Kishor Ramniklal Unadkat vs M/s. Sanwaria Consumer Limited

Part-IV

Particulars of Operational Debt

1 That at the outset, the replying Respondent is filing this reply and denies all the averments of the Insolvency Petition completely unless specifically admitted herein under 2 That the replying Respondent craves leave of this Hon'ble Tribunal to file any additional affidavit or documents during the proceeding of the said Petition.

PRELIMINARY SUBMISSIONS:

3.

That the Respondent Company i.e. SANWARIA CONSUMERS LIMITED was incorporated under erstwhile Companies Act 1956 and got registered with the Registrar of Gwalior, Madhya Pradesh on 22.04.1991, having its registered office at Office Hall No. 1, First Floor, Metro Walk, Bittan Market, Bhopal, MP 462 016. A copy of the Master Data of the Corporate Debtor obtained from website of the Ministry of Corporate Affairs is annexed and marked as Annexure: R-1.

4.

That the present reply is being filed by the Respondent through Mr. Anil Vishwakarma who is authorized by the Respondent through Board Resolution passed in the Board meeting of the Respondent Company and who is fully competent to file the present reply. Copy of Board Resolution of the Corporate Debtor is annexed herewith and marked as Annexure: R-2.

5.

It is respectfully submitted that it is admitted fact that the Respondent has availed the services from the Applicant/Petitioner since, 2009 and was making payment for the said services to the Applicant/Petitioner.

6.

That the Respondent Company has started facing financial crunches in the year, 2019 due to adverse financial market condition in India and stopped making the payment of the invoices raised by the Applicant/Petitioner for the period from March, 2019 onwards.

7.

That the Respondent is willing to make the payment of the outstanding amount as claimed by the Applicant/Petitioner once the financial position of the Respondent Company gets stabled more specifically from the next financial year i.e. (1^{\text{st}}) April 2020 in 15 monthly instalments.

8.

In view of the above submissions, Respondent respectfully prays that the application of the Applicant be dismissed on the above facts and circumstances as the Respondent is willing to make the payment and a law abiding citizen of India.

1.

That the present Petition has been filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016 to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor.

2.

That the Operational Creditor and the Corporate Debtor are in business terms since 2009. Under the said business relationship, the Operational Creditor was required to provide services of Clearing & Forwarding Agent to Corporate Debtor. The registered office of the Corporate Debtor is at E-1/1, Arera Colony, Bhopal, Madhya Pradesh-462 016.

3.

That the Operational Creditor used to raise invoices and debit notes for the services and Corporate Debtor was making payment of the same. However, the said payment was not made on the invoice to invoice basis but on the running account basis. It is submitted that the Operational Creditor has raised invoices for the services directly provided by it [Invoices and Debit Notes-Page 30 to 191 of Petition Volume 1]. On the other hand, the Operational Creditor has raised debit notes for the services provided to Corporate Debtor via third party. The Operational Creditor has filed an affidavit in compliance of order dated 21.11.2019 of this Hon'ble Tribunal wherein it has segregated such debit notes already filed with the Main Petition [Copies of Debit Notes along with supporting documents – Page 4-58 of the Affidavit filed in compliance of order dated 21.11.2019.

4.

That no payment has been received by the Operational Creditor from the Corporate Debtor after March 2019. Presently, an amount of Rs.1,53,31,016.00 (Rupees One Crore Fifty Three Lakhs Thirty One Thousand Sixteen Only) is due against the corporate debtor. [Ledger of Corporate Debtor in the books of Operational Creditor-Page 192 to 195 of the Petition Volume 1] [Bank Statements of the Operational Creditor-Page 204-305 of the Main Petition Volume 2].

5.

That being aggrieved by the non-payment of the Corporate Debtor, the Operational Creditor sent a demand Notice dated 16.09.2019 which was duly received by the Corporate Debtor; [Copy of the demand Notice issued by the Operational Creditor along with Speed Post Receipt dated 17.09.2018-Page 196-201 of the Main Petition Volume 1; tracking report showing delivery confirmation –Page 202 of the Main Petition Volume 1].

