Infraweld Services vs Offshore Infrastructures Limited

[PER: SANJIV DUTT, MEMBER (TECHNICAL)]

This Application bearing C.P.(IB) No.182/MB/2022 was filed by Infraweld Services, the Operational Creditor on 22.01.2022 under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the Code”) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as “the AAA Rules”) through Mr. Dhurandhar Singh, its Partner having authority to sign and execute this application vide a General Power of Attorney (GPA) dated 08.01.2022 for initiating Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP”) in respect of Offshore Infrastructures Limited, the Corporate Debtor.

The Operational Creditor is an unregistered partnership firm established under the provisions of the Indian Partnership Act, 1932. It is engaged in the business of trading, sales and services of engineering machinery, equipment and spare parts. The Corporate Debtor is a public company carrying on civil and industrial business of construction and engineering.

The Operational Creditor supplied varied kinds of engineering and construction materials to the Corporate Debtor from April, 2018 to February, 2020.

Upon failure of the Corporate Debtor to pay its dues, the Operational Creditor issued a Demand Notice on 19.11.2021, demanding payment of the unpaid Operational Debt of Rs.2,38,15,673/- (Two Crore Thirty-Eight Lakh Fifteen Thousand Six Hundred and Seventy-Three Rupees) including principal amount of Rs.1,47,08,296/- (One Crore Forty-Seven Lakh Eight Thousand Two Hundred and Ninety-Six Rupees) and interest calculated from April, 2019 up to 31.10.2021 amounting to Rs.91,07,377/- (Ninety-One Lakh Seven Thousand Three Hundred and Seventy-Seven Rupees). The Corporate Debtor replied to the Demand Notice vide letter dated 01.12.2021 but failed to make payment of the outstanding debt. Therefore, the Operational Creditor has preferred the present Application for initiating CIRP of the Corporate Debtor.

The Operational Creditor is a registered micro enterprise in terms of Micro, Small and Medium Enterprises (MSME) Development Act, 2006.

The Operational Creditor supplied varied kinds of engineering and construction materials between the period 10.04.2018 to 10.02.2020 to the Corporate Debtor as per their requirement. The transactions were contracted, whereby the Corporate Debtor raised Purchase Orders (POs) for supply of material/machinery with necessary specification and quantity. The POs had a clause that specified that the payment in respect of the concerned POs shall become due and payable within 60 days PDC (post-dated cheque) after despatch of material.

The Operational Creditor fulfilled every order of purchase placed by the Corporate Debtor by supplying the necessary material/machinery under a Tax Invoice and Delivery Challan duly accepted and acknowledged by the Corporate Debtor. The total supply made by the Operational Creditor to the Corporate Debtor was valued at Rs.17,99,04,512/-.

The Corporate Debtor had made some on-account payments in the bank account of the Operational Creditor. Thereafter, Operational Creditor had raised invoices of the aggregate value of Rs.11,56,99,731/- in the Financial Year (FY) 2018-2019, out of which Rs.1,91,24,253/- remained outstanding and payable by the Corporate Debtor. Further, the invoices of the aggregate value of Rs.6,42,04,781/- were raised in the FY 2019-2020 and Rs.44,15,957/- was received in excess. Consequently, a net amount of Rs.1,47,08,269/- remained due and payable by the Corporate Debtor to the Operational Creditor. The last payment was received from the Corporate Debtor on 24.12.2019.

The Operational Creditor sent various reminders on emails and text messages and made several verbal communications to the Corporate Debtor requesting for release of the outstanding payment of the unpaid operational debt. However, the Corporate Debtor failed to make payment against the invoices raised by the Operational Creditor.

The Goods and Services Tax (GST) was paid by the Operational Creditor on each of the invoices raised by the Operational Creditor upon the Corporate Debtor, regardless of the payment for several invoices remaining outstanding on the part of the Corporate Debtor. The Corporate Debtor would have claimed Input Tax Credit (ITC) on the invoices for which the Corporate Debtor had not paid the price of the materials/machinery. Further, the Corporate Debtor had deducted and deposited the TDS with the Government on certain invoices raised by the Operational Creditor, thus admitting the debt.

