AI Structured Summary
Not yet generated for this judgment
Judgment
Per: SANJIV JAIN, MEMBER (JUDICIAL)
This application under Section 9 of the Insolvency and Bankruptcy Code, 2016 read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority), Rules, 2016 has been filed by M/s. Rothe Erde India Private Limited, (hereinafter referred to as “Applicant/Operational Creditor”) against M/s. RSA Mining & Equipment Pvt. Ltd., (hereinafter referred to as “Respondent/Corporate Debtor” for initiating Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor.
Part-I of the application provides the particulars of the Applicant which has Registered Office at Gate No. 429, Village Wadivarhe at Post: Gonde, Tauka: Igatpuri, Nashik, Maharashtra-422 403. Part-II contains the particulars of the Corporate Debtor which inter alia, was incorporated on 07.04.2011 having CIN: U10300TN2011PTC080053 with Authorized and Paid-up capital of Rs.50,00,000/- (Rupees Fifty Lakhs only) each. The Registered Office of the Corporate Debtor is situate at E5 – 239, Parameshwaran Vihar, Old No.28, New No.67, Arcot Road, Saligramam, Chenna-600 093 within the jurisdiction of this Tribunal. In Part-III of the application, the Applicant has not proposed the name of any Interim Resolution Professional and has requested the Tribunal to appoint the Interim Resolution Professional (“IRP”).
Part-IV of the application sets out the particulars of the operational debt as Rs.2,17,88,826/- (Rupees Two Crores Seventeen Lakhs Eighty Eight Thousand Eight Hundred and Twenty Six only) along with interest @ 18% per annum as on 15.10.2022.
The case of the Applicant is that it is active in India since 2006. Rothe Erde India Private Limited is a subsidiary of Thyssenkrupp Rothe Erde Germany GmbH. It is a leading company specializing in research, design, developing, manufacturing and selling of slewing bearing technology, undercarriages parts which part of Excavators, Bulldozers and earthmoving machineries and crank shaft manufacturing. Pursuant to the sanction of Scheme of Amalgamation/Merger by the NCLT, Mumbai Bench vide an order dated 25.10.2018, Berco Undercarriages (India) Private Limited has amalgamated with Rothe Erde India Private Limited and transferred all its obligations/activities to Rothe Erde India Private Limited.
It is stated that during the course of business, the Corporate Debtor had approached Berco Undercarriages (India) Private Limited (“Berco”), now known as Rothe Erde India Private Limited for supply of material. A Dealership Agreement dated 06.08.2014 was executed between the Corporate Debtor and Berco. In terms of the said agreement, the Corporate Debtor being the dealer, placed several Purchase Orders on Berco for supply of products which Berco supplied as mentioned in the invoices raised from time to time. It is stated that initially the Corporate Debtor made the payments against the invoices but thereafter defaulted. It is stated that as per the Dealership Agreement, the payments were to be made within 30 days from the date of invoice and delay if any, would carry 18% finance charges per month.
