Express Equipment Rental And Logistic Pvt. Ltd. vs Newton Engineering And Construction Company Ltd.

[Per: Mr. Prasanta Kumar Mohanty, Member (T)]

The present petition has been preferred by the Operational Creditor, Express Equipment Rental & Logistic Pvt. Ltd., under Section 9 of the Insolvency and Bankruptcy Code, 2016 (herein after referred to as a "Code") seeking for initiation of Corporate Insolvency Resolution Process ("CIRP" in Short) against the Corporate Debtor Company namely, Newton Engineering & Construction Company Limited.

The Petitioner Operational Creditor is a registered company under the provisions of Companies Act, 1956, with a Company Identification Number (CIN) - U63011MH2007PTC174073. The registered office of the Petitioner is situated at 428, GIDC, Makarpura, Vadodara, Gujarat. The present Petition is filed through Authorised Person Shri Ashwin Ramanlal Gandhi having address: Neelkamal Opp. Gautam Nagar, Race Course Circle, Vadodara-390007.

The Respondent Corporate Debtor, Newton Engineering and Constructions Company Limited was incorporated on 15.04.1982 with CIN: U45201GJ1982PLC005151. The authorised capital of the company is INR.5,00,00,000.00 (Rupees Five Crores Only) and the paid-up capital is INR.2,25,00,000.00 (Rupees Two Crores Twenty Five Lakhs Only). The registered office of the Corporate Debtor Company is situated at: I, Sangeta Apartments, R.C. Dutt Rd., Vadodara, Gujarat.

The present petition has been preferred by the Operational Creditor, Express Equipment Rental & Logistic Pvt. Ltd., under Section 9 of the Insolvency and Bankruptcy Code, 2016 (herein after referred to as a "Code") seeking for initiation of Corporate Insolvency Resolution Process ("CIRP" in Short) in respect of the Corporate Debtor Company namely, Newton Engineering & Construction Company Limited. It is submitted by the Petitioner that the Respondent Corporate Debtor is indebted to the Petitioner for INR.21,69,380.00 (Rupees Twenty One Lakhs Sixty Nine Thousands Three Hundred Eighty Only)[Principal amount as per the Judgment and decree dated 27.02.2017 of INR.08,64,710.00 + Interest of INR.13,04,670.00 calculated at the decretal rate of interest of 9% p.a. on INR.08,64,710.00 as on 31.12.2017]. It is submitted that the Respondent wanted to avail of the Cranes and related services of the Applicant for their work site at the Indian Oil Corporation Ltd. near Delhi. The Respondent placed two letters of intent dated 13.06.2000 and 16.11.2000. Thereafter there was a discussion among the representatives and the Applicant and the Respondent Leading to the meeting dated: 22.11.2000. At such meeting, it was agreed that the Applicant would supply cranes and allied services at the rates, terms and conditions agreed between the parties and recorded in the minutes of the meeting that were signed by representatives of both parties. Accordingly, the Applicant provided the cranes as per the requirements of the Respondent who all throughout found the same to be perfectly satisfactory for their purposes. The Applicant raised several bills and invoices upon the respondent between 05.07.2000 and 31.03.2001 which were accepted without demur or protest. In fact, the Respondent also made part-payment of some of the invoices which serves as an admission of liability acknowledgement of the debt.

The Operational Creditor has submitted an amount claimed to be in default of INR. INR.21,69,380.00 (Rupees Twenty One Lakhs Sixty Nine Thousands Three Hundred Eighty Only) as per the terms and conditions mentioned in the Invoice raised by the Operational Creditor, against which the petitioner has raised invoices.

It is submitted that on 03.07.2001 the Applicant sent a legal notice through their advocate, inspite of which the Respondent did not pay the outstanding amount. However, on 07.10.2002 the Respondent admitted to paying the outstanding amount with interest thereon. Since even after such an admission and undertaking to pay the operational debt the Respondent failed to make the required payment, the Applicant instituted Special Civil Suit No. 949 of 2002 to recover the outstanding amount.

It is further submitted that the Special Civil Suit No. 949 of 2002 was decreed in favour of the Applicant on 27.02.2017 and the Learned 14th Additional Senior Civil Judge, Vadodara was pleaded to direct the Respondent herein to pay a sum of INR.8,64,710.00 along with the interest at the rate of 9% per annum from the date of filing the suit till realization. However, inspite of the aforesaid decree against the Respondent, no payment of the admittedly outstanding operational debt has been made.

It is submitted by the Applicant that as per Section 3(10) of IBC, 2016 “Creditor” means any person including a decree holder to whom debt is owed. Hence, this application is filed. It is further submitted that the said invoices/bills are still outstanding and have remained unpaid till date. That as on date there is an outstanding amount of INR.21,69,380.00 (Rupees Twenty One Lakhs Sixty Nine Thousands Three Hundred Eighty Only) which is due and defaulted and payable by the Corporate Debtor. Date on which the cause of action arises now on 27.02.2017 i.e. Date of decree. As per the decree, the defendant is hereby ordered and directed to pay the amount of INR.8,64,710.00 together with interest at the rate of 9% per annum from the date of filing of suit until realization of the said amount from the defendant.