Due to the continued default by the Corporate Debtor, the Operational Creditor sent a Demand Notice dated 19.11.2021 as per the provisions of Section 8(1) of the Code read with Rule 5 of the AAA Rules calling upon the Corporate Debtor to make the payment of the unpaid operational debt of Rs.2,38,15,672/-including interest up to 31.10.2021. The Corporate Debtor replied to the Demand Notice on 01.12.2021 outrightly denying any liability on its part to pay the outstanding debt. The Corporate Debtor raised dispute regarding the deficiency of services rendered by the Operational Creditor and negligence in delivery during the period of its execution without a single piece of evidence. Therefore, the Operational Creditor filed the instant Application seeking initiation of CIRP in respect of the Corporate Debtor. The Operational Creditor has also filed an affidavit in accordance with Section 9(3)(b) of the Code stating that no notice of dispute raised by the Corporate Debtor was received by the Operational Creditor in relation to the unpaid operational debt.

The Corporate Debtor vide its Affidavit-in-Reply dated 13.12.2023 has vehemently opposed the admission of the Application on several grounds. The present Application is filed on the basis of Admission-cum-Retirement Deed dated 05.11.2019 whereby Mr. Vijay Lanjewar was made to retired from the partnership of the Operational Creditor and Mr. Ravi Dhurandhar Singh was admitted into the partnership with Mr. Dhurandhar Singh continuing as a partner. Mr. Vijay Lanjewar had filed police complaint on 26.05.2022 and FIR report on 20.06.2023, wherein Mr. Vijay Lanjewar had denied having signed any retirement deed and the same was an act of fraud, forgery, cheating and criminal breach of trust. As per the FIR, signatures of Mr. Vijay Lanjewar were fabricated. Accordingly, Mr. Dhurandhar Singh was arrested and his anticipatory bail application was rejected by the Addl. Sessions Judge, Thane on 13.07.2023 as well as the Criminal Revision Petition against the said order of Addl. Sessions Judge, Thane was dismissed by the Hon’ble Bombay High Court on 10.08.2023. Therefore, it is alleged that the Operational Creditor had relied on a forged and fabricated document and misled the Adjudicating Authority.

The present Application is filed by a non-existing entity in the eyes of law. The Operational Creditor is an unregistered partnership firm and as per Section 69(2) of the Indian Partnership Act, 1932 an unregistered firm cannot sue. Therefore, the Application deserves to be dismissed.

No default had been committed by the Corporate Debtor as the Corporate Debtor was asked not to make further payments to the Operational Creditor by Mr. Vijay Lanjewar, partner of the Operational Creditor. The Operational Creditor was represented by Mr. Vijay Lanjewar as the Majority Partner and he was the one who had dealt with all the business transactions of the Corporate Debtor. The Corporate Debtor had no knowledge that Mr. Dhurandhar Singh was one of the partners in the Operational Creditor firm. The Corporate Debtor was regularly making the payments under the PO to the Operational Creditor till the end of 2019. However, on 23.03.2020 and 26.03.2020, the Corporate Debtor received letters from Mr. Vijay Lanjewar, the partner of the Operational Creditor disclosing for the first time that Mr. Dhurandhar Singh was also a partner in the Operational Creditor firm. It was brought to the notice of the Corporate Debtor that Mr. Dhurandhar Singh had illegally taken over control of the account of the Operational Creditor and due to such disputes, a request was made by Mr. Vijay Lanjewar to not release any payments in favour of the Operational Creditor. On receipt to the above letter, the Corporate Debtor immediately suspended all its business and financial transactions with the Operational Creditor.

The Corporate Debtor was unaware of the involvement of Mr. Dhurandhar Singh in the alleged Operational Creditor as a partner, while he was also handling the purchase department of the Corporate Debtor. Mr. Dhurandhar Singh dishonestly and with mala fide intentions was placing bulk orders with the Operational Creditor. With the aim of making personal gains at the cost of the Corporate Debtor, Mr. Dhurandhar Singh approved POs and bills of the Operational Creditor at highly inflated rates far above than the average market price being offered by the competitors of the Operational Creditor.

Subsequently, Mr. Dhurandhar Singh issued a letter dated 28.07.2020 claiming that Mr. Vijay Lanjewar was fired from the partnership of the Operational Creditor and was retired by way of a Retirement Deed and Mr. Dhurandhar Singh continued to be a partner of the Operational Creditor. Thereafter, the Operational Creditor vide another letter dated 27.08.2020, requested the Corporate Debtor to clear the outstanding sum of Rs.1,46,15,924/- claimed as due and payable immediately. Further, even after 2020, Mr. Vijay Lanjewar continued to represent himself as a partner and disputed the Retirement Deed. On 11.05.2022 and 23.05.2022, Mr. Vijay Lanjewar informed the Corporate Debtor that the existing disputes between him and Mr. Dhurandhar Singh were still persisting.