It is stated that the Corporate Debtor had accepted the materials without any demur for which Berco raised the invoices as detailed below:
| Sl. No. | Invoice No. | Date | Amount in Rs. |
|---|---|---|---|
| 1. | SID16-00295 | 07.07.2016 | 16,395 |
| 2. | SID16-00670 | 29.10.2016 | 1,41,95,151 |
| 3. | SID16-00960 | 31.01.2016 | 11,59,453 |
| 4. | SID16-01101 | 03.03.2017 | 72,56,068 |
| 5. | SID16-01143 | 14.03.2017 | 1,38,173 |
| TOTAL | 2,27,65,240 | ||
| Part Payment made | 95,11,803 | ||
| Outstanding Amount | 1,32,53,437 | ||
It is stated that the total amount of Rs.2,27,65,240/- (Rupees Two Crores Twenty Seven Lakhs Sixty Five Thousand Two Hundred and Forty only) was raised in respect of the invoices out of which, the Corporate Debtor made a part payment of Rs.95,11,803/- (Rupees Ninety Five Lakhs Eleven Thousand Eight Hundred and Three only) leaving a balance of Rs.1,32,53,437/- (Rupees One Crore Thirty Two Lakhs Fifty Three Thousand Four Hundred and Thirty Seven only) as per the running/Ledger account maintained by Berco. It thereafter continuously followed with the Corporate Debtor for releasing the outstanding amounts but the Corporate Debtor failed to make the balance payments. This led the Berco issue a letter dated 04.06.2018 to Corporate Debtor requesting to confirm the balance outstanding which the Corporate Debtor confirmed by countersigning the letter on 23.07.2018. Despite several requests and reminders, the Corporate Debtor did not make the payments. In the meantime, Berco was amalgamated with the Operational Creditor which considered the request of the Corporate Debtor to settle the admitted outstanding amount of Rs.1,32,53,437/- (Rupees One Crore Thirty Two Lakhs Fifty Three Thousand Four Hundred and Thirty Seven only) on monthly installment basis. A Tripartite Settlement Agreement dated 12.11.2018 was executed between Berco Undercarriages (India) Private Limited, Corporate Debtor and Operational Creditor whereby the Corporate Debtor agreed to pay the outstanding amount of Rs.1,32,53,437/- (Rupees One Crore Thirty Two Lakhs Fifty Three Thousand Four Hundred and Thirty Seven only) in 9 monthly installments beginning from 25.11.2018 till 25.07.2019 as detailed below:
| Sl. No. | Installments Date | Amounts |
|---|---|---|
| 1. | 25.11.2018 | 10,00,000/- |
| 2. | 25.12.2018 | 10,00,000/- |
| 3. | 25.01.2019 | 10,00,000/- |
| 4. | 25.02.2019 | 15,00,000/- |
| 5. | 25.03.2019 | 15,00,000/- |
| 6. | 25.04.2019 | 15,00,000/- |
| 7. | 25.05.2019 | 17,50,000/- |
| 8. | 25.06.2019 | 17,50,000/- |
| 9. | 25.07.2019 | 22,53,437/- |
| Total | 1,32,53,437/- | |
The Directors of the Corporate Debtor also executed two separate Deeds of Guarantee dated 12.11.2018.
It is alleged that even after the Tripartite Settlement Agreement, the Corporate Debtor failed to make the payment on due dates and paid only Rs.25,00,000/- (Rupees Twenty Five Lakhs only) through cheques dated 30.11.2018, 27.12.2018 and 27.08.2019 leaving a balance outstanding of Rs.1,07,53,438/- (Rupees One Crore Seven Lakhs Fifty Three Thousand Four Hundred and Thirty Eight only). The Operational Creditor then issued a final reminder letter dated 09.10.2020 calling upon the Corporate Debtor to make the payments within seven days. It is stated that in reply to the said letter, the Corporate Debtor vide its letter dated 19.10.2020 acknowledged the non-payment of debt and assured to make the payment in installments by September, 2021. It is stated that when the Corporate Debtor did not make the payment, Operational Creditor issued a legal notice dated 25.11.2020. It is stated that the Corporate Debtor vide its letter dated 16.08.2021 again acknowledged the debt towards the outstanding amount and promised to pay the entire dues by the end of March, 2022 but did not make the payment. Thereafter, the Operational Creditor issued a demand notice dated 29.07.2022 under Section 8 of IBC calling upon the Corporate Debtor to pay the unpaid Operational Debt of Rs.1,07,53,438/- (Rupees One Crore Seven Lakhs Fifty Three Thousand Four Hundred and Thirty Eight only) together with interest which was duly served on the Corporate Debtor but the Corporate Debtor neither replied to the notice nor made the payments.
The Operational Creditor in Part-IV of the application has stated the dates of default as 27.08.2019, 19.10.2020 and 16.08.2021.
