Exclusive Engineers Private Limited

Per Shri Jinan KR, Member(Judicial)

M/s. Exclusive Engineers Private Limited, a Company incorporated under the provisions of Companies Act, 1956, having its registered Office at Kolkata, has filed this Application under Section 10 of the Insolvency & Bankruptcy Code, 2016, read with Rule 7 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016, for initiating Corporate Insolvency Resolution process (in short CIRP) as against the Applicant/ Corporate Debtor for the reason of inability to pay the debt due to the Operational Creditor.

The Applicant contends that it was incorporated on 15-04-1981 and engaged in the management and engineering, consultancy and contract work of electrical, chemical, mechanical, electronics, telecom, agro engineering etc., entered into an agreement with the Operational Creditor, the Union of India, for executing a work as described in the agreement on 27-12-2002, (Agreement Reference No. CE(NAVY)/VIZ/CHN/08 of 2002-03) for an amount of Rs. 83,87,747/- (Rupees Eighty three Lakh eighty seven thousand seven hundred forty seven only) and further executed Bank Guarantees in favour of the President of India. However, the work could not be completed, as scheduled and agreed to, by the Operational Creditor.

Disputes and differences arose between the Corporate Applicant and the Union of India/Operational Creditor, and thereby, the disputes and differences were referred to an Arbitrator. The Arbitrator passed an award on 31-08-2017, allowing the claim of the Operational Creditor, to the tune of Rs. 44,89,928=37(Rupees Forty four Lakh eighty nine thousand nine hundred twenty eight and paise thirty seven only) along with the simple interest @ 8% to be calculated from February, 2005 till August, 2017, and at simple interest @ 12% on the said amount to be calculated from November, 2017 till date of actual payment.

The Corporate Applicant, being failed to pay the debt due to its inability, a resolution was passed by the Shareholders of the Corporate Applicant Company, in the extra ordinary general meeting of the Corporate Applicant held on 27-11-2017 for moving this Application under Section 10 of the Code. This Application was filed by Ms. Aruna Khandelwal an authorised signatory of the Corporate Applicant, who was also authorised by way of a resolution dated 03-10-2017 by the Board of Directors of the Company (Annexure B).

The Form 6 is complete. According to the Ld.Counsel for the Applicant there is no Financial Creditors. He also submits that other than the Operational Creditor i.e. Union of India, no other Creditors as per its books of account and that this application is liable to be allowed under Section 10 of the Code.

The Union of India, upon receipt of notice, come forward and objected this Application, contending that the Applicant filed this Application suppressing the material facts. However, the Respondent/Operational Creditor admitted that the Corporate Applicant committed default in undertaking the work granted to the Applicant and the work contract has been canceled with effect from 24-03-2004 and the work got executed through other agency at the risk and cost of the Applicant Contractor and the Contractor had failed in depositing additional expenditure and thereby, the dispute was referred to the Arbitrator and the Arbitrator came to a finding that the amount, as shown in the Application, is liable to be paid by the Corporate Applicant to the Operational Creditor/Union of India. It is submitted on the side of the Respondent/Operational Creditor that the Application is liable to be dismissed both in law and in effect due to factual inaccuracy and misconception of law. The Application has not been filed with clean hands. The Corporate Debtor has sufficient means to pay its debt. The Corporate Debtor Company owns movable and immovable property and one immovable property, a building situated at Syed Amir Ali Avenue, is free from hypothecation and belonged to Shri RG Khandelia, who is the registered owner of the said building, and in order to avoid recovery measures to be initiated by the Respondent/Operational Creditor against him this Application was filed by the Corporate Applicant.

Heard both sides and perused the records.

The Corporate Debtor/Applicant admittedly is a defaulter. This is an application filed alleging that it is unable to pay the amount found due to the Operational Creditor. The Application filed under Section 10 is otherwise complete. The Corporate Applicant also proposes the name of the Resolution Professional and Form 2 along with written communication produced with the Application, shows that there is no disqualification on the proposed IP.

The Ld. Standing Counsel, appearing for and on behalf of the Union of India objected this Application contending that the Corporate Applicant has got means to pay and in order to avoid realisation of the amount by way of attaching the building owned by Shri AG Khandelia, the Corporate Debtor has filed this Application without any clean hands. Nothing forthcoming to substantiate the contention on the side of the Operational Creditor that the Corporate Applicant here, in this case, comes with uncleaned hands as alleged. Admittedly, there is a default in repayment of the amount, found due to the Operational Creditor. According to the Ld. Counsel for the Operational Creditor, if this Application is allowed, the right to file an execution Application under the provisions of the Arbitration and Conciliation Act would be defeated. It appears to us that it is no ground to reject this Application of this nature.

The Hon'ble Appellate Tribunal in M/s. Unigreen Global Private Limited Vs. Punjab National Bank and others, Company /Appeal(AT)(Insolvency) No. 81 of 2017 has held that " the moment the Adjudicating Authority satisfied that a default has occurred, the Application must be admitted unless it is incomplete, in which case, it may give notice to the Applicant to rectify the defect within seven days of receipt of a notice from the Adjudicating Authority. Reading of Paragraph 21 in the above said judgment is worth for understanding the proposition hel in the said judgment. It read as follows:-

So, from a reading of the above said judgment of the Hon'ble Appellate Tribunal, what we understood is that this Adjudicating Authority cannot go beyond the scope of information furnished on the side of the Corporate Applicant. The Corporate Applicant, here in this case, furnished all the required information to be provided in Form No. 6, as per Rule 7 of the Corporate Insolvency Resolution Process(Adjudicating Authority) Rules, 2016. That being so, none of the objections raised on the side of the Operational Creditor are found sustainable under law.

For the reason aforesaid and as this case of the Corporate Applicant is covered by the decision of the Hon'ble Appellate Tribunal in M/s. Unigreen Global Private Limited Vs. Punjab National Bank and others, we are of the considered view that this Application is liable to be admitted and accordingly, admitted upon the following among others :

The free copy/certified copy of the Order may be issued to all the concerned Parties, if applied for, upon compliance with all requisite formalities.