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Judgment
ORDER
Per: Rajasekhar V.K., Member (Judicial)
This is a Company Petition filed under section9 of the Insolvency and Bankruptcy Code, 2016 (IBC)by M/s Profile Interiors(Operational Creditor),a proprietorship concern represented by its proprietor, Mr Chetan C. Panchal,seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Praxis Home Retail Limited[CIN: L52100MH2011PLC212866](Corporate Debtor).
The Corporate Debtor is a listed public company limited by shares and incorporated on 31.01.2011 under the Companies Act, 1956,with the Registrar of Companies (RoC), Maharashtra, Mumbai.Its CIN is L52100MH2011PLC212866. Its registered office is at Ithink Techno Campus, Jolly Board Tower D (Ground Floor), Kanjur Marg (East), Mumbai 400042, in the State of Maharashtra.Therefore, this Bench has jurisdiction to deal with this petition. The Corporate Debtor operates through its unit, Home Town Design and Build.
The present petition was filed on 22.07.2019 before this Adjudicating Authority on the ground that the Corporate Debtor failed to make payment of a sum of ₹ 27,40,607.00 (Rupees twenty-seven lakh forty thousand six hundred and seven only) as principal and ₹ 2,87,185.00 (Rupees two lakh eighty-seven thousand one hundred and eighty-five only) as interest as on 23.04.2018, which is the last of the five dates of default mentioned at page51 of the petition.
The case of the Operational Creditor is as follows: -
The Operational Creditor is a sole proprietorship engaged in the business of interior contracting and general contracting to various suppliers. The Corporate Debtor is in the business of selling furniture, homeware products, modular kitchen and design and build. The Corporate Debtor outsources the interior work to an external service provider. The Corporate Debtor had placed certain orders for supply of labour and materials;
In June 2015, the Corporate Debtor approached the Operational Creditor and outsourced several projects by executing an Agreement on 14.07.2015, which was valid upto 17.07.2017;
Out of 31 projects executed by the Operational Creditor, payments are due in respect of the following five projects, viz.,as per details given below: -(amount in whole rupees)
| Sl No | Project | Invoice | Due date | Paid | Interest on unpaid balance | Balance |
| 1. | Rajesh Kakde | 3,01,996 | 04.02.2017 | 0 | 40,856 | 3,42,852 |
| 2. | Ashwin Dudeja | 14,58,692 | 21.05.2017 | 8,11,401 | 76,291 | 7,23,582 |
| 3. | Kashinath Katragdond | 8,37,454 | 15.10.2017 | 7,72,128 | 6,120 | 71,446 |
| 4. | Ravinder Singh | 1,45,938 | 21.02.2018 | 0 | 15,869 | 1,61,807 |
| 5. | Mahindra Dive | 54,69,567 | 23.04.2018 | 38,89,511 | 1,48,049 | 17,28,105 |
| Total | 82,13,647 | 54,73,040 | 2,87,185 | 30,27,792 |
(Interest calculation shown is from respective due date to 08.05.2019)
Invoices have been placed on record as Exhibit 'B' at pages20-32. The invoices provide for interest in case of delayed payments, to be charged at the rate of 18% per annum. Bank statements are attached as Exhibit 'G' at pages52-125. The total debt due and payable to the Operational Creditor is ₹ 30,27,792.00 (Rupees thirty lakh twenty-seven thousand seven hundred and ninety-two only), as mentioned at page 51 of the petition.
The Operational Creditor had served a Demand Notice in Form 3 dated 08.05.2019 to the Corporate Debtor (Exhibit 'D', pages40-47) in terms of section 8 of the IBC. The Corporate Debtor has not replied to the Demand Notice. Necessary affidavit of No Dispute in terms of section 9(3)(b) of the IBC has been annexed at Exhibit 'E' at pages48-50.
Mr Chandrakant Mhadeshwar, Learned Counsel appeared on behalf of the Corporate Debtor and made his submissions.
In its reply dated 18.10.2019, the Corporate Debtor has stated as follows:-
In so far as the claim of Project Red Carpet is concerned, the Corporate Debtor has paid the entire bill amount to the Operational Creditor. The claim of the Operational Creditor in so far as this project is concerned, is regarding extra works done, which is not as per the work order and there was no approval taken from the Corporate Debtor in this regard. Therefore, the Corporate Debtor is not liable to pay this amount (para 8 at page 4-5 of the Reply);
In so far as the claims in respect of the other projects are concerned, there was a meeting between the representatives of the Operational Creditor and the Corporate Debtor and payments have been made by the Corporate Debtor as per the discussions held in that meeting. Hence, there is no amount due and payable (para 9 at page 5 of the Reply);
The Corporate Debtor has raised bona fide disputes regarding the entitlement of the petitioner in respect of the claims contained in the said petition. The matter involves triable issues which should be decided by leading evidence in the matter in a court of competent jurisdiction (para 11 at page 5 of the Reply).
We have heard the arguments of both sides and perused the records.
The dispute in essence can be separated into two components - one in respect of Mr Rajesh Kakde (Project Red Carpet), where the Corporate Debtor states that the bill now being claimed by the Operational Creditor pertains to additional work which has been undertaken without the consent of the Corporate Debtor. As regards the other four bills, the Corporate Debtor has submitted that the same have been settled.
In so far as Project Red Carpet is concerned, the Operational Creditor has submitted in its rejoinder that the Corporate Debtor was in the habit of assigning extra work which was not included in the original work order. A separate work order is issued by the Corporate Debtor. However, in the present case, such separate work order for additional work has not been placed on record. In its absence, and in view of the admitted position that the invoice raised pertains not to the original work order but to additional work performed by the Operational Creditor allegedly at the behest of the customer, we are of the opinion that the same cannot be accepted.