The Operational Creditor provided defective and faulty materials vide Invoice Nos.INFRAWELD/006/19-20, INFRAWELD/648/18-19 and INFRAWELD/649/ 18-19 that could not be used by the Corporate Debtor for its operations. The Corporate Debtor intimated the Operational Creditor on 12.04.2019 and 30.04.2019 that goods delivered against the invoices were damaged, defective and unusable materials and requested for immediate replacement. The same was accepted by the Operational Creditor without any dispute. The Operational Creditor undertook to get the defective components replaced at its own cost. However, the said goods were never replaced/exchanged. The total sum of the aforesaid two invoices was Rs.72,99,740/- which was not due and payable.

Further, invoice Nos.INFRAWELD/527/19-20 to INFRAWELD/532/19-20, all dated between 11.11.2019 to 12.11.2019, were issued and signed by Mr. Vijay Lanjewar who, as per the case of the Operational Creditor, had retired with effect from 01.11.2019, by way of Retirement Deed dated 05.11.2019. Accordingly, these invoices were issued by a non-existing and retired partner and the same are disputed and can be considered non-existent in the eyes of law as these had been issued without any authority to the signatory of such invoices. The total sum due and payable under the said invoices was Rs.4,39,566/-.

Mr. Dhurandhar Singh is one of the partners of the Operational Creditor. He had also been engaged at various instances by the Corporate Debtor to execute its projects and had been working together for almost 2 decades as a General Manager of the Corporate Debtor. The same was evident from various powers of attorney (POAs) executed by the Corporate Debtor in favour of Mr. Dhurandhar Singh. The Corporate Debtor, by Letter of Appointment dated 26.02.2018, had appointed Mr. Dhurandhar Singh as the Technical Director of the Corporate Debtor from 01.01.2018.

Mr. Dhurandhar Singh was also working with the Corporate Debtor as a sub-contractor through his company, namely, S. R. Infratech Private Limited for a very long period. The Corporate Debtor had placed regular work orders with S.R. Infratech Private Limited through Mr. Dhurandhar Singh from the year 2009 to 2019. S.R. Infratech Private Limited was in the business of sub-contracting pipeline construction work and had received regular work orders from the Operational Creditor.

The Director of the Corporate Debtor, Mr. Vishal Sachdeva suggested initiation of a partnership to act as a sub-contractor for other allied areas of business of the Corporate Debtor specifically as distributor of welding and gas cutting equipment. Mr. Vijay Lanjewar at that point in time was working with Wrap Engineers Private Limited, wherein during one of the client dealings, he became acquainted with Mr. Dhurandhar Singh. After mutual discussions between the two, they executed a Partnership Deed on 03.05.2017 with certain terms and conditions. The partnership continued till October, 2019. On 05.11.2019, Mr. Dhurandhar Singh and Mr.Vijay Lanjewar executed a Retirement Deed. Thereafter, a new partner was inducted and the Operational Creditor continued its business. Mr. Vijay Lanjewar having retired from the Operational Creditor firm was carrying on its business in the name of “Advance Weldtech Solutions”, a sole proprietorship firm from 25.11.2019.

By this time, i.e., 2018-19, an amount of Rs.1,90,97,113/- was due and payable by the Corporate Debtor as per the POs which was not cleared by the Corporate Debtor for the materials supplied. The non-payment of dues for almost 2 years compelled the Corporate Debtor to issue a Demand Notice on 27.08.2020 demanding the clearance of the outstanding payments. Further, final Demand Notice was sent on 19.11.2021, in Form 3 under Section 8(1) of the Code read with Rule 5 of the AAA Rules. The Corporate Debtor sent a reply on 01.12.2021, raising dispute between the partners as an escape from the liability.

The Operational Creditor denies that there existed any dispute between the parties. All the POs were addressed by the Corporate Debtor to the Operational Creditor and all invoices were addressed by and under the seal of Operational Creditor in its name. No letter complaining about the damaged/defective products was addressed by the Corporate Debtor to the Operational Creditor. Even after 4 years had lapsed, the Corporate Debtor had taken no action in respect of the defective good as alleged. As the Corporate Debtor had raised disputes in his reply regarding defective goods, the Operational Creditor denies the same by stating that the letters were addressed to Mr.Vijay Lanjewar at his personal address and not to the Operational Creditor at its registered address. There is no proof of receipt of these letters and no date mentioned on the letters on which they were acknowledged.