It is submitted that the Form No.3 demand notice was issued by the operational creditor on 01.01.2018 under the provisions of Insolvency and Bankruptcy Code, 2016. The Respondent has failed to respond to the Demand Notice within the statutorily prescribed period. Respondent has still not paid the admittedly outstanding principal amount of INR.21,69,380.00 (Principal amount as per the Judgment and decree dated: 27.02.2017 of INR.08,64,710.00 + Interest of INR.13,04,670.00 calculated at the decretal rate of interest of 9% P.a. on INR.08,64,710.00 as on 31.12.2017). It is submitted that the Respondent has not provided details of any suit or arbitral Proceedings Commenced in relation to the operational debt as required by Section 8 (2) (a) of the Insolvency and Bankruptcy Code,2016 prior to the receipt of the demand notice. It is further Submitted that no dispute, whether contemporaneous or otherwise, has ever been raised by the Respondent who has on several occasions acknowledged the sum outstanding to the Applicant and has admitted and in fact undertaken to pay the Outstanding amount.

It is submitted that the Respondent has filed an application before Hon'ble Gujarat High Court seeking Condonation of delay in filing restoration of the Application for condonation of delay in filing a First Appeal has already been dealt with by this Hon'ble Tribunal in its order dated 14.08.2019 wherein it is observed that the decree in question is in force and operative and till such time that it is stayed by a competent court. The Hon'ble Tribunal has observed that it is expected to proceed further for hearing the matter on merits.

In response to the present I.B. Petition filed by the Petitioner, the Respondent has filed its objections as:

It is submitted by the Respondent that the present Application is misconceived, frivolous, vexatious, baseless and has been filed in abuse of the process of the IBC.

It is submitted by the respondent that the applicant has already raised the issue on existence of real dispute before the Hon'ble Court learned 14th Additional Senior Civil Judge, Vadodara vide Special Civil Suit No. 949 of 2002. Hence, the Applicant cannot use IBC and its relevant provisions simply to recover monies from the respondent.

It is submitted that the Applicant has filed a Special Civil Suit No. 949 of 2002 before the Hon'ble Court of learned 14th Additional Senior Civil Judge, Vadodara dated 11.12.2002 against the Respondent for the recovery of INR.12,05,040.00 with interest and the said suit was partly allowed on 27.02.2017 and Judgment and decree is amounting to INR.8,64,710.00 together with interest @9% per annum from the date of filing of the suit until the realization of the said amount in favour of the Applicant. It is submitted that the Applicant has already availed suit proceeding in the Year 2002 against the same cause of action arose on 13.06.2002 when the Letter of intent (LOI) was issued therefore, there is no fresh cause of action for filing the present application before this forum.

It is submitted that the Respondent preferred First Appeal Stamp No. 15595 of 2018 before the Hon'ble High Court of Gujarat at Ahmedabad challenging the judgment and order dated:27.02.2017 passed by the learned additional senior Civil Judge, Vadodara in Civil Suit No. 949 of 2002 partly allowing the suit filed by the petitioner herein for recovery and passed an order for recovery of INR.8,64,710.00 with interest rate of 9% per annum from the date of filing of the suit untill the realization of the said amount. It is further submitted that the said first appeal had been preferred along with a delay application for preferring a First appeal before the Hon'ble High Court of Gujarat and both appeal and application came to be dismissed for non-removal of office objections. It is further submitted that the Corporate Debtor has preferred restoration application along with delay application before the Hon'ble High Court of Gujarat which is pending for adjudication.

The Petitioner has filed its written submissions and submitted as under: -

It is submitted that the submission of the Respondent that it has filed before the Hon'ble High Court an application seeking condonation of delay in filing restoration of the Application for condonation of delay in filing a first appeal has already been dealt with by this Hon'ble Tribunal in its order dated 14.08.2019 wherein it is observed that the decree in question is in force and operative and till such time that it is stayed by a competent court. Hence the Hon'ble Tribunal has observed that it is expected to proceed further for hearing the matter on merits.

It is submitted that no dispute contemporaneous or otherwise has ever been raised by the Respondent. In fact, a perusal of the Page No. 39 of the Paper book shows that even before the Learned Civil Court the Respondent had not filed their written statement. Hence at no time has the Respondent disputed the Operational debt which has been adjudicated upon and has attained finality. It is further submitted that the Respondent has not responded to the Demand Notice, and has not challenged the decree within limitation and even after filing an application for condonation of delay has allowed it to get dismissed for want of prosecution. Thus, the decree has attained finality, and the Respondent cannot be permitted to raise spurious defences at this belated stage. It is further submitted that there is no stay on any proceedings.

