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Judgment
Per: Chandra Bhan Singh, Member (Technical).
ORDER
This Application has been filed by M/s Nicotra India Pvt Ltd, Delhi-110096 (hereinafter called “Operational Creditor”) u/s 9 of the Insolvency & Bankruptcy Code, 2016 read with Rule 6 (Application to Adjudicating Authority) of the Insolvency & Bankruptcy Rules, 2016 seeking to initiate Corporate Insolvency Resolution Process against M/s Savlon Aircon Pvt Ltd, Thane, Maharashtra, (Corporate Debtor) for a total Operational debt amount of Rs.52,30,945/- (Rs.38,71,942/- + Interest @ 18% p.a. accrued thereon of Rs.13,59,003/-) as on 31.03.2019. The details of the outstanding liability calculation sheet for Rs.38,71,942/- as on 31.03.2019 is as under:-
A snap shot of one of Invoices No.1069 dated 16.06.2017 for Rs.1,00,488/-, allegedly outstanding is as below:-
The submissions of the Applicant/ Operational Creditor in this matter are as follows:-
The Operational Creditor submits that the present Application is filed u/s 9 of the Insolvency & Bankruptcy Code, 2016 r/w Rule 6 (Application to Adjudicating Authority) of the Insolvency and Bankruptcy Rules, 2016 owing to the defaults made by the Corporate Debtor in making payment of the amount due to the Applicant.
The Operational Creditor submits that the Corporate Debtor approached the Operational Creditor to get the supply of Demper, Diffuser, Grills, etc. based on which the Purchase Order was made.
The Operational Creditor further submits that they raised Invoices for the supplies as per the Purchase Order and they were duly accepted by the Corporate Debtor without any protest or objection. The Petitioner also submits that mutually decided terms for the Invoice payment were issued by the Corporate Debtor. After making certain initial and random payments the Corporate Debtor delayed and intentionally avoided making payments after duly the products and services to their satisfaction.
As per the Operational Creditor, the Respondent/ Corporate Debtor has confirmed the liability on 04.04.2018. The Respondent Debtor again confirmed its liability in its email dated 04.02.2019, reproduced below:-
“Dear Sir, This is with reference to the discussions had with you during our visit to our office , we hereby confirm that the balance outstanding payments of Rs.38.71 lacs shall be released by 28 Feb 2019. We sincerely regret the delay in release of the payments. Thanks and Regards, Laxman Sahane +91 9870 00 5711 M/S. SAVLON AIRCON PVT.LTD.”
The Petitioner submits that even after the assurance in the above email, the Respondent Debtor failed to make payments. Therefore, the Operational Creditor issued a statutory demand notice on 29.05.2019 under Section 8 of the Code requesting to unconditionally repay the unpaid and admitted operational debt within 10 days. The Petitioner submits that the Corporate Debtor had not replied to this demand notice within the stipulated time.
3. Submissions by the Corporate Debtor :-
The Corporate Debtor submits that the Operational Creditor filed this Petition with a mala fide intent to recover money from the Corporate Debtor and not a resolution of insolvency as envisaged being the first objective of the Code. The Corporate Debtor pleads that the objective of the Code is to revive and continue the Company and not winding up of the Corporate Debtor Company.
The Corporate Debtor denies that the total outstanding dues is of Rs. 52,30,945/- on 31.03.2019, including interest of Rs. 13,59,003/-. The Corporate Debtor further submits that there was no understanding between the Corporate Debtor and the Petitioner/ Operational Creditor to levy interest @ 18% p.a. for delayed payment of any amount against any Invoice raised by the Applicant. The Respondent also submits that the Invoices raised by the Operational Creditor did not contain any such stipulation.
According to the Corporate Debtor, they had replied to the demand letter of the Operational Creditor dated 29.05.2019, vide their letter dated 28.07.2019 citing certain allegedly pre-existed issues/ disputes between the Applicant and the Corporate Debtor prior to 31.05.2019. A copy of the email dated 28.07.2019 is reproduced below:-
“28 July 2019 To, M/s Nicotra India Pvt Ltd Shop No. 2F-201, 2 Floor, Plot No.1 & 2, LSC, Block-G, Kondi Gharoli, Mayur Vihar Phase III, Delhi – 110096 Subject: Your Demand Notice dated 29/05/2019 Madam/Sir, We are in receipt of your above demand notice.
1.Your demand notice was not sent at our registered office. It was sent at other office not regularly visited by directors. It was received by Directors only yesterday. So there is delay in reply.
