M/S Prime Papyrus Products Private Limited vs M/s Forcefox Technologies Private Limited

Per: Harnam Singh Thakur, Member (Judicial)

The present petition is filed, under Section 9 of the Insolvency and Bankruptcy Code, 2016 (for brevity ‘IBC’ / ‘Code’), by M/S Prime Papyrus Products Private Limited, (for brevity ‘Operational Creditor’ / ‘Petitioner’), through its Authorised Representative, Mr. Ganesh Kumar Choudhary with a prayer to initiate Corporate Insolvency Resolution Process (CIRP) in case of M/s Forcefox Technologies Private Limited (for brevity ‘Corporate Debtor’ / ‘Respondent’).

The Corporate Debtor, namely, M/s Forcefox Technologies Private Limited, is a Company incorporated on 19.01.2016 under the provisions of the Companies Act, 2013 with CIN No. U32107HR2016PTC057851 with its registered office at Plot No. 519-50, HSSIDC, Industrial Estate Kundli, Phase-IV, Sector-57, Kundli Sonepat, Haryana. Hence, the territorial jurisdiction lies with this Adjudicating Authority. Copy of master data of the corporate debtor is attached with the main petition and marked as Annexure-1.

The facts of the case, briefly, as stated in the petition are that the Corporate Debtor approached the operational creditor for the supply of consignment and purchase of gift boxes, user manuals and brochure materials for TARA Mobile Smart Phones. The Operational Creditor delivered made-to-order boxes, boxes for Spy Mobiles, and Jumbo Outer Cartons. The Corporate Debtor stopped clearing the outstanding amount against the supplies made from June, 2017. The Operational Creditor despite the failure of the Corporate Debtor to clear its outstanding voice, continued to supply products due to good business relations. The Corporate Debtor despite receiving the payment from Spy Mobile did not honor a single penny towards the Operational Creditor. The Operational Creditor contacted the Corporate Debtor vide emails dated 21.11.2017, 11.12.2017, 26.12.2017, and 08.01.2018 for the payment due. However, the payment was not received.

It is submitted by the petitioner in Form 5, Part IV that the amount claimed to be in default is Rs. 11,64,530/- (Rupees Eleven Lakhs Sixty Four Thousand Five Hundred Thirty Only) including 24% interest. The default occurred on 20.03.2018 i.e. the last invoice was raised on 04.01.2018 and the default occurred on the expiry of 75 days credit period of the invoice. Copy of Board Resolution (Annexure 2), Invoices along with Work Order Placed (Annexures 3, 4 & 5) and Statement of Account/Ledger (Annexure 7) are attached with the main petition.

A demand notice is stated to be issued by the operational creditor on 14.10.2019 and the same has been delivered to the corporate debtor as the postal receipt is annexed as Annexure 8 and the corporate debtor had not replied to the demand notice till date nor any objection were received by the operational creditor against said notice.

Notice of this petition has been issued to the corporate debtor to show cause as to why this petition be not admitted. Learned counsel for the respondent-corporate debtor appeared, but no reply was filed. Vide order dated 17.08.2022 of this Adjudicating Authority, the last opportunity was granted to the respondent corporate debtor for filing a reply, but neither anyone appeared on behalf of the corporate debtor nor filed any reply. So, the respondent-corporate debtor proceeded against ex parte vide order dated 21.10.2022 of this Adjudicating Authority. The short written submissions were filed by applicant vide Diary No. 00113/3 dated 02.01.2023.

We have heard the learned counsel for the petitioner and have perused the records.

The first issue for consideration is whether the demand notice under Section 8 dated 14.10.2019 was properly served. The demand notice was served upon the respondent-corporate debtor as the postal receipt is annexed at Annexure-8 of the petition. However, no reply to the demand notice had been filed.

