Jayhind Steel Traders vs M/s Saturn Pre Fab India Pvt. Ltd.

C.P. (I.B.) No. 374/9/NCLT/AHM/2018

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

The present petition has been preferred by the Operational Creditor, Jayhind Steel Traders 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, Saturn Pre Fab India Private Limited.

The Petitioner Operational Creditor is a registered company under the provisions of Companies Act, 1956, with a Company Identification Number (CIN) - 77700007122. The registered office of the Petitioner is situated at 2, Stadium House, Opp. Municipal Swimming Pool, Nr. Stadium Six Road, Navrangpura, Ahmedabad-380009. The present Petition is filed through Authorised Person Shri K.G Sukhwani having address: C-134, Sunrise Park, Drive-in-Area, Ahmedabad-380054.

The Respondent Corporate Debtor, namely M/s Saturn Pre Fab India Private Limited was incorporated on 19.07.2010 with CIN: 23959 ROC Gwalior. The authorised capital of the company is INR.80,00,000.00 (Rupees Eighty Lakhs Only) and the paid-up capital is INR.80,00,000.00 (Rupees Eighty Lakhs Only). The registered office of the Corporate Debtor Company is situated at: 727,728 Sector-3, Industrial Area, Pithampur, District Dhar, Madhya Pradesh-454774.

The present petition has been preferred by the Operational Creditor, Jayhind Steel Traders 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, Saturn Pre Fab India Private Limited. It is submitted by the Petitioner that the Respondent/Corporate Debtor is indebted to the Petitioner for INR.1,81,61,422.00 (Rupees One Crore Eighty One Lakhs Sixty One Thousand Four Hundred Twenty Two Only) along with interest @ 24% per annum pending payment. That the Operational Creditor is a Registered Partnership Firm and is having its registered office at Ahmedabad, Gujarat. It is engaged in the business of dealing in Angle, Channel, TMT, GP/CR/GC Sheets. It is further submitted that the Respondent Company had approached the applicant for the purchase of MS plate of various sizes, TMT Bars of various sizes, Binding Wire, MS Angle, MS Channel, MS Beam etc. After being satisfied with the quality of material offered by applicant, the respondent Company Started purchasing MS Plate of various sizes, TMT Bars of various sizes, Binding Wire, MS Angle, MS Channel, MS Beam etc. From time between the duration of April 2016 to March 2018. It is noted that the Respondent Company has not raised any dispute to quality of MS Plate of various sizes, TMT Bars of various sizes, Binding wire, MS Angle, MS Channel, MS Beam etc. Supplied by the Applicant. On the contrary, between the duration of April 2016 to March 2018, the Respondent Company has procured MS Plate of various sizes from the Petitioner of a Considerable Amount.

In this regard various invoices/bills were raised by the Operational Creditor in proportion to the work carried on by the Operational Creditor and the same were duly accepted by the Corporate Debtor.

It is 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.1,81,61,422.00 (Rupees One Crore Eighty One Lakhs Sixty One Thousands Four Hundred Twenty Two Only) which is due and defaulted and payable by the Corporate Debtor. Date on which the first Default occurred is 30.11.2016

It is submitted that the Form No.3 demand notice was issued by the operational creditor on 13.06.2018 under the provisions of Insolvency and Bankruptcy Code, 2016 calling upon the Respondent Company to pay an aggregate Amount of INR.1,56,25,154.00 (Rupees One Crore Fifty Six Lakhs Twenty Five Thousand One Hundred and Fifty Four Only) from the date of receipt of the demand notice and till the actual payment or realization within 10 days of the receipt of the notice. The said notice was served upon the Respondent Company on 20.06.2018.

It is submitted that the Operational Creditor used to maintain a running account for the goods supplied to the Respondent Company from time to time. It is submitted that for the supplies made between the duration of April 2016 to March 2018 the Respondent Company has released payment of INR.94,07,629.00 (Rupees Ninety Four Lakhs Seven Thousand Six Hundred and Twenty Nine Only). The fact that part payment was released fortifies the case of the applicant that the dues are admitted one and there is no dispute with respect to the same. Despite there being a part payment, Principal amount of INR.1,56,25,154.00 (Rupees One Crore Fifty Six Lakhs Twenty Five Thousand One Hundred and Fifty four Only) admittedly outstanding and payable. Furthermore, there was a specific clause in each invoices whereby the Applicant Company was entitled to Claim interest in case of delay in payment of invoice beyond the due date, at the rates mentioned in the respective invoices and since there is a gross and admitted delay in making payment of each invoices, interest amount of INR.25,36,268.00 (Rupees Twenty Five Lakhs Thirty Six Thousand Two Hundred Sixty Eight Only) on delayed payment of invoices is due and payable as on 10.07.2018.

