Khaitan Rice Mill Private Limited vs Radhashyam Industries Private Limited

The Operational Creditor is engaged in the business of trading and supplying of the Rice Brans. The Corporate Debtor in its usual course of business approached the Operational Creditor for purchasing 1054.76 quintals of Rice Brans, which was to be supplied in the month of November and December, 2018 at Rs.1700/quintals.

Thereafter, as agreed between the parties, the Operational Creditor supplied the Rice Brans to the Corporate Debtor at their depot at Galsi, against which several invoices dated 15 November, 2018, 16 November, 2018, 23 November, 2018, 29 November, 2018, 30 November, 2018, 05 December, 2018 and 06 December, 2018 were raised by the Operational Creditor.^{22.Annexure – D of the Petition.} The invoices were duly received by the Corporate Debtor without any objection.

However, on failure of the Corporate Debtor to clear the invoices several reminders were sent by the Operational Creditor to the Corporate Debtor. To such reminders the Corporate Debtor duly assured to the Operational Creditor that it shall make payments of the outstanding sum. Inspite of several reminders and assurances the outstanding stood due and payable.

Thereafter, a statutory notice dated 04 March, 2019 under section 8 of the Code was sent by the Operational Creditor and the same was received by the Corporate Debtor.

The parties had also entered in a separate agreement for supply of 250 quintals of ‘Mota’ Rice Brans of lower quality at Rs.900/quintals. However, said transaction is not the subject matter of the instant application.

In pursuance of the statutory notice dated 04 March, 2019, the Corporate Debtor replied to the Operational Creditor vide reply notice dated 27 March, 2019. However, no such reply was brought on record with respect to the said notice by the Operational Creditor.

As per the terms of negotiations and understandings between the parties the price of all materials was agreed to be Rs.9000/- per metric ton but from time to time the materials were also delivered at an agreed cost of Rs.7000/- per metric ton. The Corporate Debtor every so often would make payments against the invoices raised by the Operational Creditor. It was on 31 March, 2018 the entire amount was settled between the parties.

Further, the price of Rice Bran depends on the oil contained therein. The oil contained in the Rice Bran varies from 6% to 30%. From the demand of Rs.25,77,322/- on account of eleven disputed invoices by the Operational Creditor, it appears that they have claimed Rs.17000/- per metric ton. If taken into the agreed consideration of Rs.9000/- per metric ton against the eleven disputed invoices then the aggregate sum would be Rs.9,96,748/-

Whenever the Corporate Debtor received the Rice Bran they got it tested and also informed the Operational Creditor about the oil content of the material supplied and the Operational Creditor had duly acknowledged and confirmed the oil content.

The directors of the Operational Creditor also own a Company in the name of ‘Jay Baba Bakreswar Rice Mills Private Limited’. The Corporate Debtor used to purchase Rice Ban from the Operational Creditor and from Jay Baba Bakreswar Rice Mills Private Limited on the same agreed terms and conditions and payments were made by the Corporate Debtor in their separate accounts.

During the conciliation between the parties it was noticed that a sum of Rs.22,76,950/- was paid in excess to the Operational Creditor, which the Operation Creditor was supposed to return to the Corporate Debtor. However, after some family dispute, the operational Creditor raised eleven disputed invoices with incorrect and higher calculation at Rs.17000/- per metric ton. After conciliation, a sum of Rs,6,09,299/- is only due and payable to the Operational Creditor.

After making a detailed enquiry with the accounts department, following facts were revealed;

During the period 01 April, 2018 till 27 March, 2019 the Operational Creditor raised forty-six invoices.

From the records it appears that till 14 November, 2018 the Operational Creditor raised invoices at the rate of Rs.9000/- per metric ton or Rs.7000/- per metric ton. On and from 15 November, 2018 the Operational Creditor had wrongfully raised invoices at the rate of Rs.17000/- per metric ton.

As per the test reposts it is evident that the eleven disputed invoices were raised at an inflated rate. However, after reconciliation, the forty-six invoices raised between 01 April, 2018 to 06 December, 2018 would come to a sum of Rs.40,62,119/- out of which the Corporate Debtor has already paid an amount of Rs.34,52,820/- and a sum of Rs,6,09,299/- is only due and payable to the Operational Creditor

The Corporate Debtor in a desperate attempt to wriggle out of its obligation has made a case with respect to the said eleven invoices. On and from December, 2019, the representative of the Operational Creditor had been following up with the representative of the Corporate Debtor for the disbursement of the outstanding dues.

Because of the existing family disputes the Corporate Debtor refused to disburse the outstanding dues to the Operational Creditor. Further, no disputes were even raised by the Corporate Debtor with respect to the quality of the goods.

The application bearing CP (IB) No. 505/KB/2019 filed by Khaitan Rice Mill Private limited, the Operational Creditor, under section 9 of the Code read with rule 6(1) of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiating CIRP against Radhashyam Industries Mills Private Limited, the Corporate Debtor, is admitted.

There shall be a moratorium under section 14 of the IBC.

The moratorium shall have effect from the date of this order till the completion of the CIRP or until this Adjudicating Authority approves the resolution plan under sub-section (1) of section 31 of the IBC or passes an order for liquidation of Corporate Debtor under section 33 of the IBC, as the case may be.

Public announcement of the CIRP shall be made immediately as specified under section 13 of the Code read with regulation 6 of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

Ms. Priyanka Ajitsaria, registration number IBBI/IPA-001/IP-P-02360/2021-2022/13858, email: [email protected], is hereby appointed as Interim Resolution Professional (IRP) of the Corporate Debtor to carry out the functions as per the Code subject to submission of a valid Authorisation of Assignment in terms of regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professional) Regulations, 2016. The fee payable to IRP or the RP, as the case may be, shall be compliant with such Regulations, Circulars and Directions as may be issued by the Insolvency & Bankruptcy Board of India (IBBI). The IRP shall carry out his functions as contemplated by sections 15, 17, 18, 19, 20 and 21 of the Code.

During the CIRP period, the management of the Corporate Debtor shall vest in the IRP or the RP, as the case may be, in terms of section 17 of the IBC. The officers and managers of the Corporate Debtor shall provide all documents in their possession and furnish every information in their knowledge to the IRP within one week from the date of receipt of this Order, in default of which coercive steps will follow.

The IRP/RP shall submit to this Adjudicating Authority periodical reports with regard to the progress of the CIRP in respect of the Corporate Debtor.

The Operational Creditor shall deposit a sum of Rs.3,00,000/- (Rupees Three Lakh only) with the IRP to meet the expenses arising out of issuing public notice and inviting claims. These expenses are subject to approval by the Committee of Creditors (CoC).

In terms of section 7(5)(a) of the Code, Court Officer of this Court is hereby directed to communicate this Order to the Operational Creditor, the Corporate Debtor and the IRP by Speed Post and email immediately, and in any case, not later than two days from the date of this Order.

Additionally, the Operational Creditor shall serve a copy of this Order on the IRP and on the Registrar of Companies, West Bengal, Kolkata by all available means for updating the Master Data of the Corporate Debtor. The said Registrar of Companies shall send a compliance report in this regard to the Registry of this Court within seven days from the date of receipt of a copy of this order.