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Judgment
ORDER
The case is fixed for pronouncement of order. The order is pronounced in open Court, vide separate sheet.
O R D E R
(Per: Bench)
This application has been filed on 06.05.2019 by one M/s. ANUSHRI PAPER PACK PVT. LTD., (hereinafter referred to as ‘Applicant/Operational Creditor’) under Section 9 of the Insolvency & Bankruptcy Code 2016 (in short, ‘IBC, 2016’) r/w Rule 6 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 against M/s. INDIA DENIM LIMITED (hereinafter referred to as ‘Respondent/Corporate Debtor’). The Application is filed to initiate the Corporate Insolvency Resolution Process with respect to the Corporate Debtor (‘CIRP’).
Part-II of the application reveals that M/s. India Denim Limited was incorporated on 31.05.2018 with CIN: U17110GJ2005PLC046159. The registered office of the Corporate Debtor is situated at 145/147 Dholka Bagodara, Highway Road, Village Walthera, Taluka - Dholka, Dist. Ahmedabad-387810.
An affidavit for filing this application has been signed by one Mr. Tapesh Jain authorized by Board Resolution dated 15.02.2018. This application was filed on 06.05.2019.
The Applicant has not named the Interim Resolution Professional (“IRP”) and has left the same at the discretion of this Tribunal.
Perusal of Part-IV of the application reveals that the total debt is claimed to be Rs. 8,48,127/- which constitutes Rs. 3,65,616/- principal and Rs. 4,82,511/- being contractual interest @ 24% till 31.03.2019.
The Applicant has supplied certain packaging materials to the Corporate Debtor. The details of same are provided on page no. 53 of the application which is extracted as below;
The Applicant has annexed copy of the ledger account maintained by the Corporate Debtor for the period from 01.04.2012 to 31.03.2016. The last entry is dated 10.11.2014. At page 46 of the application, the Applicant has attached a copy of the cheque dated 17.05.2016 for a sum of Rs. 40,000/-bearing no. 000772.
Demand notice was issued on 25.01.2019. The postal receipt is attached at page no. 54. The same was delivered to the Corporate Debtor on 30.01.2019 and the track consignment report is attached at page no. 55 of the application.
It is stated that the Demand Notice was never replied by the Corporate Debtor. The Operational Creditor has not mentioned the exact date of default. However, the Computation of number of days and default are annexed as “Annexure-K” at page 60 of the application. The same is extracted as below:-
The Operational Creditor has attached the bank statements of various banks where they have maintained the bank account for the period 2019-20.
Reply was filed under Dairy No. 13098 dated 19.11.2019. In reply, it is stated by the Corporate Debtor that the bills/invoices relied upon and annexed to the application are of the year 2013 and are totally barred by limitation. It is stated that the application was filed in the year 2019 after six years without explaining or assigning any reason for the inordinate delay.
It is stated that the Limitation Act, 1963 is applicable to the proceedings under the IBC, 2016 as per Section 238A. It is stated that the goods which had supplied by the Applicant were not in good condition and were of much inferior quality.
It is stated that the Respondent has asked the Applicant to take back the goods but the Applicant did not take away the same.
It is stated that as the Applicant was requesting some payment and on humanitarian grounds, a cheque of Rs.40,000/- was issued to the Applicant in the year 2016. It is stated by the Respondent that after 17.05.2016, the Applicant never demanded the payment of any remaining amount and not a single email or any letter demanding payment is annexed to the application. According to the Applicant, Rs.40,000/- was paid in full and final settlement.
Both sides have filed the written submissions and relied upon the certain judgments.
It is the contention of the Applicant so as to limitation that:-
“A. The last invoice outstanding is dated 02.11.2013, as per which 30 days is the credit term and therefore the due date would be 02.12. 2013. As can be seen from the above list of dates and events, by way of acknowledgement of debt on 17.05.2016 in form of the entries in the books of accounts which is reflected by way of Ledger account of the Applicant in the books of Corporate Debtor, which was supplied by the Corporate Debtor and further the part payment by cheque of Rs.40,000/- which got cleared on 20.05.2016, would extend the period of limitation under section 18 and 19 of Limitation Act. The part payment of Rs.40,000/- is already admitted by the Corporate Debtor in his affidavit in reply.
