M/s. Bell Impex vs M/s. Rexsona Tiles Private Limited

i)

It is stated that the Operational Creditor has, time and again, reminded and requested the Corporate Debtor to release the payments towards the undisputed outstanding dues. However, the Corporate Debtor has turned a complete blind eye to all such requests and reminders of the Operational Creditor.

j)

It is stated by the applicant that on 12.02.2024, the Operational Creditor was compelled to issue a Demand Notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 calling upon the Corporate Debtor to pay an aggregate amount of Rs. 1,28,70,360ps. (Rupees One Crore Twenty-Eight Lacs Seventy Thousand Three Hundred and Sixty Only) in full within 10 (ten) days from the date of receipt of the said notice. The said Demand Notice was duly served upon the Corporate Debtor through Registered Post Acknowledgement Due on 20.02.2024 as well as through an E-mail on 13.02.2024. A copy of the Demand Notice dated 12.02.2024 along with proof of service of the said Demand Notice is annexed in the application and marked as ANNEXURE - H.

k)

However, till date, the Corporate Debtor has not even bothered to reply to the said Demand Notice dated 12.02.2024. Moreover, the Operational Creditor has not received any payments within the statutory period of 10 (ten) days of receipt of the said Demand Notice.

l)

Therefore, the Operational Creditor is constrained to file the present application before this Hon'ble Adjudicating Authority for initiating Corporate Insolvency Resolution Process against the Corporate Debtor in accordance with the relevant provisions of the Insolvency and Bankruptcy Code, 2016.

a)

It is submitted that the Application filed by the Operational Creditor is not maintainable in view of the fact that the claim of the Operational Creditor is beyond the period of Limitation. It is submitted that invoices raised by the Operational Creditor are starting from March 2021 to March 2022. It is submitted that the present Petition is filed on 09.07.2024 Thus invoices prior to 10.07.2021 are barred by the law of limitation. The details of such invoices are as follows:-

Invoice Date	Invoice No.	Invoice Due Amount
01/03/2021	GST3660	88306.00
03/03/2021	GST3692	97350.00
06/03/2021	GST3733	214099.00
12/03/2021	GST3783	186416.00
18/03/2021	GST3863	1642914.00
25/03/2021	GST3943	233640.00
30/03/2021	GST3975	157176.00
05/04/2021	GST/2122/66	315202.00
12/04/2021	GST/2122/129	235764.00
14/04/2021	GST/2122/164	265075.00
20/04/2021	GST/2122/204	125741.00
24/04/2021	GST/2122/244	387701.00

26/04/2021	GST/2122/256	423667.00
15/05/2021	GST/2122/420	529159.00
21/05/2021	GST/2122/456	558470.00
27/05/2021	GST/2122/498	157176.00
03/06/2021	GST/2122/544	283766.00
09/06/2021	GST/2122/566	330070.00
14/06/2021	GST/2122/621	233640.00
14/06/2021	GST/2122/622	157176.00
21/06/2021	GST/2122/693	194700.00
21/06/2021	GST/2122/704	392940.00
29/06/2021	GST/2122/786	22656.00
01/07/2021	GST/2122/803	587640.00
08/07/2021	GST/2122/905	157176.00

b)

It is submitted that the Invoices amounting to Rs. 79,77,575/- are barred by the law of Limitation from the total amount of Rs. 1,07,00,906.60ps. It is submitted that the Application filed by the Operational Creditor is beyond the period of limitation of 3 years as prescribed under Article 137 of the Limitation Act, 1963 read with Section 238A of the Insolvency and Bankruptcy Code, 2016. It is submitted that the Application ought to have been filed within the period of limitation to be maintainable under law.

c)

The respondent has further relied on following judgments to support his contentions:-

i.

B.K. Educational Services Private Limited vs. Parag Gupta and Associates reported in (2019) 11 SCC 633 (Hon'ble Supreme Court).

ii.

K. Sashidhar vs. Indian Overseas Bank reported in (2019) 12 SCC 150 (Hon'ble Supreme Court).

d)

It is therefore submitted that the present Application of the Operational Creditor is not maintainable in view of the fact that the debt of the Operational Creditor is barred by the law of limitation.

e)

It is submitted that the present Petition is filed based on some supply of raw material for which payment is already made and thus there is no outstanding and no debt is due and payable. The present petition is thus not maintainable in view of the provisions of Section 5(21) of the IBC, as the amount due from Consent Decree is not a debt as per Section 5(21) of the IBC Code, 2016.

f)

