M/s. Jayshree Industries vs M/s. Allam Infinite India Pvt. Ltd.

Per: Manoj Kumar Dubey, Member (Technical)

The instant Petition has been filed on 24.11.2021 u/s 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter as ‘IBC / Code’) r/w Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 by M/s. Jayshree Industries (hereinafter as ‘Petitioner / Operational Creditor’) with a prayer to initiate the Corporate Insolvency Resolution Process (CIRP) in respect of M/s. Allam Infinite India Pvt. Ltd. (hereinafter as ‘Respondent / Corporate Debtor’) for defaulting an amount of Rs.2,02,63,662/- due and payable by the Corporate Debtor.

The Corporate Debtor – M/s. Allam Infinite India Pvt. Ltd. is a Private Limited Company incorporated on 15.07.2016 under the Companies Act, 2013 bearing CIN: U70101KA2016PTC095043 with its registered office situated at Bengaluru. Hence, the jurisdiction lies with this Adjudicating Authority. Its Authorised Share Capital is Rs.50,00,000/- (Rupees Fifty Lakhs Only) and Paid-up Share Capital is Rs.1,00,000/- (Rupees One Lakh Only).

Brief facts of the case as stated by the Petitioner are as under:

Pursuant to the issue of notice, Respondent filed its statement of objections vide Diary No.4821 dated 10.11.2022 by inter alia contending as under:

In response to the above, the Petitioner filed Rejoinder vide Diary No.876 dated 14.02.2023, by inter alia stating as under:

Heard Shri Hrishikesh, Ld. Counsel for the Petitioner and Shri Sudharsan Suresh, Ld. Counsel for the Respondent and perused the pleadings.

It is seen that the instant Petition has been filed by the Operational Creditor M/s. Jayshree Industries seeking to initiate CIRP against the Corporate Debtor – M/s. Allam Infinite India Pvt. Ltd. for defaulting to pay the outstanding debt. As seen from Part-IV of Form-5 of the Petition, the total amount claimed to be in default is Rs.2,02,63,662/-. This Petition has been filed by the Operational Creditor u/s 9 of the Code on 24.11.2021, which is within the limitation period.

In compliance to the orders dated 07.04.2022 and 29.04.2022, Ld. Counsel for the Petitioner has filed an Affidavit vide Diary No.1852 dt.28.04.2022 and amended Form-5 vide Diary No.2428 dated 06.06.2022. In the affidavit filed on 28.04.2022, it is inter alia stated that as per the last invoice dated 19.03.2020, the default occurred on 18.04.2020, the demand notice was issued by the Petitioner to the Corporate Debtor on 08.09.2021 and the Petitioner served the copy of Petition on the Corporate Debtor on 23.11.2021. Therefore, the CP is filed within the period of limitation. It is further stated that a total sum of Rs.1,73,10,046/- has remained unpaid by the Corporate Debtor to the Petitioner towards the payment of Goods supplied by the Petitioner. Further, it is stated that in Point No.2 under Part-IV in Form-5 of the CP, an amount of Rs.2,02,63,662 has been inadvertently mentioned which is incorrect. Accordingly, in this affidavit filed on 28.04.2022, the Petitioner has sought to amend the Sl.No.2 of Part-IV (of Form-5) of the C.P. by inserting the following para; which was also incorporated in the Amended Form-5 filed vide Diary dated 06.06.2022. The relevant amended para with the date wise Tabular details of invoices and due dates given in Part-IV of Form-5 is as under:

On perusal of the records, it is observed that the Operational Creditor has supplied certain goods to the Corporate Debtor, and it raised invoices on the Corporate Debtor starting from invoice dt.04.05.2019 to 19.03.2020; out of which invoices for a total amount of Rs.1,73,10,046/- remained unpaid in accordance with the affidavit filed on 18.04.2022 and Part-IV Para Nos.1 & 2 of amended Form-5 filed on 06.06.2022. Further, with respect to the last invoice dated 19.03.2020 it is stated that the due date is 18.04.2020.

Further, the Petitioner filed a Memo vide Diary dated 23.05.2023 wherein it is stated that for the purposes of this Petition, the Petitioner is restricting the claim till the date before the commencement of the date of exclusion u/s 10A of the Code i.e., 25.03.2020. The sum of Invoices raised till 01.02.2020, which fell due on 01.03.2020 is Rs.2,01,59,360/-. Also, the sum of the amount received towards the said invoices till 01.02.2020 is stated to be Rs.80,76,726/-. Therefore, calculating the outstanding due till the said date i.e., 01.03.2020 by deducting the sum received towards total invoices raised till 01.02.2020, which fell due on 01.03.2020, the outstanding amount unpaid to the Petitioner is claimed at Rs.1,20,82,726/-(excluding interest). It is contended that this is above the basic pecuniary limit required to institute a Petition u/s 9 of the Code and thus the Petition is maintainable.

During the proceedings before this Tribunal on 26.05.2023, it was observed as under:

Further, vide order dated 09.06.2023, it was observed as under:

We have considered the submissions of the Applicant and the pleadings on record. We have also considered the submissions of the Petitioner to restrict the claim till the date before the commencement of the date of exclusion u/s 10A of the Code i.e., 25.03.2020.

