M/s. Keshan Trading Corporation vs M/s. E-Power Energy (India) Private Limited

PER: K.ANANTHA PADMANABHA SWAMY MEMBER JUDICIAL

Under consideration is a Company Petition filed by M/s. Keshan Trading Corporation (in short Petitioner/Operational Creditor), a proprietorship firm having its place of business at 5-4-23/313 & 314, (3^{\text{rd}}) Floor, Ispat Bhavan, Distillery Road, Ranigunj, Secunderabad - 500 003 against M/s. Epower Energy (India) Private Limited (in short Respondent/Corporate Debtor), a company registered under the Companies Act, 1956 having its registered office at H. No. 30-625/21/56, Plot No. 56 RKH Colony, Dr. A. S. Rao Nagar, ECIL (PO), Hyderabad - 500 062 under section 9 of the Insolvency and Bankruptcy Code, 2016 (in short IB Code 2016) r/w Rule 6 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (in short IB Rules 2016).

Before proceeding with this matter, it would be appropriate to make a note of background facts for the purpose of determination of this petition.

The Petitioner/Operational Creditor is carrying on the business of trading of GI, Iron and Steel pipes, tubes, rods and Respondent/Corporate Debtor had approached the Petitioner/Operational Creditor for sale and supply of the said materials on credit. Both were having business from the year 2015. Both the petitioner/operational creditor and the corporate debtor entered into a Memorandum of Understanding on 24.02.2017 and the Corporate Debtor has issued various purchase orders to the operational Creditor. Initially the Corporate Debtor made the payments with a delay of few days, however, reposing faith, the operational creditor supplied the materials. The Corporate Debtor issued cheques and also requested the operational Creditor not to deposit the cheques, however, with the passage of time, the corporate debtor delayed in making payment resulting irreparable loss and damage to the business of the operational creditor. After a reasonable time, the Operational Creditor sent a statement of account as on 30.09.2017 for a total amount of Rs. 4,02,50,377/- to the Corporate Debtor and the Corporate Debtor has also confirmed the same and accepted the same. The Corporate Debtor had undertaken to pay an amount of Rs.2,00,00,000/- within 30 days from 18.09.2017 and the balance amount would be paid within 30 days thereafter. The Corporate Debtor had also requested the Operational Creditor to collect 85 tones of MS Pipes from the factory, however, he said assurance was never fulfilled by the operational creditor. The Operational Creditor reminded the Corporate Debtor through letters on various dates and the Corporate Debtor again affirmed on 02.01.2018 that the entire outstanding balance would be cleared in the next 15-20 days. Though the Corporate Debtor stating that the company is in the process of getting new investor, however, the outstanding balance has not been cleared so far. The Operational Creditor has also made paper publication in order to bring it to the notice of the new investor about the outstanding balances. The Corporate Debtor has issued a demand notice on 02.06.2018 and the same were returned with postal remark “Addressee Left”. The demand notice was sent again on 11.06.2018 to the two directors of the company and also through email on the same day. Though the director had received the email demand notice, not chosen to reply to the demand notice.

The learned Practicing Company Secretary for the petitioner/Operational Creditor while reiterating the above submitted that the Respondent/Corporate Debtor is unable to pay its debts and therefore he has no other option except approaching this Adjudicating Authority under I & B Code seeking an order for commencing the Corporate Resolution Process and prayed for an appointment of IRP to take over the affairs of the Respondent/Corporate Debtor.

The Respondent/Corporate Debtor filed counter. The learned Counsel for the Respondent/Corporate Debtor inter-alia submitted that Mr. Sumanth Naidu the principal director has personally undertaken to discharge the liability and the said director has also mortgaged the properties by way of depositing title deeds of his agricultural land admeasuring to 11 acres in RR district. Therefore, the director of the company stepped into the shoes of the company and the debt due from the corporate debtor is undertaken to be repaid by the director. In view of this there is no debt is due from the Corporate Debtor. The Operational Creditor suppressed the said facts before the Tribunal. The learned Counsel for the Corporate Debtor relied on an undated settlement agreement between the Operational Creditor and the Corporate Debtor and also submitted that the Operational Creditor has acknowledged the fact regarding the mortgage of the documents vide their letter dated 29.11.2018. In view of this the learned Counsel for the Corporate Debtor submitted that the application is not maintainable under the Code and prayed for dismissal of the petition.