It is submitted that the Corporate Debtor has already made an amount of Rs. 50,00,000/- on 06.12.2023 and therefore now no debt is due and payable. It is submitted that as the debt has been paid the present Petition deserves to be dismissed in limine

g)

It is submitted that the Operational Creditor has no cause of action to file the present application against the answering Corporate Debtor; hence it is liable to be dismissed with costs. It is submitted that the application under reply is filed with the objective to harass the Corporate Debtor without any just cause. Thus, the application is an attempt to cause mental agony to the Corporate Debtor which is liable to be thwarted away by this Hon'ble Tribunal in the interests of justice.

h)

It is submitted that the Operational Creditor has not approached this Tribunal with clean hands and has suppressed vital facts vis-a-vis existence of debt from the knowledge of the Tribunal, hence the application under reply is liable to be rejected forthwith. It is humbly submitted that the documents annexed with the present application under reply are firmly disputed by the Corporate Debtor.

i)

It is submitted that the application under reply is just a pack of lies and has been instituted just to harass the Corporate Debtor and thus for want of any just cause of action the present application is liable to be dismissed with heavy costs.

j)

It is submitted that the application filed by the Operational Creditor is an attempt to malign the good reputation of the Corporate Debtor. The Corporate Debtor it has earned from all across the world by putting in immense hard work. It is further submitted that the Operational Creditor has frivolously filed the present application to tarnish the image of the Corporate Debtor for no good reason and therefore, the present application is liable to be rejected in limine.

k)

It is submitted that the contents of the instant application are manufactured, frivolous, vexatious in nature and reveal no cause of action. Hence, the present application is devoid of any legal merit and is an abuse of the process of law and therefore, is liable to be dismissed.

l)

It is submitted that in the present case the goods supplied was of sub-standard quality and was not marketable goods. It is submitted that various oral communication took place between the parties regarding the sub-standard quality of the goods. Thus, there is a dispute between the parties in regards to the quality of the goods.

m)

It is further submitted that the Corporate Debtor has already made payment of Rs. 50,00,000/- and therefore now no debt is due and payable.

n)

Without prejudice to whatever stated above, it is submitted that the Corporate Debtor is going through rough patch of business as the competition in the business has increased. It is submitted that the Corporate Debtor is going through financial crunch, the amount due and payable could not be paid. It is submitted that because of operational cost and low yield of final product, the Corporate Debtor is unable to make payment to the Petitioner Company.

o)

It is submitted that as the present proceedings are summary in nature, the Petition deserves to be dismissed as the Petition is filed with an intention of recoveries of monies, which is not the intention of the legislature. Thus, the present Petition deserves to be dismissed.

a)

It is submitted that the Applicant herein used to maintain a running account for the invoices raised by the Applicant from time to time and payments received from the Respondent Corporate Debtor on ad hoc basis in pursuance to the invoices so raised by the Applicant herein. The said fact is clearly evident from the ledger account produced by the Applicant herein at ANNEXURE-E (Page Nos. 51 to 55) along with the captioned application. Further, it is not even the case of the Respondent Corporate Debtor that the payments were made by the Corporate Debtor against each invoice so raised by the Applicant herein.

b)

Thus, by virtue of provisions contained under Section 19 of the Limitation Act, 1963, when a part payment is made before the expiration of the prescribed period of limitation by the person liable to pay the debt, a fresh period of limitation is to be computed from the time when payment was made. The same is also confirmed by the Hon'ble National Company Law Appellate Tribunal, New Delhi in the case of Jayprakash Vyas vs. Prabhat Steel Traders Pvt. Ltd. reported in 2020 SCC OnLine NCLAT 606 as well as in the case of S. M. Ghogbhai vs. Schedulers Logistics India Pvt. Ltd. reported in 2022 SCC OnLine NCLAT 216.

c)

That in the instant case, the outstanding invoices are raised by the Applicant herein between the period of March 2021 to March 2022, against which, the Respondent Corporate Debtor has admittedly made partial payments till 06.12.2023 i.e., within the prescribed period of limitation of 3 (three) years. Under the circumstances, as per Section 19 of the Limitation Act, 1963, a fresh period of limitation is to be computed from the date of such last partial payment i.e., from 06.12.2023. The receipt of last payment as on 06.12.2023 is also evident from the bank statements produced by the Applicant herein (refer Page No. 258 of the application). Hence, the instant application filed on 09.07.2024 before this Adjudicating Authority is well within the period of limitation.

d)

