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Judgment
Per Dr. V. K. Subburaj (Member Technical)
This is an application filed by M/s Jitendra Impex Pvt. Ltd. ("the Applicant") seeking to initiate corporate insolvency resolution process ("CIRP") u/s 9 of the Insolvency and Bankruptcy Code 2016 ("the Code") of M/s Compack Enterprises Pvt. Ltd. ("the Respondent"), for the alleged default on the part of the Respondent in settling an amount of Rs. 1,81,45,943/- including the interest component towards the supply of paper and paper board effected by the Applicant. The facts leading to the filling of this application as averred by the Applicant are as follows:
The Applicant is a company incorporated and registered under the provision of the Companies Act, 1956 and deals in the wholesale trading/distributorship of paper and paper board for various paper mills such as Khanna Paper Mills Ltd, Century Textiles & Industries Ltd., Sidharth Paper Ltd., etc. around Delhi and Northern India.
The Applicant has been dealing with the Respondent for many years on regular basis and has been supplying paper and paper board to the Respondent based on written/verbal orders received from the Respondent from time to time.
The Applicant, as a matter of trust, was supplying goods to the Respondent and a running account was maintained in respect of business dealings with the Respondent, against which random payments had been made by the Respondent from time to time. The amounts thus randomly paid by the Respondent, were settled against the outstanding invoices by the Applicant as per first-in-first-out (“FIFO”) rule. It is also relevant to state that there has been no dispute with respect to any of the supplies made by the Applicant and the same were duly received by the Respondent without any protest and demur.
Till November, 2017, the Respondent was making random intermittent payments, which were sufficiently setting off the total outstanding invoice amounts as per FIFO rule. However, starting from mid-November, the Respondent started making miniscule, irregular and disproportionate payments to the Applicant against total outstanding invoice amounts.
In financial year 2017-18, the Applicant had made total sale of Rs. 7,89,06,382/- to the Respondent and after factoring in all the payments received from the Respondent, the total outstanding amount of Applicant as on 01.04.2018 was Rs. 2,39,80,892/- which is reflected in the statement of accounts of the Respondent maintained by the Applicant for the financial year 2017-18.
It is significant to mention that the Respondent sent an e-mail confirmation on 17.05.2018 of total outstanding amount as on 30.04.2018 of Rs. 2,34,10,945/- to the Applicant.
During the period from 01.04.2018 till 28.12.2018 the Applicant had made a total sale of Rs. 2,03,52,062/- to the Respondent.
As on 11.01.2019 the Respondent had paid Rs. 2,61,87,011/- leaving a balance outstanding amount of Rs. 1,81,45,943/. Hence, the total outstanding amount up till 11.01.2019 was Rs. 1,81,45,943/-.
The total payment received in the said PNB account from 01.04.2018 to till date is Rs. 1,54,78,792/-. Further, a total of Rs. 1,05,02,400/- was received in the Kotak account, however the same was not received from the account of the Respondent directly but through some other party. Hence the same is not reflected in the Bank Certificate provided by Kotak but the Applicant accepts receipt of the same.
The payments under the respective invoices hereinabove became due on the date of expiry of thirty (30) days from the date of the respective invoice and was supposed to be cleared immediately on such date.
Despite several requests made by the Applicant to make payment of the said unpaid operational debt, the Respondent has miserably failed to make any payment.
The statutory notice dated 28.12.2018 was sent by the Applicant which was duly received by the Respondent through e-mail on 28.12.2018 and through registered post on 31.12.2018. The Respondent failed to pay the sum within the prescribed period of 10 days from the service of notice via.
It is also submitted that the Respondent upon receiving the statutory notice from the Applicant, has responded by way of reply dated 11.01.2019 claiming to have received the statutory note on 01.01.2019. It is pertinent to mention that no pre-existing dispute has been highlighted or pointed out by the Respondent in its reply. It is submitted that there was no agreement between the Applicant and the Respondent where the Applicant has allegedly agreed to grant the Respondent any special quantity discount much less the one allegedly claimed by the Respondent in its reply.
