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Judgment
This Application filed under Section 9 of the Insolvency and Bankruptcy Code (the Code for short) seeking Corporate Insolvency Resolution Process (CIRP) against the Respondent Company i.e. Kolla Innovatives Infotech Private Limited (CD) alleging default in payment of a Financial Debt.
The Petitioner Company i.e. Ingram Micro India Private Limited (OC) is incorporated on (5^{\text{th}}) April, 2005 in the erstwhile State of Andhra Pradesh. It is a leading distributor of IT Hardware and Software products including all telecommunication equipment, office automation equipment, also provides training warehousing and other allied services over the years built an exceptional reputation in respect of the services it provides.
The Corporate Debtor has approached the Operational Creditor for procurement of goods provided certain products to the Corporate Debtor against specific Invoices and approached for procurement of products. The OC accordingly supplied products to the CD from time to time to an extent of Rs.83,95,445/- and the CD has accepted the products without any demur as regards its price, delivery, quantity and quality etc.. Copies of the Invoices raised on the CD which remain unadjusted/unpaid after considering payment made for the supplies made by the OC annexed and marked as Annexure-III.
It is stated that since the Corporate Debtor was maintaining a running account with the Operational Creditor, any and all payments made by the CD were adjusted against the outstanding balance due and payable on the date of such payment and the unadjusted balance towards unpaid invoices would reflected in the Statement of Account. Copy of the Statement of Account of the CD is annexed and marked as Annexure-IV.
It is further alleged that the CD has acknowledged liability and undertaken to liquidate the outstanding amounts due and payable to the OC by various contemporaneous e-mail correspondence copies of which are marked as Annexure V and stated that there is no dispute what-so-ever in respect of the products supplied by the OC and the Corporate Debtor is simply attempting to delay payment of the legitimate dues of the OC.
It is averred that since no payment was made by the CD despite repeated reminders, the OC constrained to exercise its rights in accordance with the agreed terms of supply and therefore deposited the Cheque bearing No.047659 dated 18th Sept, 2019 for an amount of Rs.83,95,445/- (Rupees Eighty Three Lakhs Ninety Five Thousand Four Hundred and Forty Five only) drawn on Union Bank of India which was returned dishonoured for the reason “Account closed”. A copy of the said cheque along with the Bank Memo is annexed at Annexure-VI. It caused a Notice of demand to be issued under Section 138 of the Negotiable Instruments Act to the CD demanding the amount covered under the dishonoured cheque. Copy of the same is marked as Annexure VII. However, no payment was made by the CD. Despite service of the demand notice under Section 138 of the Negotiable Instruments Act 1881 no payment was made by the Corporate Debtor.
In view of the aforesaid a Notice in Form-3 was addressed to the CD and served on the CD at its Registered Office address which has been duly received by the Corporate Debtor. Copy of the Notice of Demand and the proof of service are marked as Annexure-VIII. However no payment has been made by the Corporate Debtor till date and 10 days from service of the notice of demand have already elapsed.
The statement of unpaid invoices is annexed at Annexed-IX.
Operational Creditor claims an amount of Rs.83,95,445/- (Rupees Eighty Three Lakh Ninety Five Thousand Four Hundred and Forty Five Only) against the outstanding value of the supplies made to the CD with interest thereon from the due of the value of outstanding invoices @ 24% per annum calculated up to 20.11.2019 amounting to Rs.27,37,271/- (Rupees Twenty Seven Lakhs Thirty Seven Thousand Two Hundred and Seventy One only) (inclusive of GST amount of Rs.4,17,549/- together aggregating to Rs.1,11,32,716/- (Rupees One Crore Eleven Lakhs Thirty Two Thousand Seven Hundred and Sixteen Only). Working of the same is annexed at: (Annexure-IX).
