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Judgment
Per: Dr. Ashok Kumar Mishra, Member (T)
C.P.(IB) No.159/BB/2019 is filed by M/s. Cholamandalam Investment and Finance Company Limited (hereinafter referred to as 'Petitioner/ Financial Creditor') under Section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, by inter alia seeking to initiate Corporate Insolvency Resolution Process in respect of M/s.SA Rawther Spices Private Limited (hereinafter referred to as 'Respondent/Corporate Debtor') on the ground that it has committed default for a total outstanding amount of Rs.6,21,51,835/- (Rupees Six Crore Twenty One Lakh Fifty One Thousand Eight Hundred and Thirty Five Only) as on 05.03.2019.
Brief facts of the case, as mentioned in the Company Petition, are as follows:
M/s.Cholamandalam Investment and Finance Company Limited (hereinafter referred to as 'Petitioner/Financial Creditor') is a Public Limited Company incorporated on 17.08.1978 with CIN: L65993TN1978PLC007576 and having its registered office at 'Dare House', No.2, N.S.C. Bose Road, Parrys, Chennai-600001. The Authorised Share Capital of the Company as per MCA records is Rs.740,00,00,000/- and Paid-up Share Capital of the Company is Rs.156,36,44,890/-. The Company is inter alia engaged in the business of extending financial facility to prospective customers under various finance Schemes such as mortgage finance, hire purchase finance, bills discounting, etc.
M/s.SA Rawther Spices Private Limited (hereinafter referred to as 'Respondent/Corporate Debtor') is a Private Limited Company incorporated on 27.12.1985 under the Companies Act, 1956 with CIN: U15495KA1985PTC007373 and having its registered office at No.17, 4th Main, 4th Block, Goraguntepalya, Bangalore-560022. The Authorised Share Capital of the Company is Rs.12,00,00,000/- (Rupees Twelve Crores Only) and Paid-up Share Capital of the Company is Rs.12,00,00,000/- (Rupees Twelve Crores Only). The Company is conducting the business of spices import and export in the name of M/s. SA Rawther Spices Private Limited since 20 years.
It is stated that the Corporate Debtor herein had approached the Financial Creditor and applied for Bill Discounting facility.
Consequently, based on the Board Resolution dated 05.04.2016 by the Corporate Debtor on executing necessary Corporate Loan Agreement and other financial document/s a sum of Rs.5,00,00,000/- (Rupees Five Crores Only) was sanctioned and the said facility was extended in No.52/BD/2015-16 dated 05.04.2016, facility unique ID No.AP00000298, subject to the terms and conditions contained in the Agreement.
It is stated that the facility was granted as aforesaid, the Corporate Debtor committed breach to repay the amount as per the Agreement and failed to honor the commitments. In these circumstances, the Financial Creditor was constrained to recall the Loan facilities and as such Financial Creditor issued a Demand Notice on 14.09.2017 called upon the Corporate Debtor to pay the outstanding due amount of Rs.4,49,45,917.33/- (Rupees Four Crores Forty Nine Lakhs Forty Five Thousand Nine Hundred and Seventeen and Thirty Three Paisa Only) as on 11.09.2017.
Despite of the issue of Demand Notice as aforesaid, the Corporate Debtor did not come forward to pay the outstanding due amount the Financial Creditor filed the claim petition before the Hon'ble Arbitrator Shri P. Ganesan in Arbitration Case No. CIFCL/ARB/LXVI/1511/2017 against the Corporate Debtor and others. The Hon'ble Arbitrator on 02.04.2018 was pleased to pass an award against the Corporate Debtor and other directed them to jointly and severally liable to pay a sum of Rs.4,67,62,098/- (Rupees Four Crores Sixty Seven Lakhs Sixty Two Thousand and Ninety Eight Only) as on 07.11.2017 together with future interest at the rate of 18% per annum till the date of realization.
It is further stated that the Corporate Debtor has failed to pay its outstanding dues as awarded by the Hon'ble Arbitrator as aforesaid till date.
Therefore, the instant application is filed before the Adjudicating Authority to initiate the Corporate Insolvency Resolution Process in respect of the Corporate Debtor herein.
The Company Petition is opposed by the Respondent herein by filing the Objections dated 08.07.2019, by inter alia contending as follows:
It is stated that the Respondent is conducting the business of Spices import and export in the name of M/s. SA Rawther Spices Private Limited since 20 years.
It is stated that the amount shown in the statement in page no.3 para no.3 and 4 is not proper since the amount shown as carried forward do not tally and the total amount is being assumed as totally different.
The confirmation of balance i.e. given as produced by the Operational Creditor has been given in a routine manner without referring to the correct entries and hence cannot be totally relied upon. It is further stated that due to demonetisation and other factors there is loss in the business.
It is stated that the application filed by the Applicant/Financial Creditor is not maintainable since the situation has not arisen initiating insolvency proceedings and is filed only to harass the Respondent and for making wrongful gain at the risk of the Respondent.