The next issue for consideration is whether the operational debt was disputed by the corporate debtor. It is deposed by way of an affidavit filed vide Diary No.00113/01 dated 18.12.2020 wherein it is stated that the Corporate Debtor had not issued any notice of dispute in terms of the provisions of the Insolvency and Bankruptcy Code, 2016 relating to a dispute of the unpaid operational debt. It is further deposed that the Operational Creditor has no knowledge of any proceedings/dispute pending or filed before any court of law or authority in respect to the goods and services supplied by the Operational Creditor to the corporate debtor whereupon the said operational debt has become due and payable by the Corporate Debtor to the Operational Creditor. Therefore, the operational debt was not disputed by the corporate debtor.

The other issue for consideration is whether this application is filed within limitation. A demand notice issued dated 14.10.2019 was duly served on the corporate debtor. Therefore, the period of limitation would begin from the date of default i.e. 20.03.2018 i.e. the last invoice was raised on 04.01.2018 and the default occurred on the expiry of 75 days credit period of the invoice.. This application was filed on 16.01.2020 vide Diary No. 400. Therefore, this Adjudicating Authority finds that this application is filed within limitation.

We have gone through the contents of the application filed in the Form 5 and find the same to be complete. As discussed above, there is a total unpaid operational debt (in default) of Rs. 11,64,530/- (Rupees Eleven Lakhs Sixty Four Thousand Five Hundred Thirty Only) including 24% interest.

It is noted that the corporate debtor has not paid back the aforesaid amount due despite statutory notice dated 14.10.2019 till date. Thus, the conditions under Section 9 of the Code stand satisfied. It is evident that from the above-mentioned facts that the liability of the corporate debtor is undisputed. Accordingly, the petitioner proved the debt and the default, which is more than Rupees one lakh (prior to the amendment in threshold limit of one crore vide notification No. S.O.1205(E) dated 24.03.2020) by the respondent-corporate debtor.

In the present petition all the aforesaid requirements have been satisfied. It is seen that the petition preferred by the petitioner is complete in all respects. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, we admit the petition for initiation of the CIR Process in the case of the Corporate Debtor, M/s Forcefox Technologies Private Limited and also direct moratorium to take effect and appoint Interim Resolution Professional as below :-

In Part-III of Form No. 5, no Interim Resolution Professional (IRP) has been proposed by the petitioner. The Law Research Associate of this Tribunal has checked the credentials of Mr. Sandeep Chandna and there is nothing adverse against him. In view of the above,we appoint Mr. Sandeep Chandna, Registration No. IBBI/IPA-002/IP-N00447/2017-2018/11237,E-mail:[email protected],Mobile No.9810768844 the Interim Resolution Professional with the following directions:-

i.) The term of appointment of Mr. Sandeep Chandna shall be in accordance with the provisions of Section 16(5) of the Code; subject to his written consent to be filed within 7 days of this order;

ii.) In terms of Section 17 of the Code, from the date of this appointment, the powers of the Board of Directors shall stand suspended and the management of the affairs shall vest with the Interim Resolution Professional and the officers and the managers of the Corporate Debtor shall report to the Interim Resolution Professional, who shall be enjoined to exercise all the powers as are vested with Interim Resolution Professional and strictly perform all the duties as are enjoined on the Interim Resolution Professional under Section 18 and other relevant provisions of the Code, including taking control and custody of the assets over which the Corporate Debtor has ownership rights recorded in the balance sheet of the Corporate Debtor etc. as provided in Section 18 (1) (f) of the Code. The Interim Resolution Professional is directed to prepare a complete list of inventory of assets of the Corporate Debtor;

iii.) The Interim Resolution Professional shall strictly act in accordance with the Code, all the rules framed thereunder by the Board or the Central Government and in accordance with the Code of Conduct governing his profession and as an Insolvency Professional with high standards of ethics and moral;

iv.) The Interim Resolution Professional shall cause a public announcement within three days as contemplated under Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 of the initiation of the Corporate Insolvency Resolution Process in terms of Section 13 (1) (b) of the Code read with Section 15 calling for the submission of claims against Corporate Debtor;

