003/IP-N00292/2020-2021/13238 and by way of written communication dated 23/04/2021, the aforesaid Mr.Sushanta Kumar Choudhury, has filed Form-2 addressing his written communication agreeing to accept appointment as the IRP if an order admitting the present application is passed. He has further informed that he is qualified to practice as an Insolvency Professional and is not serving in any proceedings as IRP or liquidator.
The Corporate Debtor in its reply affidavit filed through one of its Directors namely Mr. Bharat Kumar Sureka, submitted that the application is not maintainable in law or on facts. The application is not maintainable as being barred by time. It is submitted that the documents on which the Operational Creditor filed the instant application is not binding upon the Corporate Debtor as their exists the dispute before the demand notice. On this instant ground, the application is liable to be dismissed. It is submitted that the Corporate Debtor raised the dispute informing certain irregularities in the quality of materials supplied by the applicant. However, the Operational Creditor had chosen not to reply and simply ignored the complaints raised by the Corporate Debtor. It is further stated that the Corporate Debtor had informed the Operational Creditor about the quality, but the Operational Creditor did not give heed to its request. It is further submitted that the Operational Creditor are guilty of gross suppression of material information.
Although the Corporate Debtor in its reply has mentioned that there were pre existing disputes but there is no document enclosed with the reply affidavit justifying any such allegation. If the Corporate Debtor had any pre existing disputes with the Operational Creditor, it should be replied to the demand notice dated 06.08.2019 sent to it and should have informed the Operational Creditor of the alleged dispute within 10 days in its reply. Since the Corporate Debtor has in all its correspondences exchanged with the Operational Creditor admitted and acknowledged the liability and has sought time repeatedly from the Operational Creditor to make payment, the plea of having any pre-existing disputes with the Operational Creditor does not lie in the mouth of the Corporate Debtor. The Corporate Debtor has tried to unnecessarily made false and bald allegations, which have no legs to stand.
We have heard Ld. Counsel for the parties on the one hand, the Ld. Counsel for the Operational Creditor who has proved its case effectively but on the other hand the Ld. Counsel for the Corporate Debtor could not place any document on record to show that the payment of the outstanding amount demanded by way of demand letter dated 06.08.2019 has been paid by the Corporate Debtor to the Operational Creditor. In fact, even during the course of hearing, the Ld. Counsel for the Corporate Debtor candidly admitted and acknowledged the liability and submitted that due to adverse circumstances and financial stringency, the Corporate Debtor has not been able to make the payment, even after seeking accommodation from the Operational Creditor for making payment in instalments. Ld. Counsel for the Corporate Debtor has submitted that the Corporate Debtor is not in a position to make payment due to market conditions. On the other hand, Operational Creditor has time and again co-operated and accommodated the Corporate Debtor but finally no solution could be found in the matter.
We have heard the Ld. Counsel for the parties and gone through the petition, reply and documents placed on record by the Operational Creditor.
The application of the Operational Creditor is otherwise complete in all respect. We have thus no hesitation to admit the this petition with the following orders:
O R D E R S
The application filed by the Operational Creditor under Section 9 of the Insolvency & Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the Corporate Debtor, is hereby admitted.
ii) We hereby declare a moratorium and public announcement in accordance with Sections 13 and 15 of the I & B Code, 2016.
iii) Moratorium is declared for the purposes referred to in Section 14 of the Insolvency & Bankruptcy Code, 2016. The I.R.P. shall cause a public announcement of the initiation of Corporate Insolvency Resolution Process and call for the submission of claims under Section 15. The public announcement referred to in clause (b) of sub-section (1) of Section 15 of Insolvency & Bankruptcy Code, 2016 shall be made immediately.
iv) Moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016 prohibits the following:
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.
The supply of essential goods or services rendered to the corporate debtor as may be specified shall not be terminated, suspended, or interrupted during the moratorium period.
vi) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.
vii) The order of moratorium shall have effect from the date of admission till the completion of the corporate insolvency resolution process.
viii) Provided that where at any time during the Corporate Insolvency Resolution Process period, if the Adjudicating Authority approves the resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of the corporate debtor under Section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be.
ix) Mr. Sushanta Kumar Choudhury registered with Insolvency and Bankruptcy Board of India, having Registration No IBBI/IPA-003/IP-N00292/2020-2021/13238, and holding AFA under Regulation 7-A of the IBBI (Insolvency Professionals) Regulations, 2016, is hereby appointed as Interim Resolution Professional for ascertaining the particulars of creditors and convening a Committee of Creditors for evolving a resolution plan subject to production of written consent within one week from the date of receipt of this order.
The Interim Resolution Professional should convene a meeting of the Committee of Creditors and submit the resolution passed by the Committee of Creditors and shall identify the prospective Resolution Applicant within 105 days from the insolvency commencement date.
xi) The Operational Creditor/Applicant is directed to deposit Rs. 2,00,000/- (Rupees Two Lac only ) with the IRP appointed hereinabove within three days from this order. IRP can claim the preliminary expenses and fees subject to the approval by the CoC and after constitution of CoC.
Registry is hereby directed to communicate the order to the Operational Creditor, the Corporate Debtor, the I.R.P. and the jurisdictional Registrar of Companies by Speed Post as well as through email.
List the matter on 17/01/2022 for filing of Progress Report.
Certified copy of the order may be issued to all the concerned parties, if applied for, upon compliance with all requisite formalities.