A perusal of the Affidavit filed on 28.04.2022 requesting for inserting the amended Sl.No.2 in Part-IV of Form-5, along with the amended Form-5 Part-IV Para Nos.1 & 2 which has also been reproduced above reveals that the total amount outstanding claimed by the Petitioner was to the tune of Rs.1,73,10,046/-, which was stated to be in default. In this Sl.No.2 of Part-IV the due date for payments has been mentioned in the last Column of the Table, for which the explanation given in the Affidavit is that this is for the default, which is taken to be 30 days from the date of invoice. However, from this Table it is clearly noticed that for the invoices raised from 07.03.2020 till 19.03.2020, totalling 10 invoices in Part-IV of Form-5, the due dates for all are between 06.04.2020 till 18.04.2020; which are clearly excluded under the provisions of Section 10A of the I&B Code, 2016. The total amount for these Invoices for which dates of default (due dates) fall within the excluded period u/s 10A of IBC is therefore Rs.93,27,320/-, and if the same is excluded from the total outstanding of Rs.1,73,10,046/-mentioned in the Part-IV of amended Form-5 as well as the Affidavit filed on 28.04.2022, the remaining amount is Rs.79,82,726/- only, which is below the threshold requirement of Rupees One Crore for filing a Petition u/s 9 of the I&B Code.

The above was clearly pointed out to the Applicant in the proceedings on 26.05.2023 as well as 09.06.2023. However, there is no specific explanation given for the same. The Memo filed on 23.05.2023 claiming that the total outstanding amount even after exclusion of the above mentioned invoices with the due date falling under the period under Section 10A was Rs.2,01,59,360/- was in contradiction to the Application filed u/s 9 and the accompanying Form-5, the Affidavit filed on 28.04.2022 and the consequential amended Form-5 filed on 06.06.2022, all of which have clearly stated the outstanding amount to be Rs.1,73,10,046/- only. As already discussed above, this also included the invoices for which the due date was falling u/s 10A period which amounted to Rs.93,27,320/-. Therefore, ignoring all the submissions, affidavits and amended Form-5 filed earlier, the Applicant has contended that in this Memo filed on 23.05.2023 that the actual outstanding amount was Rs.2,01,59,360/- for the invoices raised till 01.02.2020, i.e. even after excluding the above referred 10 invoices dated 07.03.2020 onwards for which the due date was under the excluded period u/s 10A of the I&B Code, 2016. Therefore, these submissions given by the Petitioner which is without any basis cannot be considered.

In the last hearing held on 09.06.2023, an alternative argument was made that if the invoice date was considered as the due date, all the invoices given in the list in Column 2 of Part-IV of Form-5 would be eligible to be considered for this Petition, which is not a tenable argument. Interestingly, when the invoices attached with the Petition are perused, it is clearly stated in many of the invoices that the Terms of Payment was 60 days, in one invoice this period was mentioned as 30 days and in some other invoices no such time limit was given. Therefore, the contention in the Affidavit filed on 28.04.2022 that as per the terms agreed between the Parties, the Corporate Debtor has agreed to make payment within 30 days of the invoice date has not been substantiated by filing any such document. Therefore, there is an inherent lacuna in this argument, in particular, when we see the different due dates given on the different invoices. Moreover, in many of the Invoices, the due date has been stated to be 60 days, and if this period of due date is considered, then 4 more Invoices given in the Table in Column 2 of Part-IV of amended Form-5 will also fall under Section 10A period and have to be excluded from the total amount of eligible Invoices for the purpose of computation of threshold requirement.

Further, taking into account the invoices raised from 04.05.2019 till 01.02.2020 (excluding those in Section10A period) enclosed with the Company Petition, it is found that only the following invoices were enclosed with the Petition:

As seen from the above, the total amount of the Invoices enclosed with the CP is Rs.94,01,089/- only, which is again below the threshold limit of Rupees One Crore required under the I&B Code. Moreover, it is not known as to how many of these invoices were unpaid; since in the Memo filed on 23.05.2023, the Applicant has itself contended that out of the invoices raised upto 01.02.2020, a total of Rs.80,76,726/- worth invoices were already paid up by the Corporate Debtor.

It is also noticed that the Petitioner has claimed an interest @ 36% on the outstanding payments in the Part-IV of Form-5 filed with the original CP and also the revised Form-5, although it is mentioned as “an amount of Rs.1,73,10,046/- (Rupees One Crore Seventy Three Lakhs Ten Thousand Forty Six only) was the outstanding dues ‘less interest’ @ 36% per annum”. It is not understood as to what does this ‘less interest’ expression means. A perusal of the CP and the subsequent proceedings indicates that the Applicant is claiming interest @ 36% per annum on the outstanding amount. In view of various judicial precedents, including Hon’ble NCLAT Judgments; it is settled law that Interest in respect of application u/s 9 of the Code can only be considered if there is a specific Agreement to charge interest, which has not been produced in this case. Secondly, the interest could have been indicated in the Purchase Order also which has not been placed on record. Finally, coming to the argument that interest @ 36% has been mentioned in the Invoices, a perusal of the Invoices attached to this CP reflects that in many of the Invoices, in the condition given in the top right side of the Invoices, it is stated as under:

Accordingly, in view of above discussion, the instant Company Petition bearing C.P. (IB) No.15/BB/2022 is hereby dismissed as not maintainable in view of the threshold requirement not having been met. However, the Petitioner is granted liberty to pursue alternative remedies, as per Law.