Jai Trading Co. vs Alipurdwar Tea Co. Ltd.

Per Virendra Kumar Gupta (T)

This application has been filed under Section 9 of Insolvency and Bankruptcy Code, 2016 (in short, "IBC, 2016") by M/s. Jai Trading Company - the operational creditor for initiation of Corporate Insolvency Resolution Process (in short "CIRP") against M/s. Alipurduar Tea Co. Ltd. - the corporate debtor as the corporate debtor has committed default in payment of outstanding debt. The amount claimed in default is Rs.8,00,428/- along with interest @ 14% per annum from the date of default till realisation of the dues.

The facts, in brief, are that the operational creditor supplied goods to the corporate debtor during financial year 2016-2017 and 2017-2018 to the tune of Rs.9,35,053/-. Corporate debtor made part payment. The net amount remains outstanding is Rs.8,00,428/-. The operational creditor sent a letter on 30th October, 2017 which was replied by the corporate debtor wherein certain disputes were raised and the corporate debtor agreed to pay Rs.4,00,214/- in full and final settlement of the account.

The Learned Counsel appearing on behalf of the operational creditor narrated the basic facts and drew our attention to the copies of the invoices and correspondence exchanged between the parties. It was also contended that notice under section 8 was duly served and replied by the corporate debtor. Our attention was also drawn to the Affidavit filed u/s 9(3)(b) of the IBC, 2016. It was also contended that the amount of debt had been admitted by the corporate debtor and which was more than Rupees One Lac, hence, this petition was liable to be admitted.

The Ld. Counsel appearing on behalf of the corporate debtor made twofold arguments. Firstly, it was contended that there existed dispute regarding quality as well as quantity prior to delivery of notice u/s 8 of IBC, 2016 and for this reason alone, the application filed by the operational creditor was liable to be dismissed. In this regard, he drew our attention to an email dated November 11, 2017 whereby the fact of dispute and offer made by the corporate debtor to settle such disputes by making full and final payment of Rs.4,00,214/- had been mentioned. In this regard, he further contended that the operational creditor had itself offered a discount of 20% and the corporate debtor merely asked for increase of the discount to 50% and worked out the amount which could be paid as full and final settlement. It was also pleaded that since the said settlement fizzled out, therefore, the dispute remained unresolved. The second argument was taken that in point no.6 of part-II of the Form 5 read with Board Resolution (copy at page 8), it was mentioned that the application had been filed for recovery of outstanding dues, hence, for this reason also, the application was liable to be dismissed as it was settled principle that IBC, 2016 was enacted for resolution of insolvency and not for recovery of dues. In this regard, he placed reliance on the decision of the Hon’ble NCLAT in the case of Munish Kumar Bhunsali & Anr. Vs. Kotak Mahindra Bank Limited & Anr. - Company Appeal (AT) Insolvency No.1349 of 2019, paragraphs 51 & 52.

The Ld. Counsel for the operational creditor contended that the correspondence referred to by the corporate debtor was, in fact, in support of its claim as it amounted to admission of debt and default. She further argued that the undisputed amount was more than Rupees One Lac, being the threshold limit for filing application u/s 9 of the IBC, 2016, hence, this application was well within the four corners of law. She also contended that the application was defined and filed by the people not legally trained and in commercial sense, hence, the mere use of the word 'recovery' at one place and which was picked from the column relating to authority of a person would not make this application liable for quashing as requisite conditions of IBC, 2016 were met.

We have considered the submissions made by both the parties and material on record. From the perusal of the correspondence between the parties, the dispute of the fact which emerges is that corporate debtor has offered to settle the dues at 50% of the outstanding amount as against offer of 20% discount by operational creditor. It is also not in dispute that in spite of the claim of defective goods, the goods have been retained and consumed by the corporate debtor. The amount offered in settlement is Rs.4,00,214/- which is more than Rs. One Lac, being the threshold limit to file an application u/s 9 of IBC, 2016, thus, we do not find any merits in the contentions of the corporate debtor as regards the pre-existing dispute since the undisputed amount makes the application eligible for admission. In this regard, we further hold that this document is relevant for the purpose of acknowledgement and merely because settlement is fizzled out as claimed, this document does not loses its significance or value for treating the same as an acknowledgement of liability of a debt in terms of provisions of Explanation (a) to Section 18 of Limitation Act, 1963. As regards the reliance placed by the corporate debtor on the decision of the Hon'ble NCLAT in the case of Munish Kumar Bhunsali & Anr. Vs. Kotak Mahindra Bank Limited & Anr., is concerned, we find that the issue involved in that case was regarding acknowledgement of debt and the manner in which such acknowledgement of debt could be considered to be made and, therefore, the said decision has been given in the context of entirely different facts. Thus, the said decision in no way is applicable to the present case. As regards the other contention, we find that notice u/s 8 of IBC, 2016 has been duly served in accordance with the provisions of law and the application has been filed in the prescribed form. Thus, one sentence from a column, in our considered view, does not make this application as filed for recovery.

The application is otherwise complete in all respect and defect-free. The name of the IRP is not proposed as it is not mandatory in applications filed u/s 9 of IBC, 2016. We shall appoint IRP from the panel approved by IBBI.

Accordingly, we admit this application and order as under:-