v.) It is hereby directed that the Corporate Debtor, its Directors, personnel and the persons associated with the management shall extend all cooperation to the Interim Resolution Professional in managing the affairs of the Corporate Debtor as a going concern and extend all cooperation in accessing books and records as well as assets of the Corporate Debtor;

vi.) The Suspended Board Of Directors is directed to give complete access to the Books of Accounts of the corporate debtor maintained under section 128 of the Companies Act. In case the books are maintained in the electronic mode, the Suspended Board of Directors are to share with the Resolution Professional all the information regarding Maintaining the Backup and regarding Service Provider kept under Rule 3(5) and Rule 3(6) of the Companies Accounts Rules, 2014 respectively as effective from 11.08.2022, especially the name of the service provider, the internet protocol of the Service Provider and its location, and also address of the location of the Books of Accounts maintained in the cloud. In case accounting software for maintaining the books of accounts is used by the corporate debtor, then IRP/RP is to check that the audit trail in the same is not disabled as required under the notification dated 24.03.2021 of the Ministry of Corporate Affairs. The statutory auditor is directed to share with the Resolution Professional the audit documentation and the audit trails, which they are mandated to retain pursuant to SA-230 (Audit Documentation) prescribed by the Auditing and Assurance Standards Board ICAI. The IRP/Resolution Professional is directed to take possession of the Books of Account in physical form or the computer systems storing the electronic records at the earliest. In case of any non-cooperation by the Suspended Board of Directors or the statutory auditors, he may take the help of the police authorities to enforce this order. The concerned police authorities are directed to extend help to the IRP/RP in implementing this order for retrieval of relevant information from the systems of the corporate debtor, the IRP/RP may take the assistance of Digital Forensic Experts empanelled with this Bench for this purpose. The Suspended Board of Directors is also directed to hand over all user IDs and passwords relating to the corporate debtor, particularly for government portals, for various compliances. The Interim Resolution Professional is also directed to make a specific mention of non-compliance, if any, in this regard in his status report filed before this Adjudicating Authority immediately after a month of the initiation of the CIRP.

vii.) The Resolution Professional is directed to approach the Government Departments, Banks, Corporate Bodies and other entities with request for information/documents available with those authorities/institutions/others pertaining to the corporate debtor which would be relevant in the CIR proceedings. The Government Departments, Banks, Corporate Bodies and other entities are directed to render the necessary information and cooperation to the Resolution Professional to enable him to conduct the CIR Proceedings as per law.

viii.) The Interim Resolution Professional shall after collation of all the claims received against the Corporate Debtor and the determination of the operational position of the Corporate Debtor constitute a Committee of Creditors and shall file a report, certifying constitution of the Committee to this Tribunal on or before the expiry of thirty days from the date of his appointment, and shall convene first meeting of the Committee within seven days of filing the report of constitution of the Committee; and

ix.) The Interim Resolution Professional is directed to send a regular progress report to this Tribunal every fortnight.

We declare the moratorium in terms of sub-section (1) of Section 14 of the Code, as under:-

It is further directed that the supply of essential goods or services to the corporate debtor as may be specified, if any, shall not be terminated or suspended or interrupted during moratorium period. The provisions of Section 14(3) shall however, not apply to such transactions as may be notified by the Central Government in consultation with any operational sector regulator and to a surety in a contract of guarantee to a corporate debtor.

The order of moratorium shall have effect from the date of this order till 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.

The petitioner is directed to deposit an amount of ₹80,000/-(Rupees Eighty Thousand Only) with the Interim Resolution Professional to meet the immediate expenses of the CIRP within two weeks. The same shall be fully accountable by Interim Resolution Professional and shall be reimbursed by the Committee of Creditors (CoC) to the petitioner to be recovered as the CIRP cost.

A copy of this order be communicated to both the parties. The learned counsel for the petitioner shall deliver a copy of this order to the Interim Resolution Professional forthwith. The Registry is also directed to send a copy of this order to the Interim Resolution Professional at his email address forthwith.

This petition is accordingly admitted.