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Judgment
PER SHRI L. N. GUPTA, MEMBER (T)
M/s. Bhotika Trade & Services Private Limited (for brevity, the 'Applicant/Operational Creditor') has filed the present Petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 (for brevity, the 'IBC, 2016') read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 with a prayer to initiate the Corporate Insolvency Resolution Process against M/s. Avinash EM Projects Private Limited (for brevity, the 'Respondent').
The Respondent namely, M/s. Avinash EM Projects Private Limited is a Company incorporated on 31.01.2006 with CIN U45201DL2006PTC145665 under the provisions of the erstwhile Companies Act, 1956, having its registered office situated at 308, National Arcade plot No. 4, LSC Main Road, Gazipur, Delhi-110096, which is within the jurisdiction of this Tribunal. The Authorized Share Capital of the Respondent is Rs. 10,33,00,000/- and Paid-up Share Capital is Rs.1,87,96,250/- as per the Master Data of the Respondent.
It is stated by the Applicant that it is engaged in the business of selling products relating to construction and related fields and the respondent is engaged in the business of Government contracts, construction work, civil engineering, etc., particularly in oil and gas industry. It is further stated by the Applicant that during 2013-14, the Applicant sold various Construction and Welding Equipment to the Respondent. The Respondent issued various debit balance confirmations, as the Respondent was having dispute with his main client GAIL, as informed to the Applicant. Since GAIL is a government enterprise, which had to pay the Respondent, Applicant had sold goods on credit and accepted the debit balance confirmations from Respondent.
The particulars of the debt claimed including the total amount of debt/default and the date of default are mentioned in Part IV of the application, which are reproduced below, for the sake of convenience:
Part – IV
| PARTICULARS OF OPERATIONAL DEBT | ||
|---|---|---|
| 1. | TOTAL AMOUNT OF DEBT, DETAILS OF TRANSACTIONS ON ACCOUNT OF WHICH DEBT FELL DUE, AND THE DATE FROM WHICH SUCH DEBT FELL | Rs. 1,61,12,474.86 (Rupees One Crore, Sixty-One Lakhs, Twelve Thousand Four Hundred Seventy-Four and Paise Eighty-Six only) as on 18.02.2022 Material was sourced from the Bhotika Trade & Services Pvt. Ltd. on credit, for which Invoices were issued and debit balance was confirmed by AVINASH EM PROJECTS PRIVATE LIMITED. It was due on various dates. For Bhotika Trade & Services Pvt. Ltd. |
| DUE | Due dates are: - | ||
| S.No. | Dates | ||
| 1. | 18.03.2014 | ||
| 2. | 15.03.2017 | ||
| 3. | 20.02.2020 | ||
| 2. | AMONT CLAIMED TO BE IN DEFAULT AND THE DATE ON WHICH THE DEFAULT OCCURRED (ATTACH THE WORKINGS FOR COMPUTATION OF AMOUNT AND DATES OF DEFAULT IN TABULAR FORM) | Rs. 1,61,12,474.86 (Rupees One Crore, Sixty-One Lakhs, Twelve Thousand Four Hundred Seventy-Four and Paise Eighty-Six only) as on 18.02.2022 | |
| S.No. | Dates | ||
| 1. | 18.03.2014 | ||
| 2. | 15.03.2017 | ||
| 3. | 20.02.2020 | ||
| 4. | 29.02.2022 (As the date of Form 3 is 18.02.2022 plus 10 days of statutory period) | ||
| (Computation table attached) | |||
On perusal of the Part IV of the Application, it is observed that the Applicant has claimed the total amount of Rs. 1,61,12,474.86 as the unpaid operational debt.
It is stated by the Applicant that the Demand Notice dated 18.02.2022 under Section 8 of IBC 2016 was issued at the registered office of the Respondent, which was replied by the Respondent. The Applicant has filed the Affidavit under Section 9(3)(b) of 2016.
On issuance of notice, the Respondent has filed its reply dated 20.10.2022, opposed the prayer made by the Applicant for initiating CIR Process and raised the following objections –
The Application is nothing but an attempt to initiate recovery of the dues, which is not allowed under the provisions of the IBC.
The Application is not maintainable as the Applicant has failed to disclose the pendency of dispute between the parties, as the quality of the goods supplied were not up to mark and that is why money was not paid to the Applicant.
That no such dues of Rs. 1,16,12,474.86/- are due or payable as on 18.02.2022, as alleged. The material which was taken, was all substandard and it was orally informed by the Respondent to the Applicant. It is further stated that dues dates are all wrong and denied.
