Kapishvar Silicates Pvt Ltd vs VXL Instruments Limited

This Company Petition is filed on 19/07/2024 by Kapishvar Silicates Pvt. Ltd. (hereinafter referred as “the Petitioner/Financial Creditor”) seeking to initiate Corporate Insolvency Resolution Process (hereinafter referred as “CIRP”) against VXL Instruments Ltd. (hereinafter called “Corporate Debtor”) by invoking the provisions of Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter called “the Code”) read with Rule 6 of Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for committing default in payment of a Financial Debt of Rs. 1,48,07,666/- and the date on which the default occured is 16.07.2024.

The brief facts of the case are that the at the request of VXL Instruments Limited (Respondent / Corporate Debtor), Kapishvar Silicates Private Limited (Petitioner / Financial Creditor) had agreed to place an inter-corporate deposit for a sum up to Rs.1,50,00,000/- carrying interest 15% per annum compounded with monthly rest, payable at monthly interest starting from 30 April 2024. Accordingly, Inter-Corporate Deposit Agreement dated 03 April 2024 was executed between the Petitioner / Financial Creditor and Respondent / Corporate Debtor. In view of the above mentioned Inter-Corporate Deposit Agreement dated 03 April 2024, the Petitioner / Financial Creditor had disbursed amount of Rs.1,45,00,000/- to the Respondent / Corporate Debtor.

The Petitioner / Financial Creditor had sent a letter dated 28 May 2024 to the Corporate Debtor recalling the interest due on 05 May 2024 for the month of April 2024 amounting to Rs.1,72,131/-. Since as on 18 May 2024, the interest was not paid by the Respondent / Corporate Debtor and hence requested the Respondent / Corporate Debtor to pay the overdue interest amounting to Rs.1,72,131/- within 5 days from the receipt of the letter.

The Petitioner / Financial Creditor has received a reply dated 05 June 2024 from the Respondent / Corporate Debtor acknowledging the facts that an interest amounting to Rs.1,72,131/- for the month of April 2024 was due on 05 May 2024. The Respondent / Corporate Debtor has stated in the reply that they are trying to pay the said interest however due to certain financial crisis it seems difficult to pay within the time period mentioned in the letter sent by the Petitioner / Financial Creditor i.e. within 5 days from the receipt of letter and hence the Respondent / Corporate Debtor has requested for time till 15 June 2024 for paying the said interest amount. However, no payment has been received from the Respondent / Corporate Debtor as on the date of filing the present petition. The Corporate Debtor never disputed its liability in respect of the said Interest and hence as per the Clause 5(a) of Inter-Corporate Deposit Agreement dated 03 April 2024, the entire loan amount along with interest for the entire period shall immediately become due and payable.

It is the case of the Corporate debtor that since it was experiencing financial difficulties therefore it approached the Financial Creditor and consequently a loan of Rs. 1.45 crores with interest @ 15% p.a. was granted to it by the Financial Creditor.

The Corporate Debtor clearly and expressly admitted that due to unavoidable circumstances, it was unable to repay the outstanding amount towards the loan however it had always been its intention to repay the loan. The Corporate Debtor resultantly sought more time from this Hon’ble Tribunal for repayment of the same.

After having heard both the Counsels for the parties and having gone through the documents placed on record, we deem it appropriate to take note of order dated 14.10.2024 which is as follows: -

The default amount is stated to be Rs. 1.48 Cr. The date of default is 16.07.2024. The disbursement table has been annexed at page 13. The Inter-Corporate Deposit Agreement is stated to be dated 03.04.2024. The relevant clauses are being reproduced hereunder: -

On 28.05.2024, the Financial Creditor issued notice for the payment of the due interest wherein it was stated as under: -

It is submitted that the Respondent has failed to discharge the liability and did not make any payment towards the due interest. On 05.06.2024, the Respondent responded as under: -

Presently also in the reply filed before this Hon’ble Court, the Respondents have admitted their liability of payment and have only submitted that because of experiencing financial difficulties, they have not been able to make the due payment.

This Hon’ble Tribunal further relies on the judgement of Innoventive Industries Limited v. ICICI Bank and Another and E.S. Krishnamurthy & Ors. vs. Bharath Hi-Tech Builders Pvt. Ltd. (2022) 3 SCC 161 in which the Hon’ble Supreme Court held that the moment the adjudicating authority is satisfied that there is a debt and a default has occurred, the Section 7 application must be admitted unless it is incomplete.

In view of the facts, submissions and deliberations of both the parties, we deem it appropriate to admit the CIRP against the Corporate Debtor.

a. In view of the aforesaid findings, the above Company Petition No. 570/IBC/MB/2024 is hereby admitted and thereby initiation of Corporate Insolvency Resolution Process (CIRP) is ordered against VXL Instruments Limited.

b. The Financial Creditor has suggested the name of IRP to perform the duties of the Interim Resolution Professional (IRP) in the petition. This Bench hereby appoints Mr. Jayanti Lal Jain having Registration No. IBBI/IPA-001/IP-P-01792/2019-2020/12845 having Email Id [email protected] is appointed as the Interim Resolution Professional.

c. The Financial Creditor shall deposit an amount of Rs. 2 Lakhs towards the initial CIRP costs by way of a Demand Draft drawn in favour of the Interim Resolution Professional appointed herein, immediately upon communication of this Order.

d. That this Bench hereby prohibits the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the Corporate Debtor.

e. That the supply of essential goods or services to the Corporate Debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period.

f. That the provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.

g. That the order of moratorium shall have effect from the date of pronouncement of this order till the completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of section 31 or passes an order for liquidation of corporate debtor under section 33, as the case may be.

h. That the public announcement of the corporate insolvency resolution process shall be made immediately as specified under section 13 of the Code.

j. Registry shall send a copy of this order to the Registrar of Companies, Mumbai for updating the Master Data of the Corporate Debtor.

k. Registry to intimate the IRP about his appointment as IRP of the Corporate Debtor within 3 days.

l. Accordingly, CP 570 of 2024 is admitted.