The petitioner filed Rejoinder. The learned PCS for the petitioner, while reiterating the averments made in the rejoinder submitted that the corporate debtor has confirmed and given ledger confirmation for both the principle and interest for the amounts payable as on 30.09.2017. Further neither corporate debtor nor its directors mortgaged any properties and the said statement is completely false. The outstanding due as on 30.09.2018 is Rs. 5,31,36,840/- and the corporate debtor has offered an amount of Rs. 4,00,00,000/- and also offered that an amount of Rs.20,00,000/- would be paid upon withdrawal of the application. The balance amount would be paid over a period of 2 years. It is a fact that the Operational Creditor informed the Corporate Debtor that they are ready to forgo an amount of Rs. 31,36,840/- provided the corporate debtor makes an initial payment of Rs, 2,50,00,000/- for withdrawal of the application followed by monthly payment of Rs. 25,00,000/- over a period of 10 months. This offer was till 20.12.2018, however, there was no response from the Corporate Debtor. Since, the Corporate Debtor failed to make the payments, the learned Counsel for the petitioner prayed for admitting the petition and commence the CIRP against the Corporate Debtor.

7. Heard both the parties and perused the documents.

8. The Operational Creditor submitted all the relevant records including the invoices and the confirmation of the debt by the Corporate Debtor and all are on record. The Corporate Debtor has stated that there is settlement between the parties and accordingly one of the Directors mortgaged his personal properties to clear due on behalf of the Company and therefore the petition is not maintainable. It is pertinent to note that the said memorandum of understanding is not dated and it has not been signed by any of the parties. The Settlement Agreement was not signed by the parties and not dated, therefore, cannot be taken into consideration to decide the issue. Further, the Operational Creditor by its letter dated 29.11.2018 has categorically stated that the said agreement is not acceptable to them and also stated that the original documents referred in the agreement have no bearing with the transactions and therefore they have not commented on it. In view of the above, it is clear that the settlement agreement relied by the Corporate Debtor is not in force and the Operational Creditor has also said that there is no bearing on the original documents and the transactions impugned in the petition. The Corporate Debtor has also failed to submit the relevant documents in order to show that the properties of the director have been mortgaged to the Operational Creditor. It is proved beyond doubt that the Corporate Debtor is failed to make the payments to the Operational Creditor and therefore, the petition is admitted.

It is appropriate here to rely on the Judgement of Hon'ble NCLT, Mumbai Bench in the matter of Bell Finvest (India) Limited Vs Luthra Water Systems Private Limited where in it is observed that "Further that, as far as the question of churned amount is concerned we are of the opinion that, this Tribunal is not to decide the quantum of amount in default but, this Tribunal is merely to decide whether there is Default under S. 3(12) of the Code or not? And as already said there is Default under S. 3(12) of the Code on the side of the Corporate Debtor. We are of the opinion that, the quantum of claimed amount is to be decided by the Resolution Professional, so appointed". Even in the present case the quantum amount of interest claimed by the Petitioner as against the principle is to be decided by the Resolution Professional and not by this Adjudicating Authority. It is clear from the record that there is a default of Operational Debt by the Corporate Debtor.

The petitioner has also placed on record proof of sending notices and its deliveries and also filed an affidavit and bank statement under section 9(3)(b) and 9(3)(c) of IB Code. The petitioner has complied with the all the requirement as stipulated under the provisions of the IB code, 2016 for the purpose of initiating Corporate Insolvency Resolution Process. In these circumstances, this Adjudicating Authority is inclined to admit the instant petition.

Therefore, the instant petition is admitted and I order commencement of the Corporate Insolvency Resolution Process which shall ordinarily get completed within 180 days, reckoning from the day this order is passed.

I hereby appoint Mr. Mahadev Tirunagari, (Registration No. IBBI/IPA-002/IP-N00320/2017-2018/10925), having office at Sri Venkateswara Nilayam, Plot No. 10, Krishnapuram, Road No. 10, Banjara Hills, Hyderabad – 500 034 as Interim Resolution Professional (IRP) proposed by the Petitioner as per their letter dated 20.12.2018. There are no disciplinary proceedings pending against the IRP and his name is reflected in IBBI website. 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 IB Code, 2016 within three days from the date of the copy of this order is received and call for submissions of claim in the manner as prescribed.

I declare the moratorium which shall have effect from the date of this order till the completion of Corporate insolvency resolution process for the purpose referred to in Section 14 of the I & B Code, 2016. I order to prohibit all of the following, namely:

The supply of essential goods or services of the Corporate Debtor shall not be terminated or suspended or interrupted during moratorium period. The provisions of Sub-section (1) of Section 414 shall not apply to such transactions, as notified by the Central Government.

The IRP so appointed shall comply with the provisions of sections 13(2), 15, 17 & 18 of the Code. The directors, Promoters or any other person associated with the management of Corporate Debtor are directed to extend all assistance and cooperation to the IRP as stipulated under Section 19 and for discharging his functions under Section 20 of the I & B Code.

The petitioner/OC as well as the Registry is directed to send the copy of this order to IRP on his appointment so that he could take charge of the Corporate Debtor's assets etc and make compliance with this order as per the provisions of the I & B Code, 2016.

The Registry is also directed to communicate this order to the Operational Creditor and the Corporate Debtor.

With the above directions, the petition bearing CP (IB) No. 364/09/HDB/2018 is hereby admitted.