It is submitted that the invoices are old and not legible. Each entry of the Ledger Statement is wrong, false, and specifically denied. Debit balance confirmation is taken by taking advantage of the fiduciary relationship which the Applicant enjoyed with the Respondent. Computation Table entries are all wrong and false.
During the hearing on 03.11.2022, the Ld. Counsel appearing for the Respondent, however, admitted the debt due to financial distress faced by the Respondent. Nevertheless, we would still like to examine the transaction between the parties.
On perusal of the Part IV of the Application, it is observed that the Applicant has relied on the multiple dates of defaults such as 18.03.2014, 15.03.2017, 20.02.2022 and 29.02.2022. It is also observed that the Applicant has not clearly indicated the particulars of the unpaid invoices in the part IV. Therefore, at this juncture, we would like to refer to the computation of default annexed with the application. The scanned copy of the same is reproduced below:
36
Bhotika Trade And Services Pvt ltd
Avinash Em Projects outstanding calculation
Posting Date Invoice No. Invoice Amount Balance Due Int 2013-14 Int 2014-15 Int 2015-16 Int 2016-17 (As on 10-03-2017) Int 2017-18 (from 11-03-2017 To 31-03-2018) Int 2018-19 Int 2019-20 (As on 10-03-2020) Int 2020-21 (from 11-03-2020 to 31-03-2021) Int 2021-22 (As on 10-03-2022) Total Interest Total Due 30/04/13 67 1,418,632.00 3,412,852.76 753,742.64 815,594.66 819,084.66 773,955.34 696,218.06 619,084.66 709,125.35 919,043.97 727,077.88 7,212,493.16 10,625,285.92 30/04/13 88 629,850.00 629,850.00 138,739.56 151,164.00 151,164.00 142,466.89 159,861.11 151,164.00 150,870.75 171,457.25 134,183.99 1,931,071.50 1,960,921.90 30/6/2018 184 629,850.00 629,850.00 122,173.64 151,164.00 151,164.00 142,466.89 159,861.11 151,164.00 150,870.75 171,457.25 134,183.99 1,914,505.56 1,944,505.56 11/6/2018 187 512,350.00 512,350.00 99,039.64 123,012.00 123,012.00 115,914.00 176,069.40 123,012.00 106,408.06 139,525.04 109,194.31 1,069,361.85 1,581,912.85 Total 1,190,882.86 1,195,162.76 1,111,719.49 1,244,424.66 1,244,424.66 1,172,837.49 1,316,021.79 1,244,424.66 1,077,164.91 1,411,494.43 1,164,619.97 10,527,372.10 16,112,474.86 4,773,436.43 8,411,347.71 10,923,372.10 For Bhotika Trade & Services Pvt. Ltd. 15 -Director
From perusal of the aforesaid computation table, it is observed that the Applicant has claimed the invoices dated 30.4.2013, 30.04.2013, 10.06.2013 and 11.06.2013. Further, it is also evident that the principal amount (shown as “the balance due” in the table) is Rs. 51,85,102.76. The remaining amount of Rs.48,45,033.46 is claimed on account of interest.
Hence, we would like to examine Whether the Applicant could have claimed interest along with the principal amount in the instant Application?
To examine whether the Applicant could have claimed interest, we would like to examine the invoices annexed with the Application:
| TAX INVOICE | |||
|---|---|---|---|
| BHOTIKA TRADE & SERVICES PVT. LTD. 202, Laxmi Hub, 5th floor, Laxmi Industrial Estate, New Link Road, Andheri (West), Mumbai-400053, India Phone: +91 22 40169951-5 Fax: +91 22 40169954 E-mail: [email protected] VAT TIN No. : 27080291292 V CL 1-4-2006 CST: 27080291292 C | |||
| DESCRIPTION | |||
| AVINASH EM PROJECTS PVT LIMITED RICE MILL STORE/INFRONT OF CHS CHS BYATKIN AURITS DIVITAPUR, AURITA Uttar Pradesh, India | Invoice No.: 015PL/07/2013-14 Date: 30/04/13 Delivery Note No.: B15PL/07/2013-14 DT 30.04.3 Customer's Order/ Reference No.: AEPL/GAB/AJPL/2101201/003 Reference No.: 09765201085 TIN No.: 09765201085 | ||
| AVINASH EM PROJECTS PVT LIMITED On Chhijarai-Kubare Road, Chotpur Sastra E1 Jhadir Uttar Pradesh, India | CST No.: Despatch Doc. No.: 7961 Transporter's Name: MRS CARGO MOVERS Mode of Despatch: By Road Terms of Payment: Advance Due Date: 30/04/13 | ||
| NO. | NAME OF INVOICE | QTY | UNIT RATE AMOUNT |
| 1 | Imershield NR200P 2.00mm(DD31912) | 3,600.00 Kgs. | 570.0000 3,602,600.00 |
| 2 | Imershield NR200P 2.00mm(DD31912) | 3,280.00 Kgs. | 570.0000 3,285,600.00 |
