Cosmos Lifters and Technical Services Private Limited vs Hindusthan Facing Industry Private Limited

Per Rohit Kapoor, Member (Judicial)

The Court convened viahybrid mode.

This is a Company Petition filed under section 9 of the Insolvency and Bankruptcy Code, 2016 (‘the Code’) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 by Mr. AbdealiArviwala, Manager, Cosmos Lifters and Technical Services Private Limited duly authorised vide Board Resolution dated 29 November, 2019¹(‘Operational Creditor’)for initiation of Corporate Insolvency Resolution Process (‘CIRP’) against Hindusthan Facing Industry Private Limited(‘Corporate Debtor’).

The present Petition was filed on 08 January, 2020 before this Adjudicating Authority. The total amount claimed in default is Rs.77,52,944/- (Rupees Seventy Seven Lakh Fifty Two Thousand Nine Hundred Forty Four only) [Principal - Rs.53,46,858; Interest – Rs.24,06,086], including interest @18% with effect from 04 may, 2017 to 31 October, 2019.The date of default has been stated to be ….?

In part II of the Petition the authorized share capital of the Corporate Debtor is Rs.1,50,00,000/- (Rupees One Crore Fifty Lakh only) with subscribed share capital of Rs.80,50,000/- (Rupees Eighty LakhFifty Thousand only).

Submissions by the Ld. Counsel appearing on behalf of the Operational Creditor.

The Operational Creditoris engaged in supplying heavy duty crane(s) and on 23 June 2011, Corporate Debtor, issued a work order (‘First Work Order’) for such requisite crane inter alia with a hire charges of Rs.3,20,000/- per month for an initial period of 15 months. The said First Work Order was extended four times. [Annexure - P/4, Page 39-44].

¹Annexure P-3, page 38 of the Petition.

Thereafter, on 18^thDecember 2012, Corporate Debtor again placed another work order for one Crawler Mounted Crane 100 Ton Capacity, for an initial period of 3 months, in consideration of Rs.10,00,000/- being a lump sum amount for a period of three months (‘Second Work Order’). The said Second Work Order was extended one time. [Annexure - P/5, Page 45-46].

Finally, on 5^th October 2013, Corporate Debtor further issued another work order for supply of 1 no. TATA 955 ALC Crawler Crane at their Amlohiri Project of NCL (‘Third Work Order’) in consideration of hire charges of Rs.2,75,000/- per month for the period of 24 months. [Annexure - P/6, Page 47].

It was agreed between the parties that upon the expiry of a respective month, the Operational Creditor will raise its bills upon the Corporate Debtor and the Corporate Debtor shall clear the due by maintaining running and current accounts.

Accordingly, for the aforesaid 3 work orders, from FY 2011-2012 to FY 2015-2016, Operational Creditor duly raised their value bills at agreed rates and terms, and the Corporate Debtor duly accepted the same and used to pay part of the dues from time to time by maintaining running and current accounts thereof. However, the last payment was made on 04 May 2017.

Thereafter, various demands were made to the Corporate Debtor to pay the dues of the Operational Creditor but the Corporate Debtor failed to clear the bills of the Operational Creditor.

However, by letter dated 08 April, 2016 the Corporate Debtor duly handed over 5 (five) cheques having an aggregate value of Rs.50,00,000/- with assurances that they will be honored upon presentation. But before the Operational Creditor could deposit those cheques with their banker the managing director of the Corporate Debtor requested the Operational Creditor not to deposit, as they had failed to arrange the fund.

Further, the managing director of the Corporate Debtor further requested that remaining 4 (four) cheques could be produced for encashment only after having clear clearances from him. Thus, without having any alternative, the Operational Creditor waited till 6th September, 2016 and ultimately returned back those cheques only to maintain cordial relationship with the Corporate Debtor [Annexure – 18 at page 133 – 137].