The Petitioner/Operational Creditor placed heave reliance on the following documents which are marked as Exhibits, as follows:
I. Copy of Un-registered GPA dated 26.12.2017.
II. Copies of the Tax Invoices comprising terms & conditions along with email & courier receipts.
| Sl No. | Date of Invoice | Tax Invoice No. |
|---|---|---|
| 1 | 24.08.2018 | GDL12040240191 |
| 2 | 24.08.2018 | GDL12040240192 |
| 3 | 24.08.2018 | GDL12020020777 |
| 4 | 29.08.2018 | GDL12050321764 |
| 5 | 31.08.2018 | GDL12040241568 |
| 6 | 31.08.2018 | GDL12020021330 |
III. Copies of the Statement of Account.
IV. Copies of the e-mail communication by the Applicant to the Corporate Debtor.
V. Copy of the dishonoured cheque bearing vide No.047659 along with the Bank memo dated 21.09.2019.
VI. Copy of the Statement of unpaid invoices.
In view of the above circumstances the Operational Creditor prays that it appears the CD is unable to pay the dues as they arise in the ordinary course of business and therefore this petition deserves to be admitted and the Insolvency Professional be directed to take charge of the assets of the Corporate Debtor.
The Corporate Debtor has filed an affidavit along with the Counter in which it is submitted as follows:
a)That the Petitioner/Operational Creditor is the National distributor of HP India Limited dealing with the business of the Laptops and other Computer Products. Respondent/Corporate Debtor is the local distributor for the Ingram Micro from last 10 years in the dealing of the same products and having the good relations in terms of business transaction as well as the business transaction.
b)That the Petitioner/Operational Creditor has filed a Company Petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 r/w Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for a total aggregate amount of Rs.1,09,04,728/- including an interest amount @24% per annum on the principal amount outstanding of Rs.83,95,445/-.
c)It is also submitted that Petitioner/Operational Creditor and Respondent/Corporate Debtor wanted to settle the matter out of the court considering the business relation between them. The Respondent/Corporate Debtor was willing to make terms with the Petitioner/Operational Creditor. Due to the pandemic situation, it was difficult to consider smooth talks between Petitioner/Operational Creditor and Respondent/Corporate Debtor. The office of the Respondent / Corporate Debtor was closed due to the pandemic and the staff had no access to the documents and details. Due to halt in the administrative affairs, the Respondent / Corporate Debtor and its staff faced difficulties to make submissions to the Hon'ble Tribunal.
d)It is further submitted that considering the compromise to be made between the parties for closure of the claim of the petitioner, counter affidavit was not filed. While the matter stood thus, the Hon'ble Tribunal has forfeited the right of the Respondent / Corporate Debtor for filing of the counter affidavit to state their contentions. The matter was called on 11th August 2020 for want of filing counter affidavit as last chance. As the Counter affidavit was not filed by the Respondent / Corporate Debtor, the right has been forfeited. Though the matter was posted for hearing before admission, the right of Respondent / Corporate Debtor for filing counter was forfeited.
e)It is submitted that the representative of the Respondent / Corporate Debtor is established in Visakhapatnam and couldn't travel for filing and signature due to lock down and pandemic. Henceforth, the delay.
f)That the Respondent / Corporate Debtor is not misrepresenting the Court as he is not a wilful defaulter and have been appearing for all the hearings from January, 2020 and prayed that this Adjudicating Authority may be pleased to set aside the forfeiture order dated 11.08.2020 and allow the Respondent / CD to file its counter and the same may be taken on record in the interest of justice.
g)It is further submitted that the present Petition filed by the Petitioner/OC is not maintainable under Section 9 of the Insolvency and Bankruptcy Code, 2016 and as such is liable to be dismissed at the threshold itself owing to procedural lapse in the said application. That apart, the applicant herein has prima-facie failed to establish the relation between Operational Creditor and Corporate Debtor and in the absence of the same the application cannot be entertained by this Adjudicating Authority. Therefore, on this sole ground the application is liable to be dismissed in limine.
h)It is respectfully submitted that before proceeding to para wise reply, Respondent/CD intends to put forth the true and correct facts of the case.
i)The said company is inter alia engaged in the business of dealing with Hardware Products pertaining to that of Computers especially for HP, Lenovo, Dell branded Laptops and Desktops.
ii) It is respectfully submitted that M/s. Kolla Innovative Infotech Pvt Ltd, the Corporate Debtor / Respondent is a Private Limited incorporate under the Companies Act, 1956 and operating under the name and style of M/s. Kolla Innovative Infotech Pvt Ltd. Eversince the date of its establishment the company has been delivering its services to the utmost satisfaction of all its customers and till date there has been no complaint whatsoever from any corner.
iii) It is pertinent to mention herein that the Respondent / Corporate Debtor has earned a good amount of name and fame as a Distributor and hence it was appointed as a Regional Distributor for the area in East Godavari, Visakhapatnam, Vizianagaram, Srikakulam District of Andhra Pradesh.