Without prejudice to the above, in view of an order passed by the Hon'ble Supreme Court of India on 10.01.2022 in Re: Cognizance for Extension of Limitation in Miscellaneous Application No. 21 of 2022 in Miscellaneous Application No. 665 of 2021 in Suo Motu Writ Petition (C) No. 3 of 2020, which extended the limitation period up to 90 (ninety) days from 01.03.2022 in cases where the limitation would have expired between 15.03.2020 to 28.02.2022, the present application is even otherwise well within the limitation period.

e)

It is submitted that the Respondent/Corporate Debtor has miserably failed to demonstrate in the said reply, existence of any prior disputes between the parties and had vaguely averred that there are disputes with regards to the quality of goods supplied by the Applicant herein. Though, there is not a single document worth a name to suggest and/or support such bald and baseless assertion. On the contrary, at paragraph no. 25 of the said reply, the Respondent - Corporate Debtor has affirmed that it is going through a rough patch of business and also that it is facing financial crunch, owing to which the payments could not be made to the Applicant herein. That once having admitted its inability to pay the debts, the Respondent Corporate Debtor is not entitled to blow hot and cold at the same breath and raise frivolous disputes/ allegations against the claim of the Applicant herein, which are otherwise not even in existence.

f)

Owing to the aforementioned scenario, it is just, necessary and imperative to initiate Corporate Insolvency Resolution Process against the Respondent Corporate Debtor, failing which, the creditors of the Corporate Debtor shall be left entirely high and dry.

g)

In addition to the above, it is submitted that the Record of Default ("RoD") filed with National E-Governance Services Limited ("NeSL") for unpaid operational debt was "Deemed to be Authenticated" on 22.04.2024. A copy of the RoD is duly produced at ANNEXURE 1 (Page Nos. 230 to 235) along with the captioned application.

h)

In this regard, reliance is placed on an order dated 16.03.2022 passed by this Adjudicating Authority in the case of Teco Industries vs. Superdrawn Wire Industries Pvt. Ltd. being C.P.(IB) No. 177 of 2020.

i)

With respect to Paragraph No. 4, it is submitted that the averments made therein are denied being false and baseless. It is denied that the present petition is misconceived and baseless, devoid of any merits. It is further denied that the present petition is liable to be rejected. That the present application is a fit case for admitting the Respondent Corporate Debtor in Corporate Insolvency Resolution Process for the facts and reasons enumerated in the memo of application as well as in the present Affidavit in Rejoinder.

j)

With respect to Paragraph Nos. 6 to 10, it is submitted that the averments made therein are denied in toto. It is vehemently denied that the claim of the Applicant herein is beyond the period of limitation and that the invoices prior to 10.07.2021 are barred by the law of limitation. It is further denied that the invoices amounting to Rs. 79,77,575/- (Rupees Seventy-Nine Lacs Seventy-Seven Thousand Five Hundred and Seventy-Five Only) are barred by the law of limitation from the total principal amount of Rs. 1,07,00,906.60ps. (Rupees One Crore Seven Lacs Nine Hundred Six and Sixty Paisa Only). It is denied that the application filed by the Applicant herein is beyond the period of limitation of 3 (three) years as prescribed under Article 137 of the Limitation Act, 1963 read with Section 238A of the Insolvency and Bankruptcy Code, 2016. It is also denied that the present application is not maintainable in view of the fact that the debt of the Applicant herein is hopelessly barred by the law of limitation.

k)

The Applicant herein begs to place reliance on Paragraph Nos. 4 to 8 stated herein above, in order to demonstrate that the instant application is preferred well within the period of limitation. Further, the reliance placed by the Respondent Corporate Debtor on the judgements of the Hon'ble Supreme Court of India in the cases of B. K. Educational Services Private Limited vs. Parag Gupta and Associates reported in (2019) 11 SCC 633 and K. Sashidhar vs. Indian Overseas Bank reported in (2019) 12 SCC 150 in order to make out that the provisions of the Limitation Act, 1963 are applicable to the present proceedings is highly misconceived, in as much as the Applicant herein has not even for once claimed that the provisions of the Limitation Act, 1963 would not apply to the instant case.

l)

With respect to Paragraph Nos. 11 and 12, it is submitted that the averments made therein are denied being false and baseless. It is pertinent to submit that making partial payments on ad hoc basis does not ipso facto imply that there is no debt due and payable on the part of the Respondent Corporate Debtor against the goods/materials so supplied by the Applicant herein. Thus, it is rigorously denied that the present petition is filed based on some supply of raw material for which payment is already made and thus there is no outstanding and no debt is due and payable.

m)