It is further submitted that even after last part payment, a principal amount of INR.1,56,25,154.00 (Rupees One Crore Fifty Six Lakhs Twenty Five Thousand One Hundred and Fifty Four Only) and interest thereon to the tune of INR.25,36,268.00 (Rupees Twenty Five Lakhs Thirty Six Thousand Two Hundred Sixty Eight Only) admittedly remains outstanding and payable by the Respondent Company. Therefore, total outstanding amount comes to INR.1,81,61,422.00 (Rupees One Crore Eighty One Lakhs Sixty One Thousand Four Hundred Twenty Two Only) which includes Principal plus interest amount. It is submitted that through E-mails, the Applicant has reminded the Respondent Company to Release the above mentioned admitted and undisputed dues. However, despite repeated request, reminders and personal follow up by the Applicant, the Respondent Company has failed to release the outstanding payments.

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 Company that the Applicant Operational Creditor being a Partnership firm, has no locus to file this present application. That a partnership firm does not have any legal status and the present application has been filed in the name of partnership firm and not in the name of the Partners.

It is submitted that the Applicant in the application under Part-II, wherein the particulars of the Corporate Debtor are to be provided is incomplete and incorrect, as the Identification Number of the Corporate Debtor is mentioned as 23959 ROC Gwalior, however, the CIN No. of the Corporate Debtor is 23959 ROC Gwalior. Further it is submitted that the Operational Creditor has submitted in the Part IV of the Application that the details of the transaction are as per the Annexure-1. However, there is no such Annexure-1 attached to the Application submitted by the Operational Creditor.

It is submitted that the Respondent Company along with its associate sole proprietorship firm working in the name and style of M/s Saturn Fabricator (Formerly known as M/s Saturn India) is in the business relationship with the Operational Creditor since year 2016. The Respondent Company has placed several purchase orders for MS Plates, TMT Bars, Binding Wire, MS Angle etc. with the Operational Creditor. The Operational Creditor supplied the materials ordered to the plant and site of the Respondent and the Associate firm. The Operational Creditor raised the invoices in the name of the Respondent and the payment of the invoices which were duly acknowledged by the Respondent, was made by the account of the Respondent Company and also by the account of the Associate firm.

It is submitted that some of the invoices annexed and marked in the Application by the Operational Creditor are fabricated and sham, as the invoices are incomplete for the want of address and are unacknowledged. Also the delivery challans annexed by the Operational Creditor are also unacknowledged by the Respondent.

It is further submitted that the Respondent Company through the account of its Associate Firm has made substantial payment to the account of Operational Creditor through banking channel on various dates for the goods supplied by the Operational Creditor. However, to the utter shock of the Respondent, the Operational Creditor in the ledger account as annexed in its Application has suppressed material fact and has not given adjustment to the undisputed amount.

It is submitted that there is a pre-existing dispute in relation to the amount which is to be paid by the Respondent Company and also with respect to the quality of the goods supplied. The Respondent had several times discussed with the Operational Creditor regarding the discrepancy in the ledger account of the Respondent Company maintained by the Operational Creditor, the Test Certificates (TC), which were not matching and excise gate passes, which were not provided by the Operational Creditor were also informed to the Operational Creditor time and again.

It is further submitted that the said demand notice issued by the Operational Creditor was incomplete as it was without the annexure and the supporting documents on which the Operational Creditor has relied upon. In response to the said demand notice the Respondent through its reply dated 07.08.2018 has refuted the allegations and the contentions of the Operational Creditor and asked for the relevant documents which were referred by the Operational Creditor in its demand notice received by the Respondent Company was incomplete.

It is submitted that the Operational Creditor has not informed this Hon'ble Tribunal about the receipt of the payment of an amount of INR.23,31,647.00 by M/s Bhagwati Constructions, which was given on behalf of the Respondent Company.

It is submitted that the present proceeding are fraudulent and there is no intention on the part of the Operational Creditor for resolution of Insolvency of the Respondent Company and the only intention is to extort money, create undue pressure by fraudulently initiating the present proceeding while filing of present Application several facts have been concealed by the Operational Creditor which were to be brought before this Hon'ble Tribunal.

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

It is submitted that the particulars of Corporate Debtor as provided in the Company master data are provided in Part-II, however, complete identification number of the Corporate Debtor has been provided by the Corporate Debtor therefore, there is no point that, incomplete particulars of the Corporate Debtor are Provided.