B. During oral arguments while admitting that section 18 and 19 would extend the period of limitation, the other side argued that these sections of Limitation Act will not apply to IBC as per section 238A of IBC, which is contrary to the law laid down by Supreme Court and judgements of NCLAT. The hard copy of the below first 4 judgments were supplied to the Hon'ble Tribunal on 31/03/2021. These judgements hold that part payment by cheque will extend the period of limitation and NCLAT has applied section 19 to IBC proceedings also:-
(i)Tiger worldwide vs Mal Cargo reported in 2018 SCC OnLine Del 10106: para 7 & 8
(ii)Naraingarh Suger Mills Ltd. Vs Krishna Malhotra reported in 2012 SCC OnLine Del 1492, 2012 190 DLT 253: Para 5 issue no. 2, para 7 and 8
(iii)Jayprakash vyas vs, Prabhat Steal Traders Pvt Ltd. Reported in 2020 SCC OnLine NCLAT 606: Para 25, 26
(iv)MCC Concrete vs Northway Spaces Ltd. reported in 2021SCC OnLine NCLAT 19: para 22
(v)Asset Reconstruction Co. (India) Ltd. v. Bishal Jaiswal, (2021) 6 SCC 366: At para 11 to 13 while referring to earlier Supreme Court judgments it held that section 18 and other provision of Limitation act is applicable under section 238A of IBC. Further at Para 17, it held that an entry in the books of accounts can amount to an acknowledgement of debt under section 18..”.
I. MCC Concrete Versus Northway Spaces Ltd. (para 22 and 23):-
“..22. Now, we have considered the objection of ld. counsel for the respondent that the claim is barred by limitation. The ledger account is a running account which shows that on 05/11/2015, the respondent has made payment of Rs. 12 lacs to appellant and from this date of acknowledgment within three years, that is on 15/01/2018 the application is filed. Thus, the application is within period of limitation. We agree with the finding of the Adjudicating Authority that the application is filed within the period of limitation.
23.Ld. Adjudication Authority while examining the application under Section 9 of I&B Code has not considered the ledger account filed by the appellant. The statement shows that there is an outstanding due of Rs. 19,89,130/- on 31/03/2017. There is no pre-existing dispute. The Adjudicating Authority erroneously rejected the claim on the ground that the claim raised by the appellant falls within the ambit of disputed claim…”.
Respondent:-
B.K. Educational Services Private Ltd. V. Parag Gupta And Associates; 2019 (11) SCC 633.
Gaurav Hargovindbhai Dave V. Asset Reconstruction Company (INDIA) Ltd. & Anr.; (Civil Appeal No. 4952 of 2019)
Bimalkumar Manubhai Savaliya V. Bank of India; (Company Appeal (AT) (Insolvency) No. 1166 of 2019)
Bank of India v. Bimalkumar Savaliya; (Civil Appeal No. 2988 of 2020 (Supreme Court).
Heard both sides and perused the documents. The invoices are from 19.07.2013 to 02.11.2013. The last invoice outstanding is dated 02.11.2013, as per which 30 days is the credit term and therefore the due date would be 02.12. 2013. The Respondent has neither denied the receipt of the supply goods nor raised any dispute at any point of time about condition of goods or its quality. Further, Demand Notice dated 25.01.2019 was delivered on 30.01.2019 which was never replied by the Corporate Debtor. Moreover, the Respondent filed the reply to this petition stated therein for the first time that the goods which had supplied by the Applicant were not in good condition and were of much inferior quality but without any substance or evidence.
The Applicant has attached a copy of the ledger account of the Applicant in the books of the Respondent at page no. 58 and 59 of the application which confirms that the payment of Rs.50,000/- was made on 10.11.2014, the ledger account is a running account and the debt as per books of accounts of the Corporate Debtor is more than Rs.1,00,000/- (Rupees One Lakh). Further, another payment of Rs.40,000/- was admittedly made though cheque on 17.05.2016 which extended the limitation since such payments were made within the period of three years from the date of the last invoice.
The Hon’ble Supreme Court in the Dena Bank which clearly held that: (Now Bank of Baroda) Vs Shivkumar Reddy and Anr. (2021) SCC Online SC 543, clearly held that:
118.It is well settled that entries in books of accounts and/or balance sheets of a Corporate Debtor would amount to an acknowledgment under Section 18 of the Limitation Act. In Asset Reconstruction Company (India) Limited v. Bishal Jaiswall (supra) authored by Nariman, J. this Court quoted with approval the judgments, inter alia, of Bengal Silk Mills Co. v. Ismail Golam Hossain Ariff, [“Bengal Silk Mills”] and in Re Pandem Tea Co. Ltd. , the judgment of the Delhi High Court in South Asia Industries (P) Ltd. v. General Krishna Shamsher Jung Bahadur Rana and the judgment of Karnataka High Court in Hegde Golay Ltd. v. State Bank of India and held that an acknowledgement of liability that is made in a balance sheet can amount to an acknowledgement of debt.”