The Respondent has filed the reply on 15.02.2019 in which the following contentions are made:
The Applicant has been manipulating the bills as well as the accounts statement with the intention to show the alleged outstanding amount against the Respondent. In this regard, reference is made to letter dated 13.09.2018 wherein the Applicant mentioned 166 bills amounting to Rs. 3,52,07,252.62/- and requested the Respondent to issue certificate that the Respondent has neither purchased these goods nor claimed CENVAT of Rs.19,63,390.19/- against these 166 bills. On enquiry the Applicant admitted that these 166 bills of Khanna Paper Mills Ltd. were raised at the request of the Applicant and without the knowledge of the Respondent. The Respondent objected to the same but the Applicant informed that in future this would not be repeated. Thereafter the Respondent vide letter dated 14.09.2018 replied to the said letter dated 13.09.2018.
In order to show alleged outstanding against the Respondent, the Applicant has not filed their statement of accounts from the financial year 2013-14, 2014-15, 2015-16 and 2016-17 but has only filed alleged statement of accounts for the year 2017-18 and 2018-19, had the applicant filed statement of accounts starting from the F.Y. 2013-14, the same would disentitle the Applicant to maintain the present application.
The Applicant completely concealed the fact that the Applicant also issued credit notes in the financial years 2013-14, 2014-15, 2015-16, 2016-17 and 2017-18 to the Respondent towards special quantity discount on the basis of letters dated 28.12.2013 and 16.04.2016. Therefore, it does not lie in the mouth of the Applicant to say that there is no agreement between the Applicant and the Respondent where the Applicant agreed to grant the Respondent special quantity discount.
The Applicant though issued the aforesaid credit notes to the Respondents but failed to issue credit notes amounting to Rs. 6,06,989.50/- for the period 01.04.2018 to 30.06.2018 and Rs. 5,83,685/- for the period 01.07.2018 to 30.09.2018 towards special quantity discount. Therefore, the Respondent issued two debit notes no. COM/DN/126 dated 20.07.2018 for Rs. 6,06,989/- and COM/DN/227 dated 15.10.2018 for Rs. 5,83,685/- towards the same but the Applicant did not reflect the same in their alleged statement of account for the period 2018-19.
The Applicant has deliberately and intentionally not reflected in their alleged statement of accounts two invoices no. 559 dated 04.09.2018 for Rs. 59,476/- and 560 dated 04.09.2018 for Rs. 21,250/- towards rejected material which was returned to the Applicant by the Respondent.
The alleged bill nos. 5480 dated 22.10.2018 for Rs. 2,25,957/- and 5506 dated 23.10.2018 for Rs. 48,902/- as reflected by the Applicant in the alleged statement of accounts were never received by the Respondent nor any goods were received by the Respondent against those alleged bills. The Respondent never placed any orders on the Applicant after 20.09.2018. The alleged two e-way bills in respect two alleged bills are forged and fabricated.
The Respondent stopped placing orders with the Applicant since the Applicant was charging higher rates, which the Applicant did not like and raked up false claims against the Respondent. Moreover, the Respondent has always made all due payments with respect to supplies received by the Respondent as per mutually agreed terms and there has never been any dispute whatsoever between the Applicant and the Respondent in the last five years. It is important to mention here that even on 28.12.2018, the Applicant received Rs. 10,00,000/- from the Respondent through cheque before issuance of legal notice dated 28.12.2018.
It is submitted that vide letter dated 02.08.2017, the Respondent requested the Applicant to confirm the balance amount due from the Respondent as on 31.03.2017, as was required by the Respondent’s auditor. In response to the same the Applicant vide letter dated 25.08.2017 informed M/s Serva Associates that the balance amount due from the Respondent is Rs. 72,71,010/-.
It is vehemently denied that an amount of Rs. 181,45,943/- is due and payable by the Respondent to the Applicant. Once the amount of Rs.1,81,45,943/- is not payable, the question of payment of interest does not and cannot arise. In fact, the Respondent is only to pay an amount of Rs. 22,56,833/- to the Applicant which the Respondent is ready and willing to pay any time.