iv) It is respectfully submitted that being the Regional Distributor, the Corporate Debtor has been delivering products to the utmost satisfaction of the retail stores who place orders on the Corporate Debtor for the large quantities of the product.
v)It is respectfully submitted that the Operational Creditor is also one such Private Limited Company operating in similar business i.e. Supplying Computers and other allied hardware products across the country to wholesale purchasers and also supplies products to the Corporate Debtor. It is not out of place to mention herein that the Corporate Debtor has on several occasions sought for supply of the products for the purpose of distributing the same t the local retail outlets in East Godavari, Visakhapatnam, Vizianagaram, Srikakulam Districts of Andhra Pradesh and has maintained healthy business relations with the Operational Creditor by making payments in a timely manner. The Copies of the earlier payments and transactions made between the Operational Creditor / Petitioner, Corporate Debtor / Respondent are filed herewith as Annexure No.1.
vi) In the recent times the Operational Creditor has been insisting for payment of money towards certain supplies of products which it allegedly claims to have supplied during the period of 2018 and claims a due of an amount to the tune of Rs.83,95,445 for the such supplies made. The said claim amounts are absolutely false and denied by the Corporate Debtor / Respondent and as such the entire application filed before this Hon'ble Tribunal through the present Section 9 is denied by the Corporate Debtor as it is false and frivolous.
Now the Corporate Debtor / Respondent intends to give the following para wise counter to the Application filed by the Operational Creditor:
The first and foremost aspect that requires consideration by this Hon'ble Tribunal is that the petitioner herein fails to file any document to prove or show that there exists a valid contract nor does it file any documents to show that there are any valid purchase orders raised by the respondents on the petitioner for the supply of goods, so claimed by it. A bare perusal of the entire material index goes to show that no such documents have been filed to establish the relationship between the petitioner and respondent and therefore the present application is liable to be dismissed on account of failure to establish the nature of the relation.
When there is no privity of contract between the petitioner and the respondent. Any amount of transaction made or alleged to have been made would involve aspects that require fact finding and since the proceedings before the Company Law Tribunal are Summary in nature as the present case involves fact finding issues therefore this Hon'ble Tribunal cannot look into such disputed question of facts and it is the competent Civil Court having jurisdiction which can try such matters.
The Operational Creditor /Petitioner in his petition has failed to mention the details of the transaction, more particularly about dates on which the amount fell due. In the absence of a particular period the petitioner / operational creditor cannot arrive at or clam for amounts nor calculate any interest thereby making the application defective and also liable for rejection. That apart, the said non-mentioning of the period in the particulars of operational debt amounts to deliberate omission and violation of mandatory information that needs to be revealed in the present application. Therefore, on the ground of defective application the present petition needs to be dismissed.
The Petitioner / Operational Creditor has only produced the copy of the tax invoices in the present application which does not reveal any details about the payment clauses nor about any interest that accrues upon delay of such payments and merely basing upon such tax invoices the petitioner / Operational Creditor is claiming liability to the tune of Rs.83,95,445/- against the Respondent / Corporate Debtor which in the eyes of law is only a self serving document which cannot disclose nor establish any liability amounts against the Respondents. It is further submitted that tax invoices are merely documents which mention details about the products. However, the final output might very depending upon the products which might be omitted due to the damages or purchase returns caused to them or might also include defective products which might be returned and hence the tax invoices on the face of it cannot be any use in establishing strict liability against the Respondent / Corporate Debtor.
In order to clarify for a valid contract there needs to be an offer and an acceptance which in the present case has to be understood in the form of Purchase Order being raised by the respondent on the petitioner and the petitioner supplying the same. However, in the absence of such Purchase Order being raised there cannot be any claims nor can any documents which are attributed towards such Purchase Order, i.e. non-existent in the present case be used to claim the liability. Therefore, amounts claimed in the present petition in the background of there being no Purchase Orders cannot be valid and any other liability being fixed on the respondent cannot be taken as absolute as the same could also pertain to earlier transactions for which amounts have already been paid by the respondent.