In so far as the other four projects are concerned, while on the one hand, the Corporate Debtor claims to have settled the matter (para 9 at page5 of the reply), on the other hand, the Corporate Debtor has submitted that the matter involves some "triable issues" and therefore, the matter should be heard and decided by leading evidence in a civil court. This is self-contradictory. If the amounts have indeed been settled, then there is no question of having any "triable issue." Besides, the minutes of the meeting purported to have taken place on 29.11.2018 records that a sum of ₹ 3,91,303/- would be released and a sum of ₹ 4,00,000/- would be kept on hold. There is no evidence of the amount of ₹ 3,91,303/- having been released, nor any indication of what happened to the remaining amount of ₹ 4,00,000/-. Further, in its rejoinder, the Operational Creditor has specifically averred that the account status as on 24.01.2019 annexed at page13 of the reply is fabricated unilaterally from the side of the Corporate Debtor.
If the amounts have been paid in terms of the invoices, then the Corporate Debtor was duty bound to place the evidence on record like Bank statement, payment details etc.The Corporate Debtor has not placed anything on record to prove to the satisfaction of the undisputed invoices. On the other hand, there is a contradiction in the stand taken by the Corporate Debtor, as recorded in the preceding paragraph. The Corporate Debtor has not replied to the Demand Notice sent by the Operational Creditor even though the same has been sent by Registered Post and the Acknowledgment Card has been placed on record at page46 of the petition.
At the stage of deciding admissibility of the petition, it is not necessary for the Adjudicating Authority to go into the exact quantum that is due and payable to the Operational Creditor, so long as such sum is above the threshold prescribed in section 4(1) of the IBC. As already mentioned, once there is an invoice due and payable, it is for the Corporate Debtor to satisfy the Adjudicating Authority that it has either been paid or that there is a pre-existing dispute, and not raise frivolous defences such as “triable issues” as these are not defences that may be validly raised in a summary adjudication under the IBC. There is no pre-existing dispute between the parties.
The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC at the relevant time. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of the above, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor.
The Operational Creditor has not proposed the name of any Interim Resolution Professional (IRP) in the matter.
It is, accordingly, hereby ordered as follows: -
The petition bearing CP (IB) No.3018/MB.IV/2019 filed by M/s Profile Interiors, the Operational Creditor, under section 9 of the IBC read with rule 6(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiating Corporate Insolvency Resolution Process (CIRP) against Praxis Home Retail Limited [CIN: L52100MH2011PLC212866], the Corporate Debtor, is admitted.
There shall be a moratorium under section 14 of the IBC, in regard to the following:
The institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;
Transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein;
Any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002;
The recovery of any property by an owner or lessor where such property is occupied by or in possession of the Corporate Debtor.
Notwithstanding the above, during the period of moratorium,-
The supply of essential goods or services to the corporate debtor, if continuing, shall not be terminated or suspended or interrupted during the moratorium period;
The provisions of sub-section (1) of section 14 of the IBC shall not apply to such transactions as may be notified by the Central Government in consultation with any sectoral regulator;
The moratorium shall have effect from the date of this order till the completion of the CIRP or until this Adjudicating Authority approves the resolution plan under sub-section (1) of section 31 of the IBC or passes an order for liquidation of Corporate Debtor under section 33 of the IBC, as the case may be.
Public announcement of the CIRP shall be made immediately as specified under section 13 of the IBC read with regulation 6 of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
Since the Operational Creditor has not proposed the name of any IRP in the matter, this Adjudicating Authority hereby appoints Mr Sandeep D Maheshwari, Registration No.IBBI/IPA-001/IP-P00640/2017-2018/11093, having address at No.2/21, Geeta Society, Opp Ganesh Talkies, Charai, Thane (West), 400 601 [email: ayunish@yahoo.com, Mobile: +91-9320384156] as the IRPAGEThe fee payable to IRP or, as the case may be, the RP shall be compliant with such Regulations, Circulars and Directions as may be issued by the Insolvency and Bankruptcy Board of India (IBBI). The IRP shall carry out his functions as contemplated by sections 15, 17, 18, 19, 20 and 21 of the IBC.
During the CIRP period, the management of the Corporate Debtor shall vest in the IRP or, as the case may be, the RP in terms of section 17 of the IBC. The officers and managers of the Corporate Debtor shall provide all documents in their possession and furnish every information in their knowledge to the IRP within a period of one week from the date of receipt of this Order, in default of which coercive steps will follow.
The IRP/RP shall submit to this Adjudicating Authority periodical reports with regard to the progress of the CIRP of the Corporate Debtor.
The Operational Creditor shall deposit a sum of ₹ 3,00,000/-(Rupees three lakh only) with the IRP to meet the expenses arising out of issuing public notice and inviting claims. These expenses are subject to approval by the Committee of Creditors (CoC).
In terms of section 9(5)(i) of the IBC, the Registry is directed to communicate this Order to the Operational Creditor, the Corporate Debtor and the IRP by Speed Post, email and WhatsApp immediately, and in any case, not later than two days from the date of this Order.
A copy of this Order be also sent to the Registrar of Companies, Maharashtra, Mumbai, for updating the Master Data of the Corporate Debtor. The said Registrar of Companies shall send a compliance report in this regard to the Registry of this Court within seven days from the date of receipt of a copy of this order.