The Applicant has filed a rejoinder to the reply submitted by the Respondent on 07.03.2019 in which he has raised the following points apart from reiterating the points raised in the application:
That the Respondent has fraudulently set up false and fabricated credit notes dated 31.03.2014 (Annexure R-6), 04.07.2015 (Annexure R-11), 05.10.2015 (Annexure R-12), 03.01.2016 (Annexure R-13), 31.03.2016 (Annexure R-14), 06.12.2017 (Annexure R-19), 07.12.2017 (Annexure R-20), 31.12.2017 (Annexure R-21) and 31.03.2018 (Annexure R-22) (in short the aforesaid credit notes are collectively referred to as “Forged Credit Notes”). The Forged Credit Notes were never issued by the Applicant and the same have been falsely created only to defeat the claim of the Applicant by misleading this Tribunal. The Forged Credit Notes do not bear the signature of the authorized signatory of the Applicant and are forged as well as are products of an afterthought which can be easily discerned from the fact that the Respondent by way of their reply to the demand notice issued by the Applicant under Section 8 of the Code did not annex the Forged Credit Notes which they were otherwise mandated to do under Section 8 (2) (b) of the Code.
The Respondent is guilty of tricking and misleading this Tribunal by placing on record a completely forged and fabricated statement of account which can be established by perusing them in contra distinction to the acknowledgements that they have been repeatedly sending to the Applicant. In this regard, the Applicant states and submits that by way of email dated 08.10.2016, the Respondent acknowledged the opening balance of Rs. 2,01,48,487/- at the commencement of Financial Year 2016-17, however, the opening balance for the Financial Year 2016-17 in the forged/alleged statement of account filed along with the reply reflects to be Rs. 1,09,20,895/-. Similarly vide acknowledgment email dated 17.05.2018, to the email dated 12.05.2018 of the Applicant, requesting for confirmation of the outstanding amount by attaching the ledger account for the period 01.04.2017 to 30.04.2018, the Respondent also acknowledged opening balance of Rs. 1,64,98,604/- at the commencement of financial year 2017-18 in the forged/alleged statement of account filed along with the reply reflects to be Rs.98,03,683/-.
Even otherwise, the Respondent has not denied in its reply to the notice as well as in the reply to the application, the factum of receipt of email dated 12.05.2018 vide which the Applicant had sought confirmation of the outstanding balance in the sum on Rs. 2,34,10,945/- along with account statement maintained by the Applicant. It is submitted that notwithstanding the receipt of the said email along with the account statement the Respondent has not disputed nor protested in any manner the contents of the email dated 12.05.2018 or the aforesaid account statement.
It is submitted that the present application is liable to admitted in view of the fact that the Respondent has admitted in their reply to the notice as well as in the reply to the Application, the existence of an operational debt in the sum of Rs. 22,56,833/- due and payable to the Applicant and has failed to pay the same in accordance with Section 8(2) of the Code, after receipt of the demand notice. It is therefore submitted that this Application may be admitted in as much as the time frame provided in the Code to pay the operational debt has since expired.
The Respondent made a categorical statement that only Rs. 22,56,833/- was due to be paid to the Applicant and he has also handed over the cheque to this Tribunal for the same, however, the Applicant has refused to accept the cheque and is pressing the application on basis of the original claim of Rs.1,81,45,943/-. The issue to be determined here is whether the actual amount claimed by the Applicant in the application is due and whether the Respondent has committed a default in payment of that amount.
After a perusal of the pleadings and the accounts filed by the parties it is concluded that both the parties have consistently approbated and reprobated throughout the proceedings. While the Applicant in its pleadings and in the accounts filed has shown that a balance of Rs. 1,64,98,604/- was due from the Respondent to the Applicant at the end of FY 2016-2017, the Applicant in a letter dated 25.08.2017 addressed to the accountants of the Respondent has stated that the balance receivable from the Respondent as on 31.03.2017 was Rs.72,71,010. The Respondent on the other hand, in the e-mail dated 17.05.2018 has admitted that as on 30.04.2018 the amount due from the Respondent to the Applicant was Rs.2,34,10,945/-, but the ledger filed by the Respondent shows that as on 30.04.2018 the balance payable by Respondent to the Applicant was Rs.92,33,736/-.The opportunity given by the Tribunal to the parties to reconcile their accounts has also not lead to any fruitful results.
The Applicant due to its inconsistent conduct has been unable to establish that the amount being claimed by it was owed by the Respondent and that the Respondent has defaulted in the payment of the claimed amount. Thus, this application is dismissed with no costs.