The Operational Creditor accepts that Mr. Dhurandhar Singh was working as Technical Director and sub-contractor with the Corporate Debtor prior to starting his own firm. When the firm was started, the Corporate Debtor was informed about the same and it had no objection and the Corporate Debtor willingly continued its relationship with Mr. Dhurandhar Singh but the same is denied by the Corporate Debtor. The Corporate Debtor, after coming to know of Mr. Dhurandhar being the partner in Operational Creditor, should have taken some action against him but there was no email or any letter addressed to Mr. Dhurandhar Singh questioning about his act of starting a business firm during the course of working with the Corporate Debtor.

Mr. Dhurandhar Singh had not ever indulged in acts of raising POs and at inflated rates to the Operational Creditor. No communication was addressed to Mr. Dhurandhar Singh complaining that he was issuing inflated bills to his own firm and earning profit out of the Corporate Debtor. These allegations are only an attempt by the Corporate Debtor to evade its liability of clearing the outstanding dues of the Operational Creditor.

The Applicant filed an Interlocutory Application (I.A) No. 1422 of 2024 under Section 75 of the Code on 23.03.2024 praying for a direction to implead/add the Applicant as a party to the C.P.(IB) No.182 of 2022.

The Applicant filed this intervening application because of alleged non-joinder of interested parties as the Operational Creditor had voluntarily omitted to add the name of its partner, Vijay Shriram Lanjewar resulting in violation of rules of natural justice.

The Applicant and Mr. Dhurandhar Singh created a partnership firm named Infraweld Services, the Operational Creditor herein, where the share of profit/loss was agreed at 40% and 60% respectively. The business was running smoothly generating profit till 2019, when Mr. Dhurandhar Singh asked the Applicant to share and take only 10% of profit while Mr. Dhurandhar Singh will have 90% of the profit. The Applicant had refused the same. Mr. Dhurandhar Singh had siphoned of Rs.60,00,000/- on 14.11.2019 from joint account of the Partnership Firm without the consent of the Applicant, which had a balance of Rs.76,90,593/- and transferred Rs.16,00,000/- in accounts of various unknown persons. When the Applicant confronted Mr. Dhurandar Singh, he replied that it was to make arrangement for settlement of the Applicant’s account and asked the Applicant to value the stock which was valued at Rs.28,46,213/- as on 22.11.2019. Thereafter, Mr. Dhurandhar Singh started avoiding the Applicant who sent a Legal Notice dated 21.03.2020, demanding his share of profit of Rs.1,18,37,000/-, to which Mr. Dhurandhar Singh did not reply. Thereafter, a complaint was filed by the Applicant at Kasarwadavali Police Station.

The Operational Creditor with the aid of forged documents and without the consent of the Applicant had made a false Retirement Deed in which the Applicant was shown as retired. Further, the same was used in filing of this Application resulting in perjury and travesty of justice.

Upon due consideration of the pleadings and hearing the Ld. Counsels for the Operational Creditor and the Corporate Debtor, our findings in the matter are as under: -

At the outset, it is observed that the Applicant/Intervenor, Mr. Vijay Lanjewar has filed the I.A. No.1422/2024 on 23.03.2024 to implead him as a party in the Application as he was allegedly expelled from the partnership firm in a fraudulent manner by the other partner, by fabricating the Applicant’s signature on the purported Retirement Deed. It is observed that the Applicant was retired from the partnership firm vide Retirement Deed dated 05.11.2019. We find that the Application is filed under Section 75 of the Code, which refers to punishment for false information furnished in the Application made under Section 7. This provision is applicable to Section 7 applications only whereas the present Application is filed under Section 9 of the Code. We also find that there is no non-joinder or mis-joinder of parties in the present Application filed under Section 9 of the Code, because the Application was preferred by the Operational Creditor firm and not by any of its partners. The cause of action arose out of the default committed by the Corporate Debtor in making payment of the debt due to the Operational Creditor firm towards supply of goods and materials. Further, this Tribunal is not the right forum for adjudication of disputes between partners of a firm relating to rendition of accounts, settlement of dues etc. We thus find that the Applicant has not been able to make out a valid case for his impleadment in the present Application. Therefore, we are of the considered opinion that I.A. No. 1422 of 2024 is not maintainable and deserves to be dismissed.