It is stated that the Applicant have filed the application and also sworn to the Affidavit falsely and further submits that on perusal of the documents it is noticed that the Applicant has not furnished the bill discounts in a proper way and raised the bill discounts for the amount paid also making this application unjustifiable.
It is also stated that the Applicant have filed a case alleging that the Respondents are due to the extent of Rs.4,49,45,917.33/- but the sanctioned amount was to the extent of Rs.5,00,00,000/- the bills raised by the Applicant are not correct and are not the authorised bills of the Respondent/ Corporate Debtor and also the Applicant has not intimated about the bills to the Respondent Company.
It is stated that the insolvency Petition filed by the Applicant has not produced proper authorization to initiate proceedings and further submits that on perusal of the invoices it is noticed that some invoices are being produced without the signature of the Authorised persons and also have not furnished the Creditors list in a proper way.
It is further stated that on perusal of the statement in page No.3 and paras No.3 and 4, it is noticed that the statements are not correct and a column is left out for mentioning the due amount correctly, it is being done only for wrongful gain and to harass the Respondent.
It is stated that the Applicant have not issued the statutory notices to the Respondent. The Applicant/Financial Creditor have filed a complaint under N.I. Act claiming certain amount and it is registered in CC No.5186/2018 on the file of MM Court, Saidapet, Chennai and also filed an Execution Petition in Hon'ble Mumbai High Court vide No.L.No.789/2019 listed on 10.07.2019.
It is also stated that the Application is not maintainable, since he ought to have filed the application in Form No.3 in accordance with Law, and therefore prays to dismiss the CP.
Heard Shri Francis Xavier, learned Counsel for the Petitioner and Shri N.Suresha, learned Counsel for the Respondent. We have carefully perused the pleadings of the parties and extant provisions of the Code.
Upon perusal of the pleadings and the documents annexed thereto, it is seen that the Petitioner has extended a corporate finance loan to the Respondent as per Corporate Finance Loan Agreement and Non Disposal Undertaking dated 05.04.2016 and the same remains unpaid as on date. The Objections submitted by the Respondent repeatedly and mistakenly refers to the Petitioner as 'Operational Creditor' and also does not refute the non-payment of the loan. It appears that this Petition has been properly filed under Section 7 of the Insolvency and Bankruptcy Code read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Prima facie, it is proved that the debt and default both exists and the Respondent is only speaking on the difference in amount resulting from nonreconciliation but the Corporate Debtor has not paid the amount and in any case the amount is quite high and the Arbitrator also has passed the Award for recovery of the amount as stated supra. Hence, it is a fit case to be admitted.
A qualified insolvency professional namely Ms.Subramaniam Aneetha having Registration No.IBBI/IPA-001/IP-P00376/2017-18/10633 is suggested to appoint as IRP, who also has filed her written consent in Form-2 dated 06.03.2019 by inter alia affirming that she is eligible to be appointed as a Resolution Professional in respect of the Corporate Debtor and that there are no disciplinary proceedings pending against her with the Board or the Indian Institute of Insolvency Professionals of ICAI. Therefore, we are of the prima facie view that she is provisionally qualified to be appointed as Interim Resolution Professional and the application is filed in accordance with provisions of Code and thus it is a fit case to admit by initiating CIRP against the Corporate Debtor, appointing IRP, Moratorium etc., as per the Code.
In view of the above facts and circumstances of the case and by exercising powers conferred on this Adjudicating Authority under Section 7(5)(a) and other extant provisions of the Code, C.P. (IB) No.159/BB/2019 is hereby admitted with the following consequential directions:
We hereby appointed Ms.Subramaniam Aneetha having Regn.No.IBBI/IPA-001/IP-P00376/2017-18/10633, as the Interim Resolution Professional (IRP) to conduct the Corporate Insolvency Resolution Process (CIRP) in respect of the Corporate Debtor namely M/s. SA Rawther Spices Private Limited and to carry out the functions as mentioned under the I&B Code, 2016 and the Rules framed by the IBBI from time to time.
The following moratorium is declared prohibiting all of the following, namely:
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;
transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;
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;
the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.
The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period.
The provisions of sub-section (1) shall not apply to such transaction as may be notified by the Central Government in consultation with any financial regulator.
The order of moratorium shall have effect from the date of such order till the completion of the Corporate Insolvency Resolution Process.
The IRP is directed to follow all extant provisions of the IBC, 2016 and the Rules including fees rules as framed by the IBBI from time to time.
The Board of Directors and all the staff of the Corporate Debtor are hereby directed to extend full co-operation to the IRP, in carrying out her functions as such, under the Code and Rules made by the IBBI.
The IRP is directed to file her progress reports to the Tribunal from time to time about the steps taken in pursuant to the CIRP. The IRP is further directed to take expeditious steps so as to complete the process of CIRP within the stipulated time.
Post the case for report of the IRP on 27th September, 2019.