In light of the above mentioned facts and circumstance the Applicant's Prayer before this Adjudicating Authority for the initiation of Corporate Insolvency Resolution Process and call for the submission of claims in accordance with Clause (b) of Sub-section (1) of Section 13 read with Section 14 of the Insolvency and Bankruptcy Code, 2016 to be dismissed and be pleased to pass any further order in the interest of justice.

Now, the Petition is filed on 19.04.2018 under the Section 9 of the Insolvency and Bankruptcy Code, 2016 for the unpaid Operational Debt due of INR.21,69,380.00

The case was taken up by this Adjudicating Authority on 11.06.2018 on the request of the Petitioner's Counsel. The matter was heard on 05.07.2018, 03.08.2018, 18.09.2018, 12.11.2018, 19.12.2018, 25.01.2019, 28.03.2019, 31.05.2019, 28.06.2019, 14.08.2019, 12.09.2019, Arguments of the counsels of the Operational Creditor and Respondent were heard.

The matter was finally heard and during the arguments, the Learned Counsel for the Operational Creditor submitted that the Petition may be admitted and an Interim Resolution Professional appointed in accordance with the provisions of the Section 16 of the Insolvency and Bankruptcy Code, 2016. Further, it is submitted that the Corporate Insolvency Resolution Process be initiated as per Section 9 of the Insolvency and Bankruptcy Code, 2016 and the moratorium period may also be declared.

Further, the Operational Creditor has not suggested any name of an Interim Resolution Professional ("IRP" for short). If, this I.B. Petition is admitted, an IRP needs to be appointed.

18.

The Application has been filed on 19.04.2018 for operational debt due and defaulted of INR.21,69,380.00 (Rupees Twenty One Lakhs Sixty Nine Thousands Three Hundred Eighty Only) as per the respective Invoices enclosed. 18.2 As per Section 3(10) of IBC, 2016 "Creditor" means a decree holder to whom a debt is owed. 18.3 Application is filed within the limitation period as the date of decree is 27.02.2017 and the date of filing this petition under Section 9 of IBC is 19.04.2018.

As per the decree, the defendant is ordered and directed to pay the amount of INR.8,64,710.00 together with interest at the rate of 9% per annum from the date of filing of suit until realization of the said amount from the defendant.

It has reached its finality and there is no stay on decree.

Considering the material, papers filed by the Petitioner on record and the facts mentioned in the Para No. 18, 18.1, 18.2, 18.3, 18.4, 18.5,& 18.6 this Adjudicating Authority is satisfied that,

Hence, the present IB petition is admitted on 17.03.2020 with the following directions:

As per the provisions of Section 13 and 14 of the I.B. Code on the date of commencement of insolvency, this adjudicating authority shall declares moratorium for prohibiting all of the following, namely: -

The Petitioner/Operational Creditor has not suggested the name of any Interim Resolution Professional in the present Petition. Though it is not mandatory on the part of the Applicant to propose an Interim Resolution Professional when the application is filed under Section 9 of the IBC, 2016, but in that case, the Adjudicating Authority shall appoint an Insolvency Professional from the panel prepared by the IBBI and meant for this Bench on admission of the application. But if it is observed that when an Operational Creditor does not suggest the name of any Interim Resolution Professional and the Interim Resolution Professional is appointed by the Adjudicating Authority from the panel of Insolvency and Bankruptcy Board of India available for NCLT, Ahmedabad, the dispute is arising for payment of Interim Resolution Professional fees, paper publication costs etc., in the first month of the Corporate Insolvency Resolution Process. This is more, when Financial Creditor or other Operational Creditor is not there, CoC is not formed and the Operational Creditor is not able to bear the CIRP expenses.

Hence, this Adjudicating Authority hereby appoints Anil Kumar Satyanarayan Agarwal having Insolvency Professional Registration Number IBBI/IPA-001/IP-P00957/2017-2018/11578, having Email-Id:[email protected], Address: 301-302, Vraj Bhumi Complex, Nr. Prarthana Flat, B/H, Ship, Bldg, Off CG Road, Navrangpura, Ahmedabad, Gujarat, 380009 an Interim Resolution Professional.

The IRP is advised to file declaration disclosure statement within two days with this Registry.

The Interim Resolution Professional is further directed to make public announcement of moratorium in respect of Corporate Debtor Company soon after receipt of an authenticated copy of this order and to act further as per the order/direction issued by this Adjudicating Authority and to follow the provisions Section 13 and 14 and relevant provisions of the Insolvency and Bankruptcy Code. The Interim Resolution Professional shall perform all his functions contemplated, inter-alia, in 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 persons 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, 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.

An authentic copy of this order to be communicated by this Registry to the Operational Creditor, Corporate Debtor, as well as to the Interim Resolution Professional and the Registrar of Companies by Speed Post/Registered Post at the earliest.

Hence, this CP(IB) No.211/9/NCLT/AHM/2018 is admitted on 17.03.2020 with the above Observations and Directions.