Hariprasad Gopikrishna Jewellers Pvt. Ltd. vs Midas Infra Trade Ltd.

HDC Private Limited was looking for supplier of goods for its business. Applicant is a company engaged in the business of supply of goods required by HDC private limited. HDC placed orders from time to time for supply of goods with the Applicant. Accordingly, the Applicant supplied goods from time to time and raised its invoices on HDC private limited. ii. HDC accepted the goods and did not raise any disputes. However, HDC failed to make payments on time.

The Applicant was followed up with HDC for the payments of its due amount from 01.04.2017 to 09.01.2018 but no reply was received from HDC.

Vide agreement executed on 10th January 2018, between HDC private limited and Midas Infra Trade Limited the debts were taken over by the Midas Infra Trade Limited, the Respondent.

The Applicant made various follow ups and discussions with the Respondent for payments from 10.01.2018 to 29.12.2018. Balance confirmation dated 29.12.2018 issued by the Respondent.

A demand notice under Section 8 of the Code was issued by the Applicant to the Respondent on 31.12.2018 via post and vide email on 12.01.2019.

At the outset, the amount alleged to be due by the Applicant is categorically denied by the answering Respondent. Rather, it is submitted that a sum of INR 1,08,50,341/- (Rupees One Crore Eight Lacs Fifty Thousand Three Hundred Forty-One) is due and payable by the Applicant to the Respondent.

From January 2018 till May 2018, Respondent followed up with the Applicant to take payment of the said sum of INR 3.23.13.669/- from the Respondent. However, the Applicant kept on avoiding the Respondent on the pretext of its banking issues with State Bank of India.

In the month of May 2018, the Applicant requested the Respondent that instead of making payment of the aforesaid INR 3.23.13.669/- into its bank account, the Respondent may send On Approval Finished Jewellery.

Pertinently, the Applicant denied accepting the outstanding payment of INR 3.23 Crores as the account of the Applicant had already been declared as Non-Performing Asset by State Bank of India on 05.02.2016 and any payment by the Respondent in the bank account of Applicant shall be adjusted by State Bank of India in the NPA account.

It would not be out of place to state here that State Bank of India has filled recovery proceedings against the Applicant which are still pending adjudication before the Ld. Debt Recovery Tribunal, Delhi in O.A. No. 724 of 2018.

As the Applicant was a member belonging to the community of jewelers at Karol Bagh, New Delhi, the Respondent in bonafide manner and on faith in course of business, instead of making the aforesaid payment, supplied On Approval Finished Jewelry worth INR 4,31,64,010/-.

On 30.12.2018, Respondent issued an invoice upon the Applicant for a sum of INR 4,31,64,010/- as the Applicant had intimated the Respondent that the aforesaid jewelry worth INR 4,31,64,010/- which was earlier sent for approval had been retained and accepted in business by the Applicant.

Accordingly, as on 30.12.2018, a sum of INR 1,08,50,341/- (INR 4,31,64,010 - INR 3,23,13,669/-) became due and payable by the Applicant to the Respondent.

Upon receiving the above invoice dated 31.12.2018 the Applicant immediately acted with malice and with a malafide intent issued a demand notice dated 31.12.2018 demanding the sum of INR 4,15,60,309/- (alleged principal amount due INR 3,23,13,669/- + alleged interest @ 18% p.a. of INR 92,46,640/-).

Along with the said demand notice dated 31.12.2018 a forged confirmation letter dated 29.12.2018 was also enclosed. The forgery of the confirmation letter dated 29.12.2018 is implicit and conspicuous from the following:

It does not bear signatures of any personnel of the Respondent.

The seal of the Respondent affixed on the confirmation letter is fake and forged.

It is well known that no confirmation of account is made on a date of 29.12.2018 in any usual course of business. In general commercial practice, all balance confirmation is issued at the end of financial year.

On receipt of the aforesaid demand notice dated 31.12.2018, the Respondent was clearly taken aback and thereafter ensued discussions with the Applicant and other mediating members from the jewelry market at Karol Bagh namely, Mr. Vinod K Patel who mediated between the parties.