It is well-settled that while considering an application under Section 9 of the Code, the Adjudicating Authority will have to determine whether there is an ‘operational debt’ as defined under Section 5(21) exceeding the threshold limit under Section 4 of the Code; whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid and whether there is existence of a dispute between the parties or the record of pendency of a suit or arbitration proceeding filed before the receipt of the Demand Notice of the unpaid operational debt in relation to such dispute. If any of the aforesaid conditions is lacking, the application would have to be rejected [Mobilox Innovations Private Limited v. Kirusa Software Private Limited (2018) 1 SCC 353]. It is also a settled proposition of law that an application under Section 9 of the Code has to be mandatorily admitted if all the conditions stipulated in clauses (a) to (e) of Section 9(5)(i) are satisfied.

It is proposed, at this juncture, to first deal with the preliminary issue whether the Operational Creditor being an unregistered partnership firm can file the Application under Section 9 of the Code. As per Section 69(2) of the Indian Partnership Act,1932, an unregistered partnership firm cannot file a suit against a third party to enforce a right arising from a contract. In this connection, the legal position is now settled that an application made under the Code is a ‘proceeding’ and not a ‘suit’. Section 9 of the Code implicitly identifies CIRP as a proceeding and not a suit. The Hon’ble Supreme Court in B.K.Educational Services Pvt. Ltd. Vs. Parag Gupta (2021) 11 SCC 142 and Sagar Sharma v. Phoenix ARC Pvt. Ltd. (2019) 8 SCC 416 also held that applications under the Code are not considered ‘suits’. While adjudicating an application under Section 9 of the Code, all that the Adjudicating Authority is required to ascertain is the existence of operational debt, default in payment thereof and the factum of pre-existing dispute, if any. Where the Operational Creditor happens to be a firm, like in the present case, a dispute between the partners of the firm with regard to rendition of accounts or fraudulent retirement of a partner by the other under a purportedly forged Retirement Deed will have no bearing on the adjudication of the instant Application filed under Section 9 of the Code. In other words, the dispute between the partners cannot be a valid ground for dismissing the Application. Therefore, we have no hesitation in holding that the Application filed by the Operational Creditor is maintainable in law and consequently, the plea taken up by the Corporate Debtor on this point is found to be devoid of substance and is accordingly rejected.

The Corporate Debtor has vehemently contended that the Retirement Deed is forged and fabricated and that the same has been submitted to the Adjudicating Authority as evidence to show that the other partner is retired. In this regard, it is pertinent to mention that the Adjudicating Authority is vested with a summary jurisdiction and as such, it does not deal with issues relating to fraud, forgery and fabrication of documents which are to be decided by a competent court of law. Therefore, we are of the view that this issue of inter-se dispute between partners of the Operational Creditor firm is not within the jurisdiction of the Adjudicating Authority and hence, the Corporate Debtor’s contention in this behalf is found to be misconceived and is accordingly rejected.

It is observed from perusal of Part-IV of the Application that the Operational Creditor has claimed the amount in default to be Rs.2,38,15,672/- towards supply of goods against invoices issued between 10.04.2018 to 10.02.2020. It is also observed that the Operational Creditor has annexed to the Application the relevant tax invoices, purchase orders, extracts of GSTR-1 Return, Ledger Account of the Corporate Debtor maintained by the Operational Creditor, email reminders for payment of operational debt, Bank Account statements, copy of Demand Notice dated 19.11.2021 and Corporate Debtor’s reply thereto dated 01.12.2021 in order to prove the existence of operational debt and default in payment thereof by the Corporate Debtor. It is noticed from the record that the Corporate Debtor has been making payments to the Operational Creditor and that the last payment of Rs.5,192/- was made by the Corporate Debtor through Cheque No.011051 on 24.12.2019 against Invoice No.INFRAWELD/484/19-20 as per Ledger Account of the Corporate Debtor in the books of Operational Creditor. Thus, it is clear from perusal of the record that an amount more than the threshold limit of One Crore Rupees was due and payable by the Corporate Debtor to the Operational Creditor towards supply of the goods. The debt so owed by the Corporate Debtor to the Operational Creditor against the supply of goods clearly falls within the definition of “operational debt” under Section 5(21) of the Code. Hence, we find that the Operational Creditor has been able to substantiate the existence of an operational debt in excess of the threshold limit prescribed under the Code due and payable by the Corporate Debtor which remained unpaid.

