M/s. Nuvoco Vistas Corporation Limited vs M/s. Shilpraj Developers Private Limited

[Per: Ms. Manorama Kumari, Member (Judicial)]

That, the instant application is filed by Mr. Hardik Hasmukhlal Thakore, Assistant Manager Accounts & Administration of applicant/operational creditor, under Section 9 of the Insolvency and Bankruptcy Code, 2016 [hereinafter referred to as "the Code"] read with Rule 6 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 to trigger Insolvency Resolution Process against M/s. Shilpraj Developers Private Limited (hereinafter called as respondent/corporate debtor).

That, the applicant/operational creditor M/s. Nuvoco Vistas Corporation Limited is a limited company having identification number U26940MH1999PLC118229, having its registered office at Equinox Business Park, Kurla (West), Mumbai 400 070.

That, the respondent/corporate debtor M/s. Shilpraj Developers Private Limited is a company incorporated under the Companies Act, 1956 on 04.11.1988 and having its registered office at 60, Adarsh Society, Athwalines, Surat 395 007, Gujarat State, having identification No. U45201GJ1988PTC0114920K. That, authorised share capital of the corporate debtor is Rs. 1,00,00,000/- and paid up share capital is Rs. 85,88,500/-. The respondent company is in the business of textile manufacturing.

It is submitted by the operational creditor that the operational creditor had supplied Ready Mix Concrete (RMX) to different project sites of the respondent at Surat on the basis of purchase orders issued by the respondent in May, 2016 and invoices against such supplies were raised by the applicant from time to time. That, such invoices became due after 30 days from the date of receipt of the invoices by the respondent and the debt is pending since the respective due date of the invoices. That, balance confirmation of such invoices has also been received by the applicant on 11th of January, 2017 wherein debt of Rs. 7,68,973/- has been confirmed by the respondent. That, total debt due to the applicant as on 09.04.2018 works out to Rs. 10,89,433/- (Rupees ten lacs eighty-nine thousand four hundred thirty -three only) which includes interest of Rs. 3,20,460/-

The applicant has submitted copies of the following documents in support of the claim: -

Corporate Debtor filed affidavit in reply raising various objections with regard to the demand notice and power of attorney. It is stated that the demand notice issued by the petitioner has never been received by the respondent. That, acknowledgement does not bear the signature of any of the respondent's office bearers or of the respondent. The respondent has also denied certificate produced by the applicant from postal department showing acknowledgement of receipt and has vehemently submitted that the signature does not belong to any person associated with the respondent.

That, the respondent has further submitted that the authority letter issued to the petitioner cannot be considered as authority to file the application. It is further stated that form No. 5 prescribed under IB Code for initiating insolvency process provides that the application shall be signed by a person authorised by the operational creditor. It is also submitted by the respondent that Mr. Hardik Thakore is authorised to represent the company only in case of a dispute with any individual or entity, but, in the instant appeal, there is no dispute between the petitioner and corporate debtor. Hence the petition is defective and illegal and, therefore, deserves to be dismissed. It is also submitted by the respondent that the petitioner has never rebutted the objections so raised by the respondent.

It is further submitted by the respondent that as per the audited balance sheet for the year ended on 31.03.2017, the respondent company has invested Rs. 510.00 lacs and the company is required to make payments to various suppliers. Since there is recession in the real estate market the respondent is not in a position to pay the outstanding. That, the company is a going concern. That, the petitioner has claimed default of Rs. 10,89,433/- as per the working given at page No. 54 to the petition. That, the said working includes interest calculated from 22.06.2016, however, as per the balance confirmation placed at page No. 74 to the petition, an amount of Rs. 7,68,974/- has been shown in the books of accounts as on 31.12.2016. That, as per the business terms and conduct of parties, no interest was ever charged by the operational creditor and the payments made at convenience of the corporate debtor were accepted without interest. Further, interest has not been provided in the ledger account placed at page No. 59 to 61 to the petition. Hence, interest so claimed is false and to that effect the petitioner has not rebutted pleadings in objections and under the circumstances the petition should be dismissed for the false claim. The respondent has further submitted that due to liquidity problem payment to the petitioner could not be made and the claim made by the petitioner is quite insignificant compared to other financial and operational creditors.