It is submitted that the all copies of Invoices cum delivery challans are provided at Annexure-1C (Page No.30 to 136 of the Paper book), therefore, there is no point that Annexure-1 is not provided, a statement of Bank Account where the credit receipts from Operational Creditor was left in advertently.

It is submitted that Saturn Infra purchased the material on 22.06.2017 and 23.06.2017 for which six tax invoices for INR.14,90,678.00 were raised.

It is submitted that the Dy. Chief Engineer(C) I & PIO, Pratapnagar, Vadodara awarded Tender No.DY/CE/C/I/BRC/CTD-Dhar-67&71, DY.CE/C/I/BRC/WS/03, DY.CE/C/I/BRC/450 to Corporate Debtor and as per the directions of the Corporate Debtor the Operational Creditor has delivered the steel material at various sites of Western Railway where Corporate Debtor has submitted the purchase bills of steels materials from the Applicant and obtained the Payment from Western Railway but not paid to the Applicant. A copy of letter No. BRC/G/542/1 Vol. VI dated 20.02.2019 received from Dy. Chief Engineer (C) I & PIO, Pratapnagar, Vadodara.

It is submitted that the Applicant preferred the application under RTI on 09.01.2019 however, the information has not provided. It is further submitted that the Respondent Company has deliberately not provided all the copies of invoices and mislead the Hon'ble Tribunal. It is submitted that the Applicant has filed the Central Sales Tax and GST for the month of February, March & April-2017 and GST for the month of July, August & October-2018 and Madhya Pradesh Sales Tax-2017 respectively. It is submitted that books of Accounts of the Applicant Company regularly audited and tax audit report for the financial year 2016-2017 & 2017-2018.

It is submitted that M/s Bhagwati Constructions has not paid any amount on behalf of the Corporate Debtor. It is submitted that Bhagwati Constructions had allotted the work of Tender No. DY.CE/C/I/.ADI/DSL-SBI/CTD-Dhar/01 to Corporate Debtor on back to back basis and since the Corporate Debtor was unable to purchase TMT bars, therefore, M/s. Bhagwati Constructions purchased TMT bars from Applicant on behalf of the Corporate Debtor and accordingly the payment of INR.23,34,617.00 was paid by Bhagwati Constructions to the applicant which has nothing to do with the supplies made by applicant to the Corporate Debtor.

In light of the above mentioned facts and circumstance the Applicant's Prayer before this Adjudicating Authority is to Cause public announcement of 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 admitted and be pleased to pass any further order in the interest of justice.

Now, the Petition is filed on 11.07.2019 under the Section 9 of the Insolvency and Bankruptcy Code, 2016 for the unpaid Operational Debt due of INR.1,81,61,422.00

The case was taken up by this Adjudicating Authority on 10.08.2018 on the request of the Petitioner's Counsel. The matter was heard on 18.09.2018, 2.11.2018, 13.12.2018, 30.01.2019, 13.03.2019, 03.05.2019, 09.07.2019, 21.08.2019, 13.09.2019, 21.10.2019, 08.11.2019. Arguments of the counsels of the Operational Creditor and Respondent were heard.

The matter was finally heard on 08.11.2019.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.

16.

The Application has been filed on 08.11.2019 for operational debt due and defaulted of INR.1,81,61,422.00 (Rupees One Crore Eighty One Lakhs Sixty One Thousand Four Hundred Twenty Two Only) as per the respective Invoices enclosed. 16.2 Date of invoice is between April 2016 to March 2018. 16.3 Date of first default is 30/11/2016. 16.4 Application is filed within the limitation period as the date of default is 30/11/2016 and the date of filing this petition under Section 9 of IBC is 11/07/2018. 16.5 No pre-existing dispute before the filing of this application is observed.

Considering the material, papers filed by the Petitioner on record and the facts mentioned in the Para No. 16, 16.1, 16.2, 16.3, 16.4 & 16.5 this Adjudicating Authority is satisfied that,

Hence, the present IB petition is admitted on 13.03.2020 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 Indore Bench (Madhya Pradesh) at 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 Shri Gopal Krishana Saraswat having Insolvency Professional Registration Number IBBI/IPA-001/IP- P00620/2017-2018/11076 having e-mail id [email protected] Address, 387F 114 Scheme Part 1 Behind Diksha Girls Hostel, Sant Nagar, Lasudia Mori, Dewas Naka, Indore, Madhya Pradesh, 452010.

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 personnels 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.374/9/NCLT/AHM/2018 is admitted on 13.03.2020 with the above Observations and Directions.