It is further denied that the present petition is not maintainable in view of the provisions of Section 5(21) of the Insolvency and Bankruptcy Code, 2016, as amount due from Consent Decree is not a debt as per Section 5(21) of the Insolvency and Bankruptcy Code, 2016. It is of great relevance to submit that the Applicant herein has not even for once relied upon any Consent Decree in the entire application. Hence, it shall not be out of place to submit that the Respondent Corporate Debtor has completely lost sight of the facts of the instant case. Thus, it is submitted that such averments made by the Respondent Corporate Debtor are highly misplaced under the facts and circumstances of the present case.

n)

It is further denied that now no debt is due and payable on account of payment of Rs. 50,00,000/- (Rupees Fifty Lacs Only) on 06.12.2023 by the Respondent Corporate Debtor. It is denied that as the debt has been paid, the present petition deserves to be dismissed in limine. It is reiterated that the payment to the tune of Rs. 50,00,000/- (Rupees Fifty Lacs Only) made by the Respondent Corporate Debtor on 06.12.2023 was only a part payment and the instant application is filed after adjusting the receipt of the same.

o)

That even after receipt of the said part payment on 06.12.2023, a principal amount to the tune of Rs. 1,07,00,906.60ps. (Rupees One Crore Seven Lacs Nine Hundred Six and Sixty Paisa Only) and interest thereon to the tune of Rs. 21,69,453.55ps. (Rupees Twenty- One Lacs Sixty-Nine Thousand Four Hundred Fifty-Three and Fifty- Five Paisa Only) is still outstanding and payable against the 45 (forty-five) invoices annexed along with the instant application. That the instant application is filed qua the said outstanding invoices only (please refer ANNEXURE G at Page No, 214 of the application). Accordingly, the Respondent - Corporate Debtor is put to strict proof to show that the entire outstanding debt of the Applicant herein has been repaid by the Respondent Corporate Debtor.

p)

It is submitted that no notice of existence of any dispute has ever been received by the Applicant herein and hence, the contention of the Respondent - Corporate Debtor qua dispute regarding the quality of the goods/ materials supplied is a patently feeble legal argument, which is even otherwise unsupported by any evidence. Further, it is relevant to submit that the Hon'ble Supreme Court of India has also held that "It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster." in the case of Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd., reported in (2018) 1 SCC 353.

q)

Under the circumstances, it is denied that the goods/ materials supplied was of sub-standard quality and was not marketable goods/ materials. It is also denied that various oral communication took place between the parties regarding the sub-standard quality of the goods/ materials. It is further denied that there is a dispute between the parties in regards to the quality of the goods/ materials.

r)

With respect to Paragraph No. 24, it is reiterated that making partial payments on ad hoc basis does not ipso facto imply that there is no debt due and payable on the part of the Respondent Corporate Debtor against the goods/ materials so supplied by the Applicant herein. Thus, it is once again vehemently denied that now no debt is due and payable. The Applicant herein place reliance on the memo of the application as well as foregoing paragraphs to show that debt is indeed due and payable and the same is in default. That the submissions qua the same are not reiterated in the present paragraph with a view to avoid repetition.

s)

With respect to Paragraph No. 25, it is submitted that the Respondent Corporate Debtor has duly agreed and admitted that it is unable to make payments to the Applicant herein on account of financial crunch. Therefore, the present application. is liable to be admitted on this sole count.

t)

It is relevant to submit that one, M/s. Pearl Industries had also preferred an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 being C. P. (I.B.) No. 272 of 2024 before this Adjudicating Authority for the outstanding operational debt receivable from the Respondent Corporate Debtor. However, the same is withdrawn with a liberty granted to M/s. Pearl Industries to file a fresh application by this Adjudicating Authority vide an order dated 08.10.2024. Thus, the said fact clearly shows that the Respondent Corporate Debtor has also defaulted qua the dues owed to other creditors as well.

u)

Moreover, in the said reply, the Respondent - Corporate Debtor has even admitted its inability to repay the debts of the Applicant herein. Thus, it is reiterated that it is just, necessary and imperative to initiate Corporate Insolvency Resolution Process against the Respondent Corporate Debtor, failing which, the creditors of the Corporate Debtor shall be left entirely high and dry.

14. Observation and Findings of this Tribunal:

"The period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply."

'19. Effect of payment on account of debt or of interest on legacy. Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made."

Bell Impex 9-A, National Highway Near Radhay Hotel Morbi, Gujarat, State Code - 24 REXSONA TILES PVT. LTD. Ledger Account NR. AMARDHAM TEMPLE, MATEL ROAD, WANKANER 1-Apr-23 to 10-Dec-23

55

“60.

Application of payment where debt to be discharged is not indicated.—Where the debtor has omitted to intimate and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits.”