The Annexure – V which the Petitioner / Operational Creditor relies heavily upon and claims that there is an admission on the part of the Respondent is absolutely false and incorrect and hence denied by the Respondent in toto. It is pertinent to mention herein that the Respondent herein has only agreed that he is due certain amounts but however does not agree to the fixed amounts and hence the said email cannot be construed as an admission but shall be only considered as exchange of correspondence between the parties. As regards to the proceedings initiated under Section 138 of Negotiable Instrument Act are concerned, the Petitioner herein has already approached a particular forum seeking redressal of grievance and having raised such a dispute is stopped from approaching this Hon’ble Tribunal. In the event this Hon’ble Tribunal entertains the present application it could amount to nothing but encourage forum shopping on the part of the litigants who, if given a chance would raise frivolous disputes endlessly.
Even a bare perusal of the Annexure annexed in support of the claim shows that the Petitioner / Operational Creditor has issued a Notice under Section 138 of Negotiable Instrument Act and also approached the appropriate forum for recovery of the amounts so claimed. Therefore, for fixing of criminal liability in one forum and seeking for recovery of amounts before another forum would be double taxing and hence the same cannot stand in the eyes of law and as such is liable to be dismissed.
The Petitioner / Operational Creditor has not filed a single document that conclusively establishes the liability of the Respondent / Corporate Debtor either in the form of tax payments nor any other form.
The Petitioner / Operational Creditor through his emails has stated the overall due amount of Rs.98,95,445.69 and further wished not to explain the calculation of the overall due amount. No receipts or bills have been produced to claim the pending amounts. The Petitioner / Operational Creditor has filed for a claim of Rs.83,95,445.69 and is unreasonable in bringing up the figures without any distinguished proof.
The Petitioner/Operational Creditor has calculated an interest amount of 24% per annum which is exorbitant amount and the same should not be considered.
The Respondent / Corporate Debtor reserves right to file additional counter and documents pertaining. The same could not be submitted as the office of the Respondent / Corporate Debtor has been closed due to pandemic and the official documents relating to the transactions are in the office. Henceforth, the Respondent / Corporate Debtor has no access to the documents pertaining to the transactions made between the Petitioner / Operational Creditor and Respondent / Corporate Debtor.
The Respondent/Corporate Debtor averring the aforementioned contentions has raised the following defences:
The Application owing to procedural lapse failed to establish the relation between Operational Creditor and Corporate Debtor.
The said claim amount to the tune of Rs.83,95,445/- for payment of money towards supply of products are absolutely false and denied.
That the Petitioner herein failed to prove any documents or to show that there exists a valid contract nor does it filed any document to show that there are any valid purchase orders raised by the Respondent on the Petitioner / OC for the supply of goods.
There is no privity of contract between the Petitioner / OC and Respondent / CD.
Challenging the jurisdiction of this Adjudicating Authority.
Proceedings have already been initiated against this Respondent / CD under section 138 of NI Act and subsequently approached this Hon'ble Tribunal when the proceedings are already pending in the criminal court. (res sub judice).
Calculation of Rate of Interest @ 24 % P.A as an exorbitant amount.
Having considered the above submissions made on behalf of the parties, we are of the view that the following points may gratify to the defences raised by the Respondent/CD:
❖ "Section 5. (20) "operational creditor" means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred;
3.(8) "corporate debtor" means a corporate person who owes a debt to any person;
5.(21) "operational debt" means a claim in respect of the provision of goods or services including employment or a debt in respect of the repayment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority;"
❖ Tax invoices, email communications, courier receipts placed by the Petitioner/OC and cheque issued by the Corporate Debtor towards the same.
❖ Even though there is no express contract between the parties, the actions, conduct or circumstances of the parties drives an obligation which is legally binding on them, leads to form an implied contract which has the same legal force.
In view of Judgment by the Hon'ble Supreme Court of India in Kaushalya Devi MassandvsRoopkishoreKhore in Criminal Appeal No.723 of 2011, as also in the matter of SudhiSachdevvs APPL Industries Ltd. in Company Appeal (AT) (Insolvency) No.623 of 2018 by the Hon'ble NCLAT pending of Section 138 of NI Act against the Respondent / Corporate Debtor does not bar from proceeding with the present Application.
Subsequent to the passing of the order by this Tribunal, forfeiting the right of filing counter, on behalf of the Respondent / CD an Application was made annexing the counter. Even though the right to file the counter is forfeited in order to meet the ends of justice the counter is accepted and taken on record. However, on perusal of the contents raised in the counter, the following defences have been taken by the Respondent / CD.