In view of above, the present application filed U/s 9 of IBC, 2016 is maintainable. The existing operational debt is of more than rupees one lakh and its default is also proved which meets the threshold limit as per section 4 of the Code and is well within the limitation for filing the present application.
Relying upon the judgment of the Hon’ble NCLAT in the matter of MCC Concrete Versus Northway Spaces Ltd., under para 22 and 23, the Application filed under section 9 of the Insolvency and Bankruptcy Code for initiation of corporate insolvency resolution process against the Respondent/Corporate Debtor deserves to be admitted.
Accordingly, in light of the above facts and circumstances, it is, hereby ordered as under:-
The Application bearing CP(IB) No. 361 of 2019 filed by M/s. Anushri Paper Pack Pvt. Ltd., (the Applicant/ 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 M/s. India Denim Limited (the Corporate Debtor) is hereby admitted and the moratorium under Section 14 of the IBC, 2016 is declared for prohibiting all of the following in terms of Section 14(1) of the Code:-
a. 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;
b. transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;
c. 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 Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
d. 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. The provisions of sub-Section (1) shall however, not apply to such transactions, agreements as may be notified by the Central Government in consultation with any financial sector regulator and to a surety in a contract of guarantee to a Corporate Debtor.
The order of moratorium shall have effect from the date of this order till the completion of the Corporate Insolvency Resolution Process or until this Adjudicating Authority approves the Resolution Plan under sub-section (1) of Section 31 or passes an order for liquidation of Corporate Debtor under Section 33 of the IBC, 2016, as the case may be.
It is further directed that the supply of essential goods/services to the Corporate Debtor, if continuing, shall not be terminated or suspended or interrupted during the moratorium period as per provisions of sub-Sections (2) and (2A) of Section 14 of IBC, 2016.
The Operational Creditor has not proposed the name of IRP. Hence, this Tribunal hereby appoints Mr. Rahul Shah, having Registration No. IBBI/IPA-001/IP-P-02170/2020-2021/13367 (Email ID:-[email protected] ) as per the panel suggested by IBBI for this Bench for the period of July, 1 to December 31, 2023. He shall conduct the Corporate Insolvency Process as per the Insolvency and Bankruptcy Code, 2016 r.w. Regulations made thereunder.
The IRP shall perform all his functions as contemplated, inter-alia, by Sections 17, 18, 20 & 21 of the IBC, 2016. It is further made clear that all personnel connected with the Corporate Debtor, its Promoter or any other person associated with the management of the Corporate Debtor are under legal obligation under Section 19 of the IBC, 2016 for extending assistance and co-operation to the IRP. Where any personnel of the Corporate Debtor, its Promoter or any other person required to assist or co-operate with IRP, do not assist or co-operate with the IRP the IRP is at liberty to make appropriate application to this Adjudicating Authority with a prayer for passing an appropriate order.
This Adjudicating Authority directs the IRP to make a public announcement of the initiation of CIRP and call for the submission of claims under Section 15 as required by Section 13(1)(b) of the IBC, 2016.
The IRP is expected to take full charge of the Corporate Debtor assets, and documents without any delay whatsoever. He is also free to take police assistance in this regard, and this Court hereby directs the Police Authorities to render all assistance as may be required by the IRP in this regard.
The IRP shall be under a duty to protect and preserve the value of the property of the ‘corporate debtor company’ and manage the operations of the corporate debtor company as a going concern as a part of obligation imposed by section 20 of the Code.
The IRP or the RP, as the case may be shall submit to this Adjudicating Authority periodical report with regard to the progress of the CIRP in respect of the Corporate Debtor.
The Operational Creditor is directed to pay an advance of Rs.2,00,000/- (Rupees Two Lakh Only) to the IRP within two weeks from the date of receipt of this order for the purpose of smooth conduct of CIRP and IRP to file proof of receipt of such amount to this Adjudicating Authority along with First Progress Report within 30 days. Subsequently, IRP may raise further demands for interim funds, which shall be provided as per the Rules.
The Registry is directed to communicate a copy of this order to the Operational Creditor, Corporate Debtor and to the IRP and the concerned Registrar of Companies, after completion of necessary formalities, within seven working days and upload the same on the website immediately after the pronouncement of the order. The Registrar of Companies shall update its website by updating the Master Data of the Corporate Debtor in the MCA portal specific mention regarding admission of this Application and shall forward the compliance report to the Registrar, NCLT.
The commencement of the Corporate Insolvency Resolution Process shall be effective from the date of this order.
The Registry is further directed to send a copy of this order to the Insolvency and Bankruptcy Board of India for their record.
Accordingly, CP (IB) No. 361 of 2019 is allowed. A certified copy of this order may be issued, if applied for, upon compliance with all requisite formalities.