As regards the occurrence of default, it is noticed that the Corporate Debtor has accepted that it was regularly making the payments under the POs to the Operational Creditor till the end of 2019. Due to the disputes between the partners and Mr. Vijay Lanjewar’s email dated 26.03.2020, the Corporate Debtor stopped making the payments and suspended the business activities with the Operational Creditor. However, merely because Mr. Vijay Lanjewar, a purportedly retired partner of the Operational Creditor asked him not to make further payments due to ongoing disputes between the partners, the Corporate Debtor cannot take the plea that it has committed no default. Any disputes between the partners of the Operational Creditor will not have the effect of extinguishing the liability of the Corporate Debtor. As a matter of fact, the conduct of the Corporate Debtor does not demonstrate its bona fides. In its reply, the Corporate Debtor claimed that he had no knowledge that Mr. Dhurandhar Singh was one of the partners of the Operational Creditor firm. The Operational Creditor, on the other hand, has been successful in demolishing the said claim of the Corporate Debtor by placing on record its certificate of Importer-Exporter Code issued on 24.12.2018 and its GST Registration Certificate showing Mr. Dhurandhar Singh as a partner of the Operational Creditor, both of which were shared with the Corporate Debtor vide emails dated 24.12.2018 and 15.04.2019 respectively. Likewise, the Corporate Debtor has failed to substantiate with relevant evidence and materials the allegation that while handling purchase operations at the Corporate Debtor, Mr. Dhurandhar Singh was dishonestly placing bulk orders with his Operational Creditor firm at highly inflated rates so as to make personal gains. All this lends credence to the Operational Creditor’s submission that dispute between partners of the Operational Creditor is being used by the Corporate Debtor as a shield to escape its liability towards the Operational Creditor. Any disputes between the partners of the Operational Creditor firm will not absolve the Corporate Creditor of its liability to make payment of its outstanding dues to the Operational Creditor. Hence, the plea of the Corporate Debtor on this count is found to be devoid of merit and is accordingly dismissed.

It is noticed from the record that the Operational Creditor has not mentioned any specific date of default in Part-IV of the Application. However, it is well-settled that omission to specify date of default will not be fatal to the Application under Section 9 of the Code so long as the same can be gathered from the pleadings and materials available on record. As per the payment terms contained in the purchase orders, the payment for goods supplied to the Corporate Debtor was to be made by the Corporate Debtor on the expiry of 60 days from the date of despatch of materials. Since there were regular supplies of materials to the Corporate Debtor, the items were to be supplied immediately from the date of each PO so that the date of invoice in most cases is the same as the date of the relevant PO. In these circumstances, omitting the last 3 invoices which fell within 10A suspension period and considering the invoice dated 08.01.2020 as the last invoice falling due in the pre-suspension period, we get date of default as 08.03.2020. In view of this, the Application filed by the Operational Creditor on 22.01.2022 is found to be well within the period of limitation.

The next issue to be determined is whether the Corporate Debtor has been able to bring out any pre-existing dispute with the Operational Creditor prior to the receipt of the statutory Demand Notice. It is observed from the record that the Demand Notice under Section 8(1) of the Code dated 19.11.2021 was properly delivered to the Corporate Debtor. The Corporate Debtor replied to the said Demand Notice vide letter dated 01.12.2021. In its reply addressed to Mr.Dhurandhar Singh in his capacity as partner of the Operational Creditor firm, the Corporate Debtor inter alia, claimed that he and his wife were previously employed with the Corporate Debtor and he had illegally fabricated the invoices without supplying any goods and made false claim of non-existing debt for which the Corporate Debtor reserved its right to file criminal case against him under the provisions of the IPC. The Corporate Debtor also claimed that his associate company, S.R. Infratech Pvt Ltd., where Mr. Dhurandhar Singh, his son and his wife were Directors, was liable to pay the Corporate Debtor outstanding amount of Rs.8.50 Crore plus further interest, for which the Corporate Debtor reserved its right to file civil suit for recovery of the said amount and also file criminal case against the Directors in due course. In this connection, it is noticed from the record that neither any supporting evidence with regard to aforesaid claims has been filed by the Corporate Debtor nor any civil or criminal cases have been initiated against the Operational Creditor for alleged “false claim of non-existing debt”.