Part-V of the application contains the particulars of the documents/records/evidence of default as below:
8.LIST OF OTHER DOCUMENTS ATTACHED TO THIS APPLICATION IN ORDER TO PROVE THE EXISTENCE OF OPERATIONAL DEBT AND THE AMOUNT IN DEFAULT
a)A Copy of Company Master data of Corporate Debtor - Annexure - 1
b)A copy of Power of Attorney of Mr. Raj Kumar Jha - Annexure - 2
c)A copy of the Dealership Agreement dated 06.08.2014 - Annexure - 3
d)Copies of 5 invoices under which amount is due:
i.Copy of Invoice No. SID16-00295 of Rs. 16,395/- - Annexure - 4 (i); ii. Copy of Invoice No. SID16-00670 of Rs. 1,41,95,151/- Annexure - 4 (ii); iii. Copy of Invoice No. SID16-00960 of Rs. 11,59,453/- Annexure - 4 (iii); iv. Copy of Invoice No. SID16-01101 of Rs. 72,56,068/- Annexure - 4 (iv);
v.Copy of Invoice No. SID16-01143 of Rs. 1,38,173/- Annexure - 4 (v). Annexure - 4 (i) to (v) Colly
e)A copy of the Letter issued by Berco to Corporate Debtor and also counter signed by Corporate Debtor - Annexure - 5
f)A copy of the NCLT Mumbai Order for Approval Scheme of Amalgamation - Annexure - 6
A copy of the Tripartite Settlement Agreement Annexure – 7
A copy of the final reminder Letter issued by Operational Creditor to Corporate Debtor - Annexure – 8
A copy of the Letter addressed by the Corporate Debtor to Operational Creditor - Annexure – 9
A copy of the Legal Notice addressed by the Operational Creditor to Corporate Debtor - Annexure – 10
A copy of the Letter addressed by the Corporate Debtor to Operational Creditor - Annexure – 11
A copy of the Demand Notice issued by Operational Creditor to Corporate Debtor - Annexure – 12
A copy of the Postal Receipt - Annexure – 13
A copy of the Acknowledgement Card - Annexure – 14
A copy of the bounced Email, sent to Corporate Debtor along with Demand Notice - Annexure – 15
Workings for Computation of Default in Tabular Form - Annexure – 16
On getting notice of the application, the Respondent filed the reply alleging that the materials were supplied between the period from 07.07.2016 to 14.03.2017. As per the terms of payment mentioned in the invoices, payments were to be made within 30 days from the date of invoice. The due date of payment against final invoice was 13.04.2017. This application has been filed in November, 2022 i.e. after more than three years from the date the amount became due and payable and as such, the application is barred by limitation.
Rejoinder is filed by the Applicant wherein it referred to the letters dated 04.06.2018, 19.10.2020 and 16.08.2021 sent by the Corporate Debtor to the Applicant wherein it had made categorical admissions of the debt due to the Applicant and committed to pay the same. It is stated that the application is within the limitation;
We have heard Ld. Counsel for the parties and gone through the documents placed on record.
A perusal of record reveals that the Respondent/Corporate Debtor entered into a Dealership Agreement dated 06.08.2014 with Berco Undercarriages (India) Private Limited. The Corporate Debtor being the dealer, placed several Purchase Orders on Berco for supply of products which Berco supplied against which, it raised the invoices from time to time. Initially, the Corporate Debtor made the payments but thereafter, it defaulted. The Dealership Agreement annexed as Annexure-3 clearly provides that if invoices are not paid within 30 days of the invoice date, the dealer will have to pay 18% finance charges against the unpaid balance from the date of the invoice until the date of payment.
It is seen from the record that against the invoices for the period from 07.07.2016 to 14.03.2017 for a total sum of Rs.2,27,65,240/- (Rupees Two Crores Twenty Seven Lakhs Sixty Five Thousand Two Hundred and Forty only), the part payments of Rs.95,11,803/- (Rupees Ninety Five Lakhs Eleven Thousand Eight Hundred and Three only) upto the year 2019 were made leaving outstanding amount of Rs.1,32,53,437/- (Rupees One Crore Thirty Two Lakhs Fifty Three Thousand Four Hundred and Thirty Seven only). Berco had a letter dated 04.06.2018 to the Corporate Debtor to confirm the balance which the Corporate Debtor confirmed by countersigning the letter on 23.07.2018 as Annexure-5.
Record shows that Berco amalgamated with and into the Operational Creditor i.e. the Applicant by the order of NCLT, Mumbai dated 25.10.2018. It held a discussion with the Corporate Debtor and thereafter, parties signed a Tripartite Settlement Agreement dated 12.11.2018 annexed as Annexure-7 whereby the Corporate Debtor agreed to pay the outstanding amount of Rs.1,32,53,437/- (Rupees One Crore Thirty Two Lakhs Fifty Three Thousand Four Hundred and Thirty Seven only) in nine(9) installments beginning from 25.11.2018 till 25.07.2019. The Directors of the Corporate Debtor also executed two separate Deeds of Guarantee dated 12.11.2018. Record also shows that only an amount of Rs.25,00,000/- (Rupees Twenty Five Lakhs only) through different cheques was paid. Last payment was made on 27.08.2019 for a sum of Rs.5,00,000/-.
The correspondences between the Applicant and the Corporate Debtor show that the Corporate Debtor had acknowledged the non-payment of debt vide its letter dated 19.10.2020 annexed as Annexure-9 and letter dated 16.08.2021 annexed as Annexure-11. In the aforesaid letters, no dispute was ever raised by the Corporate Debtor. Rather it had sought time to clear the dues. The said acknowledgment was made within a period of three years from the date the debt became due. Section 18 of the Limitation Act, 1963 clearly provides that if there is an acknowledgment of debt within the period of three years from the date the debt becomes payable, the limitation starts from the date the acknowledgment is made. It is seen from the record that in the letter dated 16.08.2021. the Corporate Debtor had again acknowledged its debt and stated that they are confident of clearing the entire dues by the end of the Financial Year i.e. March, 2022.
We are of the view that this application has been filed within three years from the acknowledgment of debt. That being the position, the defence taken by the Corporate Debtor/Respondent does not hold any water and deserve rejection out rightly.
In this case before filing the application, the Operational Creditor had sent the demand notice under Section of 8 of IBC which was duly served upon the Respondent/Corporate Debtor. No reply was filed by the Corporate Debtor as to the quality/services rendered by the Operational Creditor as per the Dealership Agreement dated 06.08.2014.
Thus, taking into consideration the facts and circumstances of the case as well as the position of Law, we are of the view that the Application, as filed by the Operational Creditor, is required to be admitted under Section 9(5) of the IBC, 2016. Accordingly, the Corporate Debtor is admitted to CIRP.
Since the Operational Creditor has not proposed the name of the Interim Resolution Professional in Part-III, this Tribunal based on the latest list furnished by the Insolvency and Bankruptcy Board of India applicable for the period between July 2023-December 2023, hereby appoints Mrs. Revathi Raghunathan having Registration Number [IBBI/IPA-001/IP-P00832/2017-2018/11417] (AFA valid till 08.06.2024) as the “Interim Resolution Professional”. The IRP appointed shall take in this regard such other and further steps as are required under the Statute, more specifically in terms of Sections 15, 17, 18 of the Code before this Bench. The powers of the Board of Directors of the Corporate Debtor shall stand superseded as a consequence of the initiation of the CIRP in relation to the Corporate Debtor in terms of the provisions of IBC, 2016.
As a consequence of the Application being admitted in terms of Section 9 (5) of the Code, the moratorium as envisaged under the provisions of Section 14(1) and as extracted hereunder shall follow in relation to the Corporate Debtor:
a. The institution of suits or continuation of pending suits or proceedings against the respondent including the execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;
b. Transferring, encumbering, alienating or disposing of by the respondent any of its assets or any legal right or beneficial interest therein;
c. Any action to foreclose, recover or enforce any security interest created by the respondent in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
d. The recovery of any property by an owner or lessor where such property is occupied by or in the possession of the respondent.
Explanation.-For the purposes of this subsection, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a licence, permit, registration, quota, concession, clearance or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license or a similar grant or right during moratorium period;
However, during the pendency of the moratorium period in terms of Section 14(2) (2A) and 14(3) as extracted hereunder:
(2)The supply of essential goods or services to the Corporate Debtor as may be specified shall not be terminated or suspended or interrupted during the moratorium period.
(2A) Where the interim resolution professional or resolution professional, as the case may be, considers the supply of goods or services critical to protect and preserve the value of the Corporate Debtor and manage the operations of such Corporate Debtor as a going concern, then the supply of such goods or services shall not be terminated, suspended or interrupted during the period of moratorium, except where such Corporate