| TOTAL | 3,331,600.00 | ||
| CST @ 2.00 % | 67,032.00 | ||
| Tax Amount | INR 67,032.00 | ||
| Amount in Words.NET AMOUNT PAYABLEINR 3,418,632.00 Three million four hundred and eighteen thousand six hundred thirty-two Indian Rupee | |||
| Declaration: We hereby declare that our registration certificate under The Maharashtra Value Added Tax 2003 is in force on the date on which the same of goods specified in this Tax Invoice has been effected by us and it shall be accounted for in the Turnover of sales while filing of return and the due tax, if any, payable on the sale has been paid or shall be paid. | For BHOTIKA TRADE AND SERVICES PVT. LTD. (AUTHORISED SIGNATORY) | ||
For Bhotika Trade & Services Pvt. Ltd. Director
TAX INVOICE EXTRA COPY ISSUE OF INVOICE UNDER RULE 11 OF CENTRAL EXCISE RULES 2002 CONVAT CREDIT UNDER RULE 7 OF EXCISE RULES 2002 IMPORTER / FIRSTSECOND STADE DEALERS INVOICE
Ex Item Code Description of Goods QTY Duty/ Unit In Rate % Invoice / Bill of Entry & Date Tariff Amounts Value Duty Paid BE Cost (0) % BE Cost (0) % ACD (0) % 1 AM013 1m/1000/2002/2007 1.00m/2002/2013 20000.00 15,10175 15.00 Revised 30/04/2013 80,11,1000 1,945,135.00 365,365.00 0.00 0.00 0.00 Assumable Value in Words: FORTY TWO LAC FORTY TWO THOUSAND ONE HUNDRED THRUYY FIVE AND FORTY ONE FOUR ONLY Amount of Duty Paid in Words: SEVEN LAC EIGHTY FOUR THOUSAND THREE HUNDRED FORTY ONE ONLYCERTIFICATE: Certified that the goods covered under this invoice were (a) imported directly by us or received directly from MS : The Linaria Electric Company (Australia) PTY LTD.Certified that the particulars given above are true and correct and the amount indicated represents the total amount of charges of the item in an additional invoice on the drawing, directly or indirectly from the buyer. Who have imported the said goods. (b) Received directly from the factory / depot / consignment agent, authorized premises of MS.Declaration: * We hereby Certify that our registration Certificate under the Nishankhile Value Added Tax Act, 2002 is in force on the date one which has sale of the goods upon that in this tax invoice is made by us and that the transaction of the sale covered by this tax invoice has been effected by us and in the UK as a result for the services of those while filling of the return and the due act, if any, payable on the sale has been paid on that the part. (a) Received from MS. Who are the first stage dealer of MS.For BHOTIKA TRADE & SERVICES PRIVATE LIMITED Satyamra Chidong Authorized Signatory Place: Mumbai Date: 30/04/2013
P.O. No. & Date: AEP/4/2013/APL/2013/2013/2013 Chadras / Delivery No.: 07/04/2013-11-07 24.04.2013 Total Freight Discount 0 % TOTAL RECD RECD RECD RECD RECD 3,351,434.00 0.00 0.00 0.00 0.00 Total Excise Duty in Figures: 6/4/13.00 Total Goods in Figures: 0.00 Total BEC Gas in Figures: 0.00 Total ACD in Figures: 0.00 Total Amount in Figures: 3,351,434.00 Total Excise Duty in Words: TWO LAC THRUYY THOUSAND FOUR HUNDRED SEVENTHEN ONLY Total Amount in Words: Total Amount in Words: TOTAL THRUYY THOUSAND FOUR HUNDRED SEVENTHEN ONLY Total Amount in Words: THRUYY FOUR LAC EIGHTEEN THOUSAND SIX HUNDRED THRUYY TWO ONLY
MANUFACTURER / SUPPLIER / IMPORTER DETAILS BHOTIKA TRADE & SERVICES PRIVATE LIMITED 305, Laurel Mall, 5th floor, Laurel Industrial Estate New Link Road, Andhuri (West), Mumbai, P10 400 003 India Maharashtra Range with Address Nishankhile Nibukun, Jala Gali Road, Andhuri (West) Mumbai-400 0003CST No.: 2701029120DC Central Excise Regn No.: AACC2070000000002 C.E. Division: AN2000513 (West) Postal Address of Division: Nishankhile Nibukun, Jala Gali Road, Andhuri (West) Mumbai-400 0003 Commissioner: V
