HTC Impex Private Limited vs Santipara Tea Co. Limited

The Operational Creditor is engaged in the business of supplying agrochemicals, insecticides, herbicides, pesticides etc.

Pursuant to various purchase orders placed by the Corporate Debtor in 2012, the Operational Creditor, from time to time, supplied varieties of agrochemicals to the Corporate Debtor. Accordingly, the Operational Creditor raised tax invoices upon each delivery.

The Corporate Debtor received the delivered goods without any protest or demur as to the quality, quantity or branding of the goods. Against the supplies made by the Operational Creditor on and from 2012, the Corporate Debtor used to make on account payment, making the account of the Corporate Debtor a running and continuous one.

The total amount of debt due from the Corporate Debtor is ₹7,24,530/-along with interest @14% per annum on and from 90 days from the date of invoice till the date of final payment.

However, despite several repeated requests by the Operational Creditors, the Corporate Debtor has deliberately neglected to make the payments due from it.

The first default occurred 90 days after the date of the first bill raised by the Operational Creditor being on 31.01.2012 whereas the last supply was made on 15.05.2012 and the last on account payment made against the supplies made was on 05.08.2014 for a sum of ₹20,000/- thereby making the account of the Operational Creditor a running and continuous one.

The Corporate Debtor has by a letter dated 09.03.2015 also confirmed the amount of ₹7,24,530/-, the principal sum as being due and payable by it.

The Operational Creditor had within the period of limitation filed a winding up proceedings under section 434 of the Companies Act, 1956 before the Hon’ble High Court at Calcutta being C.P. No. 161 of 2016 in which by an order dated 29.03.2016. Hon’ble Justice Biswanath Somadder had in view of the Tea Act, 1953 and the notification dated 28.01.2016 disposed of the winding up petition with liberty to the petitioner therein to take necessary steps in accordance with law. The issue of the Tea Act, 1953 has been decided on 04.10.2019. As such, the limitation which started to run in August 2014 stopped when the winding up proceedings were filed and continued till 04.10.2019. the date for calculating limitation once again starts running on and from 04.10.2019 for the balance of the three years. As such, this petition is well within limitation.

Upon the commencement of the Code, and the order as passed by the Hon’ble Apex Court, the Operational Creditor issued notice under section 8 of the Code on 03.12.2019 upon the Corporate Debtor. The Corporate Debtor has not replied to the demand notice.

The Corporate Debtor has submitted that the Operational Creditor has admitted that the date of first supply is 31.01.2012 and the date of last supply is 15.05.2012. Further, the last payment was made on 05.08.2014. As such, the instant petition is barred by limitation.

It has been denied that a sum of ₹7,24,530/- or any part thereof is due from the Corporate Debtor to the Operational Creditor. The Operational Creditor has clubbed several purchase orders in order to arrive at a claim of ₹7,24,530/-

The mere filing of winding up proceedings being C.P. No. 161 of 2016 will not stop the period of limitation from running against the Operational Creditor.

The Operational Creditor could not have issued the demand notice dated 03.12.2019, since the purported claim is ex-facie barred by the laws of limitation and the fact that the Corporate Debtor has not replied to the said notice is of no consequence.

The Operational Creditor has reiterated that the winding up petition in 2016 was within time. The notification dated 28^th January 2016 under section 16E of the Tea Act 1953 in connection with the tea unit of the Corporate Debtor in light of which and the relevant provisions of the Chapter III – A of the Tea Act, 1953, no suit or legal proceeding was maintainable and institution of any such legal proceedings would amount to abuse of process of law as such the winding up application was disposed. The issue of applicability of Tea Act on applications filed under the Code having been decided by the Hon’ble Supreme Court in October, 2019, enlarged the period of limitation. Therefore it is denied that the Operational Creditor cannot take benefit of section 14 of the Limitation Act, 1963.