2.We draw your kind attention to an L C Of Rs. 5,29,761/-was drawn and bills of same amount were adjusted against that L.C. Was duly retired by us on maturity date. It seems that you have not given full credit for that to us.
3.We also draw your attention to amount due to us from your side on account of direct work order of supply of TUBE Axial Fansat GCP, World One. There is Rs. 14,13,228/- payable by you to us. Mail correspondence regarding the same is attached herewith.
4.We also draw your attention to huge loss suffered by us due to your refusal to supply as Direct Driven Vane Axial Fan at GCP, The Park, Lodha after accepting our purchase order. We appointed our staff from February 2017 for the project relying on your delivery promise. We have to find other supplier and our project was delayed for 4 months which resulted in loss of 28,00,000/- plus on staff.
We request you to come to our office and settle all issues. Whatever balance payment is due to you shall be paid immediately. Thanking you, Yours Sincerely For Savlon Aircon Private Limited Sd/-Director.”
The Corporate Debtor submits that the Corporate Debtor awarded two contracts to the Applicant for supply of ventilation system axial fan and ventilation system as jet fan (“goods”). The Applicant gave its quotation for supply of goods and based on the quotation, the Corporate Debtor gave its quotation to a Third party viz. Lodha Group. The Applicant required immediate payment on supply of goods and therefore, the Corporate Debtor arranged financial assistance from a Group Company of the Lodha Group, Capacity Projects Pvt Ltd (“CPPL”). The CPPL made direct payment to the Applicant. The Corporate Debtor further submits that it was agreed between the Applicant and the Corporate Debtor that the difference in price (difference between the price quoted by the Applicant to Corporate Debtor and by the Corporate Debtor to the Third party purchaser) would be paid to the Corporate Debtor by the Applicant. According to the Corporate Debtor, the Applicant has received payment directly from CPPL including margin of the Corporate Debtor amounting to Rs.14,13,228/-. The Corporate Debtor alleges that the rate difference of Rs.14,13,228/- has not been passed on by the Applicant to the Corporate Debtor. The Corporate Debtor submits that several emails were issued to the Operational Creditor, especially of date 02.04.2019 requesting for this amount.
The Corporate Debtor further submits that the Corporate Debtor awarded another contract to the Applicant for supply of Axial fans to the Corporate Debtor. The Applicant was required to submit the information related to the Axial fan to the Corporate Debtor and the Corporate Debtor was required to submit the information received from the Applicant to a Group Company of the Lodha Group for approval of equipment, materials etc. According to the Corporate Debtor the Applicant submitted two material Approval Submittals which were approved conditionally by the Lodha Group for want of valid AMCA Certification for Axial Fan. The Corporate Debtor submits that the Applicant failed to submit valid AMCA Certificates for the Axial Fans which were to be delivered to Lodha Group by the Corporate Debtor. The Corporate Debtor reminded the Applicant to update the AMCA Certificate status and to confirm the delivery status of Axial Fans. The Applicant kept stalling for a period of four months and thereafter, in complete breach of contract, did not supply/ deliver the Axial Fans because of which the Corporate Debtor had to suffer huge losses amounting to Rs.29,37,661/- on account of labour cost which were deployed by the Corporate Debtor for installation, testing, commissioning of Axial Fans. Also, the Corporate Debtor had to engage another vendor/ supplier, viz. Flaktwoods ACS (India) Pvt Ltd for supply of Axial fans at an additional cost of Rs.13,14,539/-. The Corporate Debtor submits that the Corporate Debtor is entitled to receive Rs.42,52,500/-from the Applicant towards the losses incurred by the Corporate Debtor due to breach of contract by the Applicant.
The Corporate Debtor further submits that on the request of the Corporate Debtor, a Letter of Credit (“LC”) was issued in favour of the Applicant by GP Parsik Sahakari Bank Ltd for an amount of Rs.5,29,761/-. Upon expiry of LC, the Applicant has given credit of only Rs.3,65,512/- to the Corporate Debtor and not of Rs.5,29,761/-. The Corporate Debtor alleges that the Applicant has misappropriated a sum of Rs.1,64,349/-which is still due and payable to the Corporate Debtor by the Applicant.
The Corporate Debtor reiterates that the purpose of the Code is “resolution” and not “recover” or “winding up” and claims that the Corporate Debtor is a solvent company. Therefore, the Corporate Debtor pleads that the Petition of the Applicant be dismissed with penalty u/s 65 of the Code.
