M M Iron & Steels vs ASPG Infrastructure Private Limited

ORDER

“M M IRON & STEELS” (Operational Creditor) is in the business of providing goods to ASPG Infrastructure Pvt. Ltd. (Corporate Debtor) and payments are made on the basis of invoices. The present Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'Code') read with Rule 6 (Application to Adjudicating Authority)_ of the Insolvency and Bankruptcy Rules, 2016, has been filed by the Operational Creditor for initiation of Corporate Insolvency Resolution Process against M/s ASPG Infrastructures Private Limited (hereinafter referred to as 'Corporate Debtor') for default in payment of the total outstanding debt Rs.3,16,57,141 (Rupees Three Crore Sixteen Lakhs Fifty Seven Thousand One Hundred Forty One Only) along with applicable interest. That as per the demand, requirement and specification of the Corporate debtor, the Operational Creditor had provided goods along with respective invoices to the Corporate debtor, at such addresses as provided by the Corporate Debtor and same were duly received by the Corporate Debtor. The Operational Creditor and the Corporate debtor had an open and running account for the transactions of goods supplied by the Operational Creditor to the Corporate debtor and as per the account books maintained by the Operational Creditor in its regular course of business, a consolidated amount of Rs. 3,16,57,141/- is outstanding against the Corporate Debtor towards the invoices issued for supply of goods to the Corporate Debtor along with applicable interest. Thereafter, Operational Creditor approached the Corporate Debtor on the above-mentioned addressees through various modes of communication. That despite several reminders to the Corporate Debtor by the Operational Creditor and false assurances made by the Corporate Debtor, the Corporate Debtor has failed to clear the balance outstanding to the Operational Creditor of Rs. 3,16,57,141/- (Rupees Three Crore Sixteen Lakhs Fifty Seven Thousand One Hundred Forty One Only) along with applicable interest. The said amount is still outstanding which has resulted into wrongful gain to the Corporate Debtor and wrongful loss to the Financial Creditor even after receiving the Legal notice dated 11.05.2022 and also a statutory demand notice dated 11.05.2022 under Section 8 of the Code read with Rule 5 (Demand Notice by operational creditor) of the Insolvency and Bankruptcy Rules, 2016. Therefore, the Operational Creditor is left with no other option than to approach this Hon'ble Tribunal. Hence the present Application.

The Operational Creditor through his advocate issued a statutory Demand Notice dated 11.05.2022 under Section 8 of the Insolvency and Bankruptcy Code, 2016 calling upon the Corporate Debtor at the registered office address through Speed-Post to repay the unpaid Operational Debt. The Corporate Debtor has not responded to the said Demand Notice within the stipulated period and has not raised any dispute regarding the unpaid Operational Debt within the stipulated period. The Corporate Debtor has sent a belated reply vide email dated 01.06.2022 where the Corporate Debtor has plainly denied the liability, while they have themselves admitted the same in the past email communications.

I. That the present application under Section 9 of the Code is not maintainable as the Applicant is not an ‘operational creditor’ as envisaged under the Code. Fact is that the goods were not sent to the Respondent and there is no document to show any receipt. That the Petitioner has failed to prove the delivery of the purported invoices and goods to the Respondent. The application is devoid of any purchase order, transportation documents, delivery receipts, invoice receipts etc. and hence there is no question of any operational debt payable to the applicant on behalf of the respondent. That the invoices are fabricated and fictitious and no supply was ever made.

II. That the amounts claimed by the Applicant in the present petition is disputed and is contrary to the amounts claimed by the Applicant in its own email dated 24.08.2020. As per the said email, the complete accounts were shared with the respondent and after receipt of cheques, the outstanding balance was Rs. 3,57,33,75/- as on 24.08.2020. Thereafter, admittedly, the Applicant has received payments of Rs. 7,00,000/- thereafter and hence an outstanding amount of Rs. 28,73,375/- is left which is less than the statutory limit of Rs. 1 Cr as per Section 4 of the Code and hence the present application is not maintainable. Further, the amounts mentioned in the said email dated 24.08.2020 do not reconcile with the amounts claimed in the ledger annexed with the present application.

III. That for malicious reasons, the Applicant has refrained from filing the annexures of the email dated 24.08.2020 which will clearly show the real nature of the transaction between the parties and would specifically prove that no goods were supplied by the applicant. The annexures which are being annexed by the Respondent show that it was not a transaction of supply of goods, but it was a routing transaction on which interest was payable. The interest outstanding on 24.08.2020, as per the documents annexed with the said email is Rs. 2.68 Cr approximately allegedly payable to the Applicant which for mala fide reasons has not been claimed in the present application and is nothing short of perjury.

IV. That without prejudice to the aforesaid objections, the Applicant cannot file the present petition being an unregistered partnership firm. Even otherwise, the Applicant firm has no cause of action to file a Section 9 application since no goods were supplied by the Applicant firm to the Respondent.

V. That the contents of Part-IV are disputed and denied. There is no operational debt owed by the Respondent. The specific date of default is also missing and, on this ground, alone the application deserves to be dismissed.

I. That only moon shine /illusory defences have been raised by the Corporate Debtor in the reply to the Company Petition merely to wriggle out of the consequences of nonpayment of operational debt as enumerated under the IBC 2016. The Corporate Debtor has not come with clean hands and has deliberately concealed documents and is therefore misleading this Hon'ble Tribunal.

II. That the Operational Debt is an admitted liability, duly reflecting in the balance sheet of the Corporate Debtor. The Corporate Debtor has not only received all goods for the invoices enclosed by the Operational Creditor but have also availed GST input for the same. The Corporate Debtor has failed to place their GST returns in support of allegations of no goods delivered or GST input availed.

III. That the Corporate Debtor is trying to mislead this Hon'ble Tribunal by ignoring the actual ledger and focusing on rough calculation blowing a typographical error out of proportion. If the contents of the email dated 24.08.2020 are read in totality, the Operational Creditor had claimed total balance as Rs. 5,09,33,375/- and had acknowledged receipt of four postdated cheques for total amount of Rs. l,52,00,000/. Thereby, the balance amount due and payable stood at Rs. 3,57,33,375/- and that too subject to encashment of cheques. However, inadvertently the Operational Creditor had mentioned a balance amount of Rs. 35,73,375/- due to omission of a "3" in total figure. The Corporate Debtor without any application of mind or verifying the computation, has based their entire reply on an erroneous figure and while ignoring the amount mentioned in statutory demand notice. It is also important to mention here that the post dated cheques were never encashed as the Corporate Debtor repeatedly requested the Operational Creditor not to present the cheque. Thus, the amount of admitted debt in the form of post-dated cheques itself is Rs. l,52,00,000/- which the Corporate Debtor has defaulted to pay. This itself is more than the threshold limit. The Corporate Debtor on its part has failed to enclose any bank statements to establish that the post dated cheques of total amount of Rs. l,52,00,000/- were actually encashed and amounts were paid to the Operational Creditor.

IV. That as per Annexure-I of the Reply by Corporate Debtor, there is an outstanding amount of Rs. 3,47,24,400/- as per the ledger, which clearly mentions terms such as Sales and Return of Goods. In addition, there are certain hand written notes computations based on discussions between the parties towards interest on account of delay of payment by Corporate Debtor. It is important to mention here that amounts mentioned in the handwritten notes have not been included in the ledgers nor claimed through the present petition. As per Balance Sheet provided by the Corporate Debtor to Operational Creditor vide email dated 11.05.2022 (Page 67, 86 of the Company Petition) there is an admitted debt of Rs. 3,18,10,086.60/- towards Operational Creditor. This entire amount is towards supply of goods. If there would have been any outstanding towards payment of interest, the Corporate Debtor was obligated to deduct TDS and issue appropriate TDS Certificates towards expense of payment of interest. However, no such TDS Certificates have been placed on record by the Corporate Debtor.

V. That the Operational Creditor has already submitted a compliance affidavit on 30.09.2022 to address the issue as to whether an unregistered partnership can initiate proceedings under IBC. The Operational Creditor is relying on Judgement/Order passed by the coordinate bench of this Hon'ble Tribunal in the case of M/s. G. L. Shoes Vs Mls. Action Udhyog Private Limited, CP No. (IB)-345(ND)2020 (Order dated 06.06.2022) where it was held that the Application filed by the Unregistered Partnership firm is maintainable. The Operational Creditor is also relying on Judgement/Order passed by Hon'ble NCLT Mumbai Bench in the case of M/s Shree Dev Chemicals Corporation Vs. Gammon India Limited in CP (IB) No.3637/MB.IV/2018 (Order dated 16.07.2020) where it was held that Applications filed under the IBC are not 'suits' but only proceedings, and therefore, the bar in terms of section 69(2) of the Indian Partnership Act, 1932, would not apply to applications filed under the IBC.

ANALYSIS AND FINDINGS

i.

“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;

ii.

Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;

iii.

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;

iv.

The recovery of any property by an owner or lessor, where such property is occupied by or in the possession of the corporate debtor. [Explanation.-For the purposes of this sub-section, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a licence, permit, registration, quota, concession, clearance or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concession, clearances or a similar grant or right during the moratorium period;]”