Regarding the clubbing of purchase orders, the Operational Creditor has submitted that only purchase orders forming the part of separate agreements and separate cause of action cannot be clubbed, and the said proposition of law does not apply to the instant matter.

Heard the Ld. Counsel for the Operational Creditor and the Ld. Counsel for the Corporate Debtor and perused the records.

The Operational Creditor in the instant case has failed to explicitly mention the date of default by the Corporate Debtor. On page 6 of the petition, the Operational Creditor has mentioned that the date on which the first default occurred is 90 days from the date of the raising of first bill i.e 31.01.2012. thereafter, the Operational Creditor has mentioned that the last supply was made of 15.05.2012. Further, it has been submitted that the last payment was made on 05.08.2014. As such, there is ambiguity regarding the date of default in the instant petition and the same therefore, is incomplete.

Further, the Operational Creditor has not produced any certificate in compliance of section 9(3)(c) of the Code, nor has it provided the bank statements for the relevant period of time. As such the Operational Creditor has failed to provide evidence to confirm that the Corporate Debtor has not made any payments post the date of default, further rendering the instant petition incomplete.

The main defence taken by the Corporate Debtor is that the instant petition is barred by limitation. The Operational Creditor has rebutted the said contention by pointing out that the limitation period will be extended under sections 14 and 18 of the Limitation Act, 1963. In this regard, the Operational Creditor has highlighted the following facts:

a. The Corporate Debtor has acknowledged the debt vide letter dated 09.03.2015;

b. A winding up petition was filed by the Operational Creditor in February 2016, which was dismissed on 29.03.2016 in light of the notification dated 28.01.2016 issued by the Ministry of Commerce and Industry, Govt. of India.

c. The requirement of the prior consent of the Central Government before filing insolvency proceedings under the Code against the relevant tea undertaking under section 16M of the Tea Act 1953, was done away with by the Hon’ble Supreme Court in Duncans Industries Limited Vs. A.J. Agrochem^{11.(2019) 9 Supreme Court Cases 725, decided on 04.10.2019}.

d. The period from the filing of the winding up petition till the Hon’ble Supreme Court’s decided on 04.10.2019 shall be excluded while computing of the limitation period, under section 14 of the Limitation Act, 1963.

On perusal of records, it can be seen that the purported acknowledgment dated 09.03.2015 of the Corporate Debtor in a letter from the Operational Creditor addressed to the Corporate Debtor wherein, the Corporate Debtor has acknowledged the receipt of the said letter, and not the contents of the same. The stamp of the Corporate Debtor mentions “Contents not verified”. As such, the same cannot be considered as acknowledgement of debt under section 18 of the Limitation Act, 1963.

However, even if the purported acknowledgment dated 09.03.2015 were to be considered, the resultant limitation period would still come to an end on 09.03.2018. Even if, under section 14 of the Limitation Act, 1963, the period of pendency of the winding up petition No. 161 of 2016 ( from February 2016 to 29.03.2016 ) is excluded, the limitation period will still only extend till may 2018. The matter of Duncans Industries (Supra) was decided by the Hon’ble Supreme Court on 04.10.2019. During the period from May 2018 to 04.10.2019, the Operational Creditor had ample time to institute proceedings under the code with prior consent of the Central Government. During this period, under section 16M of the Tea Act 1953, filing of legal proceedings was allowed, albeit with prior consent of the Government. As such, the Operational Creditor’s claim that the limitation period would stop running from the date of filing of the winding up proceedings till the Hon’ble Supreme Court’s decision on 04.10.2019 and resume thereafter is untenable. The limitation period in the instant case would resume from 29.03.2016 and would have been extinguished by May 2018. The proceedings under section 9 of the Code, however, were filed on 31.12.2019. The instant petition, therefore is barred by limitation.

In light of the above facts and circumstances, this Adjudicating authority is satisfied that the instant petition is both incomplete and barred by limitation and therefore is liable to be dismissed.