FINDINGS
The present Petition CP No. CP(IB)-3713(MB)/2019 has been filed u/s 9 of the IBC 2016 by Operational Creditor M/s Nicotra India Pvt Ltd against M/S Savlon Aircon Pvt Ltd, the Corporate Debtor, for a purported default of a total outstanding amount of Rs.52,30,945/-. Out of this total outstanding, principal amount is Rs.38,71,942/- and the Interest claimed @ 18% uptill 31.03.2019 is Rs.13,59,003/-.
The Bench notes that this Petition was filed on 09.10.2019 and the Invoices raised are from 08.02.2017 to 16.06.2017. Therefore, it is well within limitation. The Operational Creditor had supplied Demper, Diffuser, Grills etc to the Corporate Debtor against purchase order raised upon the Operational Creditor by the Corporate Debtor. Also, Operational Creditor had raised invoices for the said supplies as per the purchase order. The delivery challan is also attached for all the invoices in the Petition. However, the Bench notes that a rate of interest claimed by the Petitioner of 18% does not figure on the invoices or in any other document and, therefore, is not admissible as claimed by the Petitioner.
The statutory demand notice was initially served by the Petitioner u/s 8 of the IBC read with Rule 5 of the IBC Act, 2016 on 29.05.2019. However, no reply was received from the Corporate Debtor within the stipulated time.
The Bench notes that the Operational Creditor has submitted an account confirmation statement by the Corporate Debtor dated 04.04.2018 where the Corporate Debtor has confirmed the balance amount due to Nicotra India Pvt Ltd. A snap shot of confirmation of balance as provided by Corporate Debtor is as below:-
The Bench further notes that again on February 04, 2019 by an email dated 04.02.2019 addressed by the Corporate Debtor to the Petitioner, the Corporate Debtor has confirmed the outstanding balance payment of Rs.38.71 lakhs, which he promised would be released by February 28, 2019. The email further goes to mention that the Corporate Debtor regrets the delay in the release of the payment. For reference, a snap shot of the email sent by the Respondent to the Petitioner is as under:-
The Bench notes that the Respondent has not raised any cogent argument against the debt except saying that the attempt of the Petitioner is to brow beat the Respondent into submissions and that the present Petition is filed with the mala fide intent to recover money from the Respondent. Regarding the confirmation of accounts of Rs.38,71,942/- the Respondent mentions that it was only provided to the Petitioner for statutory audit purposes and that they have fraudulently obtained such confirmation from the Respondent.
The Bench finds that there is no substance in the argument advanced by the Respondent and there is a clear case of Operational debt and confirmation of debt on more than one occasion by the Respondent Company. Therefore, the Bench arrives at the conclusion that there is an “operational debt” as per the section 3(11) of the Code and “default” as per section 3(12) of the Code and, therefore, the Petition is liable to be Admitted.
In part III of the Petition regarding the proposed Interim Resolution Professional, the Petitioner has mentioned the Hon’ble NCLT to appoint a person as Interim Resolution Professional. Accordingly, this Bench appoints Mr. Jagdish Ratanlal Ahuja, Registration No. IBBI/IPA-002/IP-N00401/2017-2018/11175, email: [email protected], Mobile No.9323144390 to act as Interim Resolution Professional in this matter. Upon Admission of the Application and declaration of “Moratorium” the Insolvency Process such as Public Announcement etc. shall be made immediately as prescribed under Section 13 read with Section 15 of the Code. He shall perform the duties as an Interim Resolution professional as defined under Section 18 of the Code and inform the progress of the Resolution process and compliance of the directions of this Order within 30 days to this Bench. A liberty is granted to intimate even at an early date, if need be.
Having admitted the Petition/ Application the provisions of “Moratorium” as prescribed u/s. 14 of the Code shall come into operation. As a result, institution of any suit or parallel proceedings before any Court of Law are prohibited. The assets of the Corporate Debtor must not be liquidated until the Insolvency Process is completed. However, the supply of essential goods or services to the Corporate Debtor shall not be suspended or interrupted during “Moratorium” period. This direction shall have effect from the date of this Order till the completion of Insolvency Resolution process. Accordingly, CP(IB)-3713/(MB)/2019 stands “Admitted”. The Corporate Insolvency Resolution Process shall commence from the date of this Order.
Registry is directed to communicate this order to both the parties and the IRP immediately.