While the mediation and discussions were going on, the Applicant started blowing hot and cold. On one hand, it kept on harping that it is not in a financial position to pay INR 1,08,50,341/- to the Respondent and the matter can be settled/compromised if the same can be deferred in the next 12 months. On the other hand, the Applicant also raised an issue that since his bullion was lying for more than 13 months with the Respondent, thereafter the amount of INR 1,08,50,341/- should be waived.

Pertinently, on 31.12.2018, the Applicant issued a demand notice where for the very first time, it raised an issue of interest on the alleged outstanding of Rs. 3.23 crores. It may be noted that neither in the invoice of April/May 2017 is there any whisper or noting of any interest nor is there any communication between the parties whereby the Respondent has accepted charging of this interest.

The Respondent has failed to show or prove that the existence of dispute existed before the receipt of the demand notice. On the contrary, the Respondent in order to create a dispute has concocted an invoice dated 30.12.2018 annexed along with the Reply, which has never been issued or delivered upon the Applicant. The Respondent has failed to show any document to demonstrate that the said invoice was delivered upon the Applicant. In order to further demonstrate that the said invoice is a sham and the same has been fabricated by the Respondent pursuant to the receipt of the Section 8 Notice it is pertinent to note that the Respondent has filed the GST Return only after the notice of the present application was delivered to the Respondent. It is submitted that on 02.02.2019 the notice of the present petition was delivered upon the Respondent and the Respondent filed the GST Return on 24.02.2019 (the due date to file the GST Return was 11.01.2019).

It is submitted that the Respondent has filed a cross petition before NCLT under Section 9 of the Code against the Applicant bearing number C. P. (IB)-1107/(ND)/2019. The said petition CP No. (IB)-1107 (ND) of 2019 was served upon the Applicant and the Applicant came to know that a notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 was alleged to have been served upon the applicant by speed post. That the Respondent has annexed the speed post receipt and tracking report to substantiate that the notice was served upon the Applicant and the Applicant chose not to reply to the said notice. As the Applicant never received such a demand notice alleged to be issued by the Respondent, the Applicant lodged a request with post office for the detail of delivery of demand notice and later on filed RTI dated 22.06.2019 with the concerned post office in order to get an information regarding the said consignment.

It was found that as per the report of RTI, the article was never delivered upon the Applicant. On 11.04.2019, the delivery executive found that the office closed at the time of delivery but the a person, who had previously enquired about the parcel at the post office, was standing in front of the office and took the delivery from the delivery executive. As the same person was enquiring about said article in the post office, the delivery executive in the same apprehension handed over the said article to him and took the receipt in the form of his signature. The report clearly states that the article was never delivered upon the actual addressee but some other person impersonating the official from the Applicant's office took away the article.

In the counter petition filed by the Respondent it is mentioned that:

In reply to the present petition of the applicant it is mentioned that:

It is apparent from the above contradictions that the Respondent has been playing fraud upon the Applicant.

The Respondent contends to have issued an invoice dated 30.12.2018 for an amount of Rs. 4,31,64,010 and claims that it was delivered to the Applicant. However, the Respondent has not enclosed any document to prove that the invoice was delivered to the Applicant. In the absence of any proof, it is difficult to decide that the Respondent has raised any dispute prior to the date of issue of the section 8 notice.

Another issue to be analysed is the manner of serving the Section 8 notice relating to the cross-application by the Respondent to the Applicant herein. As per the documents filed by the Applicant herein the Respondent sent the Section 8 notice and before it could be received by the Applicant herein, another person pretending to be related to the Applicant accepted the delivery on behalf of the Applicant in a dubious way. This has been proved by the details stated in the reply to the RTI application of the Applicant. Hence it appears that the Respondent has tried to defraud the Applicant.

Further the Respondent in its reply to the present petition has contended that the jewelry worth Rs.4,31,64,010/- which was sent earlier for approval had been retained and accepted in business by the Applicant. However, in the cross-petition filed by the Respondent, it is contended that the Applicant (M/s Hariprasad Gopikrishan Jewellers Pvt. Ltd.) did not respond regarding selection of jewelry from the lot taken on approval basis even after many follow-ups. Therefore, the Applicant issued invoice for the jewelry purchased by the Applicant (M/s Hariprasad Gopikrishan Jewellers Pvt. Ltd.). The contradictory stands taken by the Respondent in both the petitions show that the Respondent has been defrauding the Applicant.