It is also noteworthy that neither of these claims has been raised by the Corporate Debtor in its Affidavit-in-Reply to the Application. It is observed from the record that in its Affidavit under Section 9(3)(b) of the Code, the Operational Creditor has declared that till date, no notice relating to a ‘dispute’ as defined under Section 5(6) of the Code had been received from the Corporate Debtor in relation to the outstanding amount before the delivery of the Demand Notice in terms of Section 8(2) of the Code. The Operational Creditor has also declared that the Corporate Debtor has raised “hypothetical and misconceived defence on flimsy grounds” which has “no legs to stand” as “the alleged defence raised by the Corporate Debtor is false, frivolous, ... and has been raised to illegally avoid initiation of CIRP”. It is noticed that in its reply to the Application, the Corporate Debtor has taken up the plea of defective and faulty materials based on two letters dated 12.04.2019 and 30.04.2019, sent by it to the Operational Creditor. On careful perusal of the said letters, it is noticed that the letters contain mention of only Mr. Vijay Lanjewar’s personal address and not the business address of the Operational Creditor. Although the letters contain purported acknowledgment by Mr. Vijay Lanjewar thereon, no date of alleged acknowledgement is mentioned in the said letters. The Corporate Debtor has not explained the circumstances under which the said letters dated 12.04.2019 and 30.04.2019 addressed to the Operational Creditor and purportedly bearing acknowledgement of alleged defective materials by Mr. Vijay Lanjewar, partner of Operational Creditor have been lying with the Corporate Debtor and the reasons as to why the alleged dispute in regard to defective materials could not be raised by it in reply to the Demand Notice dated 19.11.2021.

All this is enough to cast a shadow of serious doubt over the genuineness of the said letters dated 12.04.2019 and 13.04.2019. Thus, the purported dispute raised by the Corporate Debtor with regard to alleged defective materials can legitimately be treated as spurious, illusory and hypothetical or mere bald assertions unsupported by evidence. Likewise, the Corporate Debtor’s reliance on inter se disputes between partners of the Operational Creditor firm will be of no avail, because the dispute between partners of a partnership firm has no nexus with the concept of ‘dispute’ as defined under Section 5(6) of the Code.

As regards the Operational Creditors’ claim for interest of Rs.91,07,377/- to be treated as ‘operational debt’, it is observed that neither the Purchase Orders POs nor the Tax Invoices contain any stipulation for charging of interest. In the absence of mutual agreement or any promise to pay interest for delayed payment, the Operational Creditor’s claim for treating the said interest as operational debt cannot be sustained, because such interest does not arise out of any provision or supply of goods or services. It appears that interest has been claimed based on the status of the Operational Creditor as an MSME enterprise. However, it is now settled that the correct forum for claiming interest under MSMED Act is the MSME Facilitation Council and not this Tribunal. Therefore, the claim of the Operational Creditor for treating the interest amount of Rs.91,07,377/- as part of ‘operational debt’ is found to be untenable.

From the above discussions, it is evident that the Operational Creditor has been able to discharge the onus of proving that there is an operational debt exceeding the threshold limit of One Crore Rupees, as laid down under Section 4 of the Code due and payable by the Corporate Debtor who has committed default in the payment of such debt. The Application is complete and has been filed in the prescribed form. There is no payment of the unpaid operational debt till date. The Corporate Debtor has also failed to establish the factum of any genuine pre-existing dispute between the parties, as brought out above. The Operational Creditor has not proposed the name of an IP to act as the Interim Resolution Professional (IRP) and, therefore, this Bench hereby appoints Mr. Milind Khankhoje, IP having Registration No.IBBI/IPA-001/IP-P-02922/2024-2025/14483. In view of the above, we find that all requisite conditions necessary to trigger CIRP in respect of the Corporate Debtor are satisfied and the matter is fit for admission under Section 9(5)(i) of the Code.

In view of the aforesaid findings, the I.A. No.1422/2024 is dismissed and Application bearing C.P.(IB) No.182/MB/ 2022 filed under Section 9 of the Code by Infraweld Services, the Operational Creditor, for initiating CIRP in respect of Offshore Infrastructures Limited, the Corporate Debtor is admitted.

We further declare moratorium under Section 14 of Code with consequential directions as follows: