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Judgment
ORDER
The case is fixed for pronouncement of the order. The order is pronounced in open Court vide separate sheet.
O R D E R
The instant application has been filed on 19.12.2022 by the Applicant M/s. Favourite Minerals LLP - (hereinafter referred to as „Operational Creditor’) against the Respondent M/s. Ramos Ceramic Private Limited (hereinafter referred to as „Corporate Debtor’) under Section 9 of the Insolvency and Bankruptcy Code, 2016 (“IB Code, 2016”) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiation of Corporate Insolvency Resolution Process (CIRP) against the Respondent/Corporate Debtor , to appoint Interim Resolution Professional (hereinafter referred to as “IRP”) and declare the moratorium for having defaulted the operational debt of Rs.2,46,70,193/- which include interest of Rs.66,05,193/-. The date of default is stated to be 01.07.2021.
On perusal of Part-I of the Form-V reveals that the Applicant/Operational Creditor, M/s. Favourite Minerals LLP. is a limited liability company registered under LLP Act with No. LLPIN – AAM-6490 and having registered address at: Survey No.110, Village: Sartanpar, Taluka: Wankaner, Morbi, Rajkot, Gujarat – 363621. The company was engaged in supply of body-clay for the ceramic materials.
On perusal of Part-II of the Form-V reveals that the Respondent/Corporate Debtor, M/s. Ramos Ceramic Private Limited is a private limited company incorporated under the provisions of the Companies Act, 2013, having CIN: U26990GJ2018PTC102147. The company is engaged in manufacturing of ceramic goods. The registered address of the Respondent/Corporate Debtor is at: Sartanpar, Talkua: Wankaner, Sartanpar, Rajkot, Gujarat – 363621.
On perusal of Part-III of the Form-V reveals that the Applicant/Operational Creditor has not proposed name of any Interim Resolution Professional, in case, the present application gets admitted and left with the discretion of this Bench.
On perusal of Part-IV of the Form-V reveals that the total amount of default which aggregates to Rs.2,46,70,193/- including the interest amounting to Rs.66,05,193/- against the invoices No.GT/1206 of 2020 to invoice No.GT/3358 of 2020. It is submitted, the Applicant/Operational Creditor received a last payment from the Respondent/Corporate Debtor on 01.07.2021. Thereafter there was no payment for the earlier supplies was made as per the Annexed copies of the invoices, GSTR-1 and GSTR-3B of unpaid Invoices, Ledger of the Respondent/Corporate Debtor, Computation Chart of unpaid Invoices annexes as Annexure-5 to Annexures-8 in the instant application. Hence, the date of default was claimed as 01.07.2021.
It is submitted that the Applicant/Operational Creditor had supplied goods to the Respondent/Corporate Debtor and raised various Invoices dated 14.07.2020 to 31.07.2021 which are annexed as Annexure-5. Further, the Applicant/Operational Creditor has filed the Computation Chart of the unpaid Invoices in which due date of payment of each Invoice is shown w.e.f. 14.07.2020 to 31.07.2021 which is also annexed at Annexure-8. The Computation of the unpaid operational debt in default duly certified by the Chartered Accountant is shown below:-
It is further submitted by the Applicant/Operational Creditor that the payment was made by the Respondent/Corporate Debtor on account basis and not as per invoice basis and in this regard, the Respondent/Corporate Debtor consistently made payment till 01.07.2021. Thereafter, the default took place as no payment was made after 01.07.2021 which were due and payable against the supply made during the period of 14.07.2020 to 02.10.2020 vide invoices No.GT/1206 of 2020 to invoice No.GT/3358 of 2020.
The Applicant/Operational Creditor, after several reminders, served a Demand Notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 on 23.07.2022, calling upon the Respondent/Corporate Debtor to clear the outstanding debt within ten days of receipt of the Demand Notice. However, neither reply was received from the Respondent/ Corporate Debtor nor the Corporate Debtor paid the payment of the operational debt of default or disputed the fact of unpaid operational debt. The Applicant/Operational Creditor has annexed the copy of email sent on 07.10.2022 with the present application.
Further, the Applicant/Operational Creditor annexed certain documents in support of his contentions as follows:-
| Sr. No. | Particulars | Exhibits | Page Nos. |
|---|---|---|---|
| 1 | Memo of application to the Adjudicating Authority in Form-5 of I. & B. (Application to Adjudicating Authority) Rules, 2016 | - | 15-19 |
| 2 | Affidavit verifying the application | - | 20-22 |
| 3 | Copy of the demand notice in Form-3 issued by the applicant in the capacity of Operational Creditor | 1 | 23-26 |
| 4 | Copy of proof of service of Demand Notice to the Corporate Debtor | 2 | 27 |
| 5 | Affidavit u/s 9(3)(b)of the I & B Code, 2016 | 3 | 28-30 |
| 6 | Copy of the Master Data of Corporate Debtor as per the MCA Web-Portal | 4 | 31 |
| 7 | Copy of the unpaid invoices | 5 | 32-775 |
| 8 | Copy of Forms GSTR-1 and GSTR-3B pertaining to the period of unpaid invoices | 6 | 776-803 |
| 9 | Copy of Ledger of the Corporate Debtor in the books of the Applicant | 7 | 804-884 |
| 10 | Computation of the unpaid operational debt in default duly certified by the Chartered Accountant | 8 | 885-896 |
| 11 | Copy of Bank Account Statements of the Applicant after the Service of Demand Notice to the Corporate Debtor | 9 | 897-905 |
The Applicant/Operational Creditor has sought following reliefs from this Tribunal:-
(i)To admit the present application and to initiate Corporate Insolvency Resolution Process of M/s. Ramos Ceramic Private Limited (referred as „Corporate Debtor‟).
(ii)To declare the Moratorium for the purpose os referred to in Section 14 of the Code.
(iii)To cause a public announcement of the initiation of Corporate Insolvency Resolution Process and call for the submission of claims under Section 15 of the Code, and
(iv)To appoint an Interim Resolution Professional in the manner as laid down in Section 16 of the Code.
Notice was issued to the Respondent/Corporate Debtor for appearance as well as for filing reply. After due service the Respondent/Corporate Debtor appeared through its counsel and filed Reply denying various averments made in the Application. Mr. Harsh Bachubhai Agola, the authorised person of the Respondent, M/s. Ramos Ceramic Private Limited has filed an affidavit-in-reply on 05.06.2023 vide Diary No.1981 and raised objections as under:-
(i). The Respondent/Corporate Debtor has vehemently opposed the maintainability of the present application as being barred by Section 10A of the Insolvency and Bankruptcy Code, 2016 as well as barred due to non-compliance of the threshold limit of rupees one crore as per Section 4 of the I.B. Code, 2016.
(ii). The Respondent has quoted the insertion of Section 10A by the Government of India to reduce the impact of Covid-19 pandemic on the business. He further quotes the revision of threshold limit for the initiation of a Corporate Insolvency Resolution Process (“CIRP”) from rupees one lakh to rupees one crore which we perused.
(iii). The Respondent/Corporate Debtor further contended that the Applicant/Operational Creditor has purportedly claimed the outstanding amount Rs.2,46,70,193/- for the invoices raised between 14.07.2020 to 02.10.2020.
(iv). The Respondent further contends that the Applicant/Operational Creditor has surreptitiously mentioned the date of default as 01.07.2021 being the last dated of payment made by the Respondent/Corporate Debtor. It is submitted that the demand notice (Form 4) dated 23.09.2022 was issued by the Applicant/Operational Creditor states Rs.2,46,70,193/- as the outstanding and payable for the invoices generated between 14.07.2020 to 02.10.2020. It is submitted by the Respondent that the default was firstly occurred between 14.07.2020 to 02.10.2020.
(v). The Respondent/Corporate Debtor, in support of his contentions quoted a decision of Hon‟ble National Company Law Appellate Tribunal in the matter of Mr. Anil Kaushal V/s. M/s. Colliers International (India) Property Services Private Limited and Ors. Company Application (AT) No.448 of 2021 decided on 02.08.2022.
(vi). The Respondent/Corporate Debtor further contended that the unpaid invoices attached at page nos. 32 to 775 of the application have been issued during the period of July 2020 to October 2020, i.e. between 25.03.2020 to 25.09.2020, which are barred by Section 10A of the I.B. Code, 2016. As the present application was filed 19.12.2022, the threshold limit of rupees one crore of debt under Section 4 of the IBC will be applicable as in the present case.
(vii). As contended by the Respondent/Corporate Debtor, the exclusion of invoices that fall between the exemption period as per Section 10A brings the total outstanding amount below the threshold limit, i.e. rupees one crore and hence, on such ground, the application is not maintainable.
(viii). The Respondent/Corporate Debtor also contended that the invoices were also raised for the goods he has not received, for which there are no acknowledgements on the part of the Respondent. The transport challans produced by the Applicant/Operational Creditor are also questioned to be in skeptics for proving the delivery of goods to the Respondent/Corporate Debtor etc.
We heard the Learned Counsels from both the parties. We perused the materials available on record. We also perused the invoices which are w.e.f. from 14.07.2020 to 31.07.2021 annexed as Annexure-5 as well as the Computation Chart of the unpaid Invoices in which due date of payment of each Invoice is shown w.e.f. 14.07.2020 to 31.07.2021 which is also annexed at Annexure-8
On perusal of Computation Chart which is annexed as Annexure- 8, the due date is shown for Invoices is shown w.e.f. 14.04.2020 to 28.02.2020 except last three invoices. All these invoice‟s due date/default occurred in the exempted period in terms of Section 10A of the IBC, 2016. The total amount of default mentioned in the application is Rs.2,46,70,193/-. The due date for the last three invoices is mentioned as 31.03.2021, 30.04.2021, 31.07.2021 in the Computation Chart is beyond section 10A period. But the total due amount of these last three invoices is Rs.2638.00 which is below the threshold limit in terms of section 4 of the IBC.
As per Section 10A of IBC, 2016, any default occurred between the period 25.03.2020 to 25.03.2021 is exempted and no IBC proceedings shall ever be initiated against the Respondent/Corporate Debtor for the default which occurred during the period from “25th March, 2020 to 25th March, 2021.
In the present case the default exactly fall within that exemption period. Section 10A of the IBC is reproduced hereunder:-
Suspension of initiation of corporate insolvency resolution process.
10A. Notwithstanding anything contained in sections 7,9 and 10, no application for initiation of corporate insolvency resolution process of a corporate debtor shall be fixed, for any default arising on or after 25 March, 2020 for a period of six months or such further period, not exceeding one year from such date, as may be notified in this behalf:
Provided that no application shall ever be filed for initiation of corporate insolvency resolution process of a corporate debtor for the said default occurring during the said period. Explanation :- For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply to any default committed under the said sections before 25th March, 2020.
In pursuant to the above section, the Central Government issued two notifications. They are as follows:-
45a. Inserted by the Insolvency and Bankruptcy Code (Second Amendment) Act, 2020 w.e.f. 5-6-2020.
45b. Notification No. S.O. 3265(E), dated 24-9-2020: In exercise of the powers conferred by section 10A of the Insolvency and Bankruptcy Code, 2016 (31 of 2016) [as inserted by section 2 of the Insolvency and Bankruptcy Code (Second Amendment) Act, 2020 (17 of 2020)], the Central Government hereby notifies further period of three months from the 25th September, 2020 for the purposes of the said section.
Notification No. S.O. 4638(E), dated 22-12-2020: In exercise of the powers conferred by section 10A of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government hereby notifies further period of three months from the 25th December, 2020, for the purposes of the said section.
However, the plea of the Applicant is that the payment was made by the Respondent/Corporate Debtor on the account basis and not as per invoice basis and in this regard, the Respondent/Corporate Debtor consistently made payment till 01.07.2021. Thereafter, the default took place as no payment was made after 01.07.2021 which were due and payable against the supply made during the period of 14.07.2020 to 02.10.2020 vide invoices No.GT/1206 of 2020 to invoice No.GT/3358 of 2020. Hence, the debt of the unpaid Invoices claiming to be fallen due on 01.07.2021.
The Applicant has shifted the date of default of the unpaid invoices to 01.07.2021 under the garb of last payment received on 01.07.2021 to avoid the case from exempted period U/s 10A of the IBC. However, the date of original default cannot be allowed to be shifted on the basis of mere subsequent payment or acknowledgments of debt liability or subsequent promise of the respondent to clear the payment. In Company Appeal (AT) Insolvency No. 850 of 2023 titled IDBI Trusteeship Services Ltd. Vs. Direct Media Distribution Ventures Pvt. Ltd. decided on 12.09.2023, Hon‟ble NCLAT New Delhi held that mere fact that default amount is reduced by certain amount realized after the invocation of Corporate Guarantee and issued a new notice to Corporate Guarantor cannot change the date of default.
In fact, out of all the annexed invoices, the last three invoices dated 31.03.2021, 30.04.2021 and 31.07.2021 are eligible to claim the default as under:-
| Sr. No. | Invoice Date | Outstanding Amount (Rs.) | |
|---|---|---|---|
| 1 | 31.03.2021 | 1238.00 | |
| 2 | 30.04.2021 | 900.00 | |
| 3 | 31.07.2021 | 500.00 | |
| Total (Rs.) | 2638.00 | ||
| CP(IB)No.341 of 2022 In the matter of M/s. Favourite Minerals LLP V/s. M/s. Ramos Ceramic Private Limited | |||
However the total of sum of all the three invoices, i.e. Rs.2638/-does not meet the minimum threshold of rupees one crore, which is required to initiate the Corporate Insolvency Resolution Process against the Respondent/Corporate Debtor.
However, the total outstanding of the Applicant has mentioned the date of default between the period from 25.03.2020 to 25.03.2021 under the subsequent acknowledgments of debt liability and However, it appears that the present application has been filed merely to create legal pressure under the hood of IBC for the recovery of the dues. We rely upon the judgment of Hon‟ble Principal Bench in the matter of Ms. Rita Malhotra and Ors. Vs. M/s. Orris Infrastructure Pvt. Ltd. (CP (IB) -234(PB)/2019) wherein it is said that IBC cannot be used as a tool of recovery.
Accordingly, we are of the opinion that the present application filed under section 9 of the I.B. Code, 2016 for the debt fell due against the Invoices raised with effect from 14.04.2020 to 28.02.2020 are not maintainable being hit by exempted period under Section 10A of the I.B. Code, 2016 and the same is dismissed with no order as to costs.