However on 31 October, 2018 the Corporate Debtor approached the Operational Creditor and offered to pay the outstanding sum of Rs.53,46,858/-by various installments and the same was recorded in the minutes of the meeting held at the office of the Corporate Debtor[Annexure – 19 at page 138]. Further, the Corporate Debtor also assured that theyshall clear the aforesaid dues but they failed to do so.

Finding no other alternative, The Operational Creditor on 08 November 2019 issued a demand notice under section 8 of Code to the Corporate Debtor, demanding for the outstanding sum of Rs. 77,52,944/- (including interest), however, the said notice was returned as unclaimed by the Corporate Debtor after keeping the same on hold from 09 November, 2019 till 25 November, 2019.

Whether the notice under section 8 of the Code when returned with the endorsement ‘Unclaimed’ is a good service or not?

Is there any default by the Corporate Debtor? Is the same is being acknowledged by the Corporate Debtor within the limitation period?

We have heard the Ld. Counsel appearing on behalf of the Operational Creditor and perused the record.

With respect to the first issues, we rely on Crown Worldwide Holding Limited & Another v. Crown Relocations Movers and Packers² by the Hon’ble High Court at Bombay, where the court held that this is settled by a long line of authority on an interpretation of Section 27 of the General Clauses Act and Section 114 of the Evidence Act. Hence, is a well-established presumption that the return of packet with the endorsement “unclaimed” is good service. The Hon’ble High Court also relied on the Judgment inIspat Industries Ltd.³After reviewing the case law, S.J. Vazifdar J. (as he then was), said:

We also rely on the judgment of Castle Industries Private Limited v. Cubs International Petrochem Limited⁴ by the Hon’ble High Court at Calcutta, where the Hon’ble High Court has held that ‘unclaimed’ is a good service inasmuch as having regard to the fact that there is no contemporaneous denial on the claim of the petitioner and the company has evaded the service of the notice, it can be presumed that the company has no defence to the claim of the petitioning creditor.

Furthermore, in this instant case it can be construed that there is no contemporaneous denial on the claim of the petitioner, by the Corporate Debtor because they have duly acknowledged the outstanding dues in the minutes of meeting dated 31 October, 2018 [at page 138 of the Petition].It is also pertinent to mention that as per the tracking record [at page 181] of the Petition, the delivery of the Section 8 notice was put on hold on the Addressee Instructions i.e., the Corporate Debtor.

There are many instances when the Operational Creditor upon direction form this Adjudicating Authority has served the petition along with court order [page 9 of the Affidavit Service dated 18 April, 2022]. Further, the Operational Creditor also made a paper publication on 19 January, 2021, in two newspapers, namely, Business Standard and Aaajkal, indicating the next date of hearing [ Page 2 – of the Affidavit Service dated 24 February, 2021].After giving several opportunities to the Corporate Debtor, the matter was set ex-parte on 12 may, 2022.

With respect to the limitation period, it is pertinent to mention that the last bill dated 05 October, 2015 fell due on 05 November, 2015. Technically, the limitation period would end on 05 November, 2018 but since, the minutes of meeting between the parties was on 31 October, 2018, where the Corporate Debtor acknowledged the debt and assured to make the payment in four instalments. This acknowledgement of the Corporate Debtor is within the limitation period, hence, attracting section 18 of the Limitation Act, 1963.

In view of the above facts and circumstances, we are satisfied that the present petition made by the Operational Creditor is complete in all respects as required by law. The Petition establishes that the Corporate Debtor is in default of a debt due and payable and that the default is more than the minimum amount stipulated under section 4 (1) of the Code, stipulated at the relevant point of time. Further, as envisaged under section 9(3)(b) of the Code, an affidavit has also been filed by the Operational Creditor.

It is, accordingly, hereby ordered as follows:-

CP (IB) No. 82/KB/2020 to come up on 15.11.2022 for filing the periodical report.

A certified copy of this order may be issued, if applied for, upon compliance with all requisite formalities.