6 That the Corporate Debtor did not reply to the Demand Notice sent by the Operational Creditor within 10 days. That, thereafter, the Operational Creditor filed the present Petition before this Hon'ble Tribunal.

7 That it is humbly submitted that the Corporate Debtor vide its reply has admitted the debt and did not raise any dispute regarding the same. Further the Corporate Debtor while admitting the debt has blamed the adverse market condition for its inability to repay the debt due to Operational Creditor. [Para 5 & 6-Page 2 of the Reply of the Corporate Debtor]. Further the Corporate Debtor in his reply has requested for time to repay the Debt [Para 7-Page 3 of the Reply of the Corporate Debtor]. It is pertinent to note that the said reply has been filed by the Chief Financial Officer of the Corporate Debtor [Board Resolution of the Corporate Debtor-Pate 8 of the Reply of the Corporate Debtor].

8.

Therefore, in view of unequivocal admission of debt by the Corporate Debtor and admitted liability to pay the same, it is humbly prayed that the Petition filed by the Operational Creditor be allowed.

9. Initiation of Corporate Insolvency Resolution Process by Operational Creditor.

9.

(1) After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment under sub-section (1) of section 8, if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under sub-section (2) of section 8, the operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process.

(2)

The application under sub-section (1) shall be filed in such form and manner and accompanied with such fee as may be prescribed.

(3)

The operational creditor shall, along with the application furnish—

(a)

a copy of the invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor;

(b)

an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt;

(c)

a copy of the certificate from the financial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt 1[by the corporate debtor, if available;]

2[(d) a copy of any record with information utility confirming that there is no payment of an unpaid operational debt by the corporate debtor, if available; and

(e)

any other proof confirming that there is no payment of any unpaid operational debt by the corporate debtor or such other information, as may be prescribed.]

(4)

An operational creditor initiating a corporate insolvency resolution process under this section, may propose a resolution professional to act as an interim resolution professional.

(5)

The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), by an order—

(i)

admit the application and communicate such decision to the operational creditor and the corporate debtor if,—

(a)

the application made under sub-section (2) is complete;

(b)

there is no 3[payment] of the unpaid operational debt;

(c)

the invoice or notice for payment to the corporate debtor has been delivered by the operational creditor;

(d)

no notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility; and

(e)

there is no disciplinary proceeding pending against any resolution professional proposed under sub-section (4), if any.

(ii)

reject the application and communicate such decision to the operational creditor and the corporate debtor, if—

(a)

the application made under sub-section (2) is incomplete;

(b)

there has been 4[payment] of the unpaid operational debt;

(c)

the creditor has not delivered the invoice or notice for payment to the corporate debtor;

(d)

notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility; or

(e)

any disciplinary proceeding is pending against any proposed resolution professional: Provided that Adjudicating Authority, shall before rejecting an application under sub-clause (a) of clause (ii) give a notice to the applicant to rectify the defect in his application within seven days of the date of receipt of such notice from the adjudicating Authority.

(6)

The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5) of this section.

"27.

The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins. Default is defined in Section 3(12) in very wide terms as meaning non-payment of a debt once it becomes due and payable, which includes non-payment of even part thereof or an instalment amount. For the meaning of "debt", we have to go to Section 3(11), which in turn tells us that a debt means a liability of obligation in respect of a "claim" and for the meaning of "claim", we have to go back to Section 3(6) which defines "claim" to mean a right to payment even if it is disputed. The Code gets triggered the moment default is of rupees one lakh or more (Section 4). The corporate insolvency resolution process may be triggered by the corporate debtor itself or a financial creditor or operational creditor. A distinction is made by the Code between debts owed to financial creditors and operational creditors. A financial creditor has been defined under Section 5(7) as a person to whom a financial debt is owed and a financial debt is defined in Section 5(8) to mean a debt which is disbursed against consideration for the time value of money. As opposed to this, an operational creditor means a person to whom an operational debt is owed and an operational debt under Section 5 (21) means a claim in respect of provision of goods or services.

28.

When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor – it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under subsection (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in part III, particulars of the financial debt in part IV and documents, records and evidence of default in part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. This it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the "debt", which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under subsection (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be"