M/s. Italimpianti Orafi SPA vs Greenworld International Pvt. Ltd.

The petitioner seeks to invoke the provisions of Section 9 of the Insolvency & Bankruptcy Code against the respondent/Corporate Debtor alleging that they have a legally recoverable claim against the Corporate Debtor, which despite repeated requests and reminders, has not been paid.

It is submitted by the petitioner that the Plant and Machinery were duly imported from Italy and commissioned at the Corporate Debtor's work site in Delhi in the month of December, 2013 and has been in use and possession of the Corporate Debtor, but the full payment has not been remitted to them.

The grievance of the Operational Creditor's is that the last tranche of Euro 185,000.00, being the 5th and final instalment, has not been paid by the Corporate Debtor. At the request of the Corporate Debtor, this instalment was agreed to be repaid in 8 monthly instalments w.e.f. June, 2014 to January, 2015. Despite this concession, it is submitted that the Corporate Debtor has failed to release this amount. As the outstanding liability of 185,000.00 Euros stood unremitted, the Operational Creditor was compelled to file a Winding Up proceeding before the Hon'ble High Court of Delhi which has culminated in the present proceeding. Due compliance of the statutory provisions have been made by the Operational Creditor.

On being served, the Corporate Debtor has filed its reply and seeks to resist the prayer made in the petition on two grounds, viz. claim being barred by limitation and existence of disputes. It therefore becomes imperative for this Bench to examine both these issues.

With respect to the claim being within limitation, ld. Counsel for the Operational Creditor has submitted that the Corporate Debtor expressed financial constraints and conceding to their problems, a fresh MoU was drafted. This draft of the MoU, which upon negotiation between the parties was duly signed by the Operational Creditor and sent to the Corporate Debtor, was however not countersigned by the Corporate Debtor. It appears that the negotiation on this front for rescheduling the repayment of the final instalment was probably done to buy time. Since the MoU dated 07.05.2014 rescheduling the repayment though instalments, though referred to in their subsequent mails was never countersigned by the Corporate Debtor, it does not bind them nor can extend the limitation upto the January 2015, when the last instalment was proposed to be paid. Notwithstanding the same, the liability towards payment has been expressly accepted vide emails dated 26.11.2014 & 17.12.2014 in terms of the following:

Again, as per email dated December 17, 2014

Taking the aforesaid into consideration, the limitation in any event extends till 16.12.2017. The liability to pay Euros 185,000 was clearly acknowledged and was never in dispute. To enable the Corporate Debtor tide over their financial crisis, the Operational Creditor also agreed to grant them time to pay in instalments. Since the repayment schedule was not adhered to despite reminders given, the petitioner filed a Winding Up Petition before the Hon'ble High Court of Delhi being Company petition No. 474/2019. The said petition which was filed in May 2016 was transferred to the NCLT on 17.04.2017. Keeping in view the specific requirements under the Code which required the petitioner to issue a demand notice under Section 8 of the Code, the petitioner was allowed to withdraw the petition with liberty to file afresh under the Code. The said order is dated 10th August, 2017. In view of the pendency of the Writ Ptition before the Hon'ble Delhi High Court and later with the NCLT, the period till 10th August, 2017 from at least 24th May, 2016 (date of the 1st order is 25th May, 2016) is sought to be excluded. This would approximately result in extension of 442 days beyond 16.12.2017 i.e. upto 4th March, 2019. The petitioner seeks benefit under Section 14 of the Limitation Act in computing the period of limitation, and therefore, this petition which has been filed on 08th February 2019 is within limitation.

The second point of resistance is pendency of a prior dispute. Various correspondence are on record which corroborate that initially a dispute did exist with respect to the dissatisfaction over the performance of the plant in respect of its quantitative and qualitative output and other issues. It is the Corporate Debtor 's case that the project being one of its kind, the technology imparted for its operation and functioning was to be provided by the Operational Creditor upon which the performance/output of the machinery depended. It was communicated that the plant did not even perform at 10% of what was assured. Communications are on record regarding the problems faced in running the plant in respect of its incinerators, Gas furnace, refining problems in copper and precious metals due to which the business resulted into losses. The training to address trouble shooting in refining the metals was also not appropriately provided. It is the Corporate Debtor's case that despite having paid Euros 945,000 i.e. 84% of the agreed price, the support was not offered by the petitioner company. The staff of the Corporate Debtor was not trained on the maintenance procedure of the machine. Reliance has been made on the reply dated 25.03.2016 to the legal notice issued by the Operational Creditor, that there was an existence of dispute between the parties on various points, primarily relating to technical issues faced by the respondent/Corporate Debtor in the installation/operation of the plant and machinery, apart from lack of training of the employees of the company and how to deal with the break down services. From the various mails relied upon the parties it appears that there were initial teething problems in operating the plant, and dissatisfaction over the overall performance of the plant commissioned by the Operational Creditor. The quality and quantity of the recovered metal was not as projected. Other than lack of training of staff on the maintenance procedure, there were other issues in respect of smelting furnaces, and services back-up. However, all these issues seem to have been addressed by the Operational Creditor. It is pertinent to note that there is no correspondence, bringing on record any dissatisfaction or raising any dispute with respect to the installation, or any other back up or ancillary service after mid 2014. The plant was used for alternate purpose i.e. refining of gold dore bars after the Corporate Debtor obtained a licence from the Government of India. There is a complete silence on the part of the Corporate Debtor thereafter, accept that they promised to pay the balance due. This gives rise to the surmise that no dispute in respect of the working of machinery was raised thereafter. It is only in reply to the legal notice that we find that all these earlier issues were again taken as a defence.

The dispute is sought to be raised was in respect of installation and operation, which appear to have been addressed. No dissatisfaction over the working of the machinery has been raised after May, 2014 and except for promises to pay the outstanding balance, no further complaints are on record. This evident from the email dated 26th November, 2014 when the Corporate Debtor confirms that

The Corporate Debtor then received a licence to refine gold dore bars imported under a scheme of the Government of India. It is observed that thereafter there is no complaint on record in respect of working of the plant and machinery. The communication thereafter is only for liquidating the outstanding liability in instalments.

Since we do not find any correspondence relating to further complaint in respect of the machine after mid-2014, when the Corporate debtor undertook to repay in instalments. Though they did not sign the MoU, it appears that the machine was being operated satisfactorily. Initial teething problems which were addressed by the Operational Creditor cannot be viewed as a dispute to escape the liability to pay the full price of the machinery imported from the Operational Creditor. The Operational Creditor is entitled to the balance payment of Euros 185,000/- which the Corporate Debtor has failed to pay, giving rise to a default of an operational claims. The resistance on both courts as raised by the Corporate Debtor are unsustainable. The claim is within limitation. In view of the same, the petition stands admitted. Accordingly, a moratorium in terms of Section 14 of Code comes into effect forthwith, staying:

The Operational Creditor has not proposed the name of any IRP. Accordingly, we appoint, Mr. Sunil Kumar Gupta, Registration No. IBBI/IPA-001/IP-P00205/2017-18/10394, email: caskg82@gmail. Com Mobile No. 9953999077 duly empanelled with the IBBI as the IRP. He is directed to take such steps as are mandated under the Code, more specifically under Sections 15, 17,18,20 and 21 and file his report.

The Operational Creditor is directed to deposit a sum of Rs. 2 lakhs with the IRP to meet the immediate expenses, which shall be fully accounted for. The same shall be duly reimbursed to the Operational Creditor by the CoC to be recovered as CIR costs.

Copy of the order be communicated to both the parties as well as to the IRP.

To come up on for (6^th) January, 2020 further consideration.