Ex Item Code Description of Goods QTY Duty/ Unit In Rate % Invoice / Bill of Entry & Date Tariff Amounts Value Duty Paid BE Cost (0) % BE Cost (0) % ACD (0) % 1 AM013 1m/1000/2002/2007 1.00m/2002/2013 20000.00 15,10175 15.00 Revised 30/04/2013 80,11,1000 1,945,135.00 365,365.00 0.00 0.00 0.00 Assumable Value in Words: FORTY TWO LAC FORTY TWO THOUSAND ONE HUNDRED THRUYY FIVE AND FORTY ONE FOUR ONLY Amount of Duty Paid in Words: SEVEN LAC EIGHTY FOUR THOUSAND THREE HUNDRED FORTY ONE ONLYCERTIFICATE: Certified that the goods covered under this invoice were (a) imported directly by us or received directly from MS : The Linaria Electric Company (Australia) PTY LTD.Certified that the particulars given above are true and correct and the amount indicated represents the total amount of charges of the item in an additional invoice on the drawing, directly or indirectly from the buyer. Who have imported the said goods. (b) Received directly from the factory / depot / consignment agent, authorized premises of MS.Declaration: * We hereby Certify that our registration Certificate under the Nishankhile Value Added Tax Act, 2002 is in force on the date one which has sale of the goods upon that in this tax invoice is made by us and that the transaction of the sale covered by this tax invoice has been effected by us and in the UK as a result for the services of those while filling of the return and the due act, if any, payable on the sale has been paid on that the part. (a) Received from MS. Who are the first stage dealer of MS.For BHOTIKA TRADE & SERVICES PRIVATE LIMITED Satyamra Chidong Authorized Signatory Place: Mumbai Date: 30/04/2013
For Bhotika Trade & Services Pvt. Ltd. Director
On perusal of the above invoices, we find no clause in the invoices pursuant to which, in case of default by the Respondent, the Applicant would be entitled to claim interest.
In this context, we refer to the Judgment dated 27.07.2018 in Pavan Enterprises Vs Gammon India Ltd. Company in Appeal (AT) (Insolvency) No. 148 of 2018, wherein the Hon'ble NCLAT held that -
"4.It is submitted that the 'debt' includes the interest, but such submission cannot be accepted in deciding all claims. If in terms of any agreement interest is payable to the Operational or Financial Creditor then debt will include interest, otherwise, the principal amount is to be treated as the debt which is the liability in respect of the claim which can be made from the Corporate Debtor.
5.In the present appeals, as we find that the principal amount has already been paid and as per agreement no interest was payable, the applications under Section 9 on the basis of claims for entitlement of interest, were not maintainable. If for delayed payment Appellant(s) claim any interest, it will be open to them to move before a court of competent jurisdiction, but initiation of Corporate Insolvency Resolution Process is not the answer."
(Emphasis Placed)
Further, the Hon'ble NCLAT in its judgement dated 15.07.2022 in Company Appeal (AT) No. 690 of 2022, Prashant Agarwal vs. Vikash Parasrampuria & Anr, has held, as given overleaf :
"(vi)It is, therefore, clear from these facts that the total amount for maintainability of claim will include both principal debt amount as well as interest on delayed payment which was clearly stipulated in the invoice itself. It is noted that the total principal debt amount of Rs.97,87,220/- along with interest the total debt makes total outstanding as Rs.1,60,87,838/-. Thus, the total debt outstanding of OC is above Rs.1 crore as per requirement of Section 4 IBC read with notification No. S.O 1205 (E) dated 24.3.2020 (Supra), and meets the criteria of Rs.1 crore as per Section 4 of IBC and Application is therefore maintainable in present case. We concur with the orders of Adjudicating Authority on this issue also."
(Emphasis Placed)
Since neither any specific agreement between the parties is placed on record or produced, pursuant to which interest could be claimed by the applicant nor there is any delayed payment clause with interest is in the invoices, therefore, we are of the considered view that interest cannot be claimed by the Applicant herein, merely to reach the minimum threshold amount of Rs. One Crore.
Since the Application is filed on 28.07.2022, therefore, the minimum threshold of Rs 1 Crore is applicable to the instant case. Since the Principal outstanding in the instant case is less than the minimum threshold amount of Rs. One Crore, we have no other option but to dismiss the Application.