Heard both the sides and perused the documents submitted by both the sides.

On perusal of the records it is found that the first objection raised by the respondent is that the respondent has not received the demand notice issued by the petitioner. On perusal of the records it is found that the petitioner has produced acknowledgement receipt of the delivery of the demand notice. On one hand, the petitioner has produced certificate from the postal department showing the receipt of the demand notice by the respondent. On the other hand, claim made by the respondent that the notice has not been received by him is not supported by any cogent evidence.

In the reply, respondent itself has admitted that the amount due to the applicant is Rs. 7,68,974/- only, as shown in the balance confirmation placed at page No. 74 to the petition which itself shows that there is some amount due to the petitioner.

As regards the objection relating to the validity of the power of attorney, on perusal of the records it is found that a "letter of authority" dated 28th August, 2017 has been issued by Mr. Arun Shukla, Chief & Product Line General Manager - RMX & Aggregate Division, Nuvoco Vistas Corporation Limited authorising Mr. Hardik Hasmukhlal Thakore, Assistant Manager - Accounts & Admin. to represent the petitioner company in the proceedings before any Forum, Tribunal, Labour Court, Civil Court, Criminal Court, High Court or any other Court of Law/NCLT/Judicial Forum in the state of Gujarat. On perusal of the record it is also found that a resolution was passed by the Board of Directors of the petitioner company on 8th August, 2017 authorising Mr. Arun Shukla, Chief & Product Line General Manager – RMX & Aggregate Division, Nuvoco Vistas Corporation Limited to do and perform such acts and things which he may consider necessary or proper or in the interest of the applicant company. Thus, I find that the “letter of authority” issued to Mr. Hardik Hasmukhlal Thakore authorising him to file the instant petition is valid and in order.

While examining an application under Section 9 of the Act, will have to determine the following: -

In view of the aforesaid discussions and before rejecting and/or admitting the application, we must refer to the legislation guide on Insolvency Law of United Nations Commission on International Trade Law. One of the things the Legislative Guide spoke about was whether the debt is subject to a legitimate dispute or set off, in an amount equal to or greater than the amount of the debt.

Thus, under the facts and circumstances and as discussed above, in light of the Hon'ble Supreme Court Judgement and the provisions thereof as enshrined in Insolvency & Bankruptcy Code, this adjudicating authority is of the considered view that operational debt is due to the Applicant. That, Applicant is an Operational Creditor within the meaning of sub-section (5) of Section 20 of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default and service is complete.

That, the Application filed by the Applicant is complete in all respects.

The applicant/operational creditor has not proposed the name of Interim Resolution Professional. This Adjudicating Authority hereby appoint Shri Sunil Kumar Agarwal, Tower 6/603 Devnandan Heights, Near Poddar School, New C.G. Road, Chandkheda, Ahmedabad 382 424 ([email protected]) having registration No. IBBI/IPA-001/IP-P01390/2018-19/12178 to act as an interim resolution professional under Section 13(1)(c) of the Code.

Section 13 of the Code enjoins upon the Adjudicating Authority to exercise its discretion to pass an order to declare a moratorium for the purposes referred to in Section 14, to cause a public announcement of the initiation of corporate insolvency resolution and call for submission of claims as provided under Section 15 of the Code. Subsection (2) of Section 13 says that public announcement shall be made immediately after the appointment of Interim Insolvency Resolution Professional. This Adjudicating Authority directs the Insolvency Resolution Professional to make public announcement of initiation of Corporate Insolvency Process and calls for submission of claims under Section 15 as required by Section 13(1)(b) of the Code.

From the above stated discussion and on the basis of material available on record it is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code.

The petition is, therefore, admitted and the moratorium is declared for prohibiting all of the following in terms of subsection (1) of Section 14 of the Code: -

It is further directed that the supply of goods and essential services to the Corporate Debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period. The provisions of sub-section (1) shall, however, not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.

The order of moratorium shall have effect from the date of receipt of authenticated copy of this order till the completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of corporate debtor under Section 33 as the case may be.

This Petition stands disposed of accordingly with no order as to costs.

Communicate a copy of this order to the Applicant, Financial Creditor, Corporate Debtor and to the Interim Insolvency Resolution Professional.