Taking into consideration the above points, fact remains the same that it is an admitted debt and the Respondent/CD had also issued a cheque towards the payment of due in favour of the Petitioner / OC which goes to show that it is an admitted debt. Not going with the variations with regard to take the due amount is more than a lakh Rupees which gives jurisdiction to this Tribunal to entertain this Application.
The defence raised by the Respondent/CD in the case is frivolous and as only an attempt to misguide the Tribunal. Therefore, the contentions raised by the Petitioner/OC are to be considered on its merits and have to be accepted for the purpose of allowing this application.
Having heard learned counsels for both sides and perusal of records, we are satisfied that the Respondent/Corporate Debtor has failed to make its outstanding debt to the Petitioner/Operational Creditor and the same is more than the minimum of Rs.1,00,000/- (Rupees One Lakh Only) then prescribed in IBC and the Petition filed Under Section 9 of the IBC is complete in all respects and therefore no reasons to deny admission of the Petition. Therefore, this Adjudicating Authority has got the jurisdiction to entertain the Petition.
The Petition was filed on 05.12.2019 and first listed on 10.12.2019 posted for hearing on various dates from 23.12.2019 to 17.08.2020, for filing of counter/reply, rejoinder and written submissions, if any by the parties. This Adjudicating Authority has also ordered notices which was carried out accordingly by the Petitioner. Both counsels present and made their submissions having satisfied with the submissions from both the sides and perusal of record.
After hearing submissions of the counsel for the Petitioner/Operational Creditor and having perused the record, this Adjudicating Authority is satisfied that the Petitioner has proved its case by placing evidence that default has occurred for which the Corporate Debtor was liable to pay. The Petitioner has also placed on record proof of sending notices to the Respondent/CD for his appearance and for making submissions along with other material papers. The Petitioner has complied with all the requirements as stipulated under the provisions of the IB Code, 2016 for the purpose of initiating Corporate Insolvency Resolution Process. In these circumstances, having satisfied with the submissions made by the Petitioner/OC this Adjudicating Authority is inclined to admit the instant Petition.
Accordingly, the instant petition is hereby admitted and this Adjudicating Authority orders the commencement of the Corporate Insolvency Resolution Process which shall ordinarily get completed within the timelines stipulated in the IB Code, 2016 (as amended), reckoning from the day this order is passed.
This Adjudicating Authority hereby Appoint Mr. Sai Ramesh Kanuparthi, as IRP, since no IRP was proposed. The IRP is directed to take charge of the Respondent Corporate Debtor's management immediately. He is also directed to cause public announcement as prescribed under Section 15 of the Insolvency and Bankruptcy Code, 2016 within three days from the date the copy of this order is received, and call for submissions of claim in the manner as prescribed.10. The moratorium is hereby declared which shall have effect from the date of this Order till the completion of Corporate Insolvency Resolution Process, for the purposes referred to in Section 14 of the I & B Code, 2016. It is hereby ordered to prohibit 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 (54 of 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.
However, the supply of essential goods or services of the Corporate Debtor shall not be terminated or suspended or interrupted during moratorium period. Further, the provision of Sub-section (1) of Section 14 shall not apply to such transaction, as notified by the Central Government.
The IRP shall comply with the provisions of Sections 13 (2), 15, 17, & 18 of the Code. The IRP is also directed to submit his Form-II notice giving consents within three days from the date of receipt of this order. The directors of the Corporate Debtor, its promoters or any person associated with the management of the Corporate Debtor is expected to extend all assistance and cooperation to the IRP as stipulated under Section 19 and for discharging his function under Section 20 of the I & B Code, 2016.
The Operational Creditor and the Registry are directed to send the copy of this Order to IRP so that he could take charge of the Corporate Debtor's assets etc., and make compliance with this Order as per the provisions of I & B Code, 2016.
The Registry is directed to communicate this Order to the Operational Creditor and the Corporate Debtor.
The Registry shall also communicate this order to ROC, Hyderabad for updating the status of Corporate Debtor in MCA Website.
The detailed address of the IRP is as follows: Name : Mr. K.S. Ramesh Address : Plot No.6B, Beside TDP Office Road No.2, Banjara Hills, Hyderabad Email: [email protected] Cell: 9849039674 Reg. No: IBBI/IPA-001/P-P00910/2017-18/11510
The present Petition bearing CP(IB) No.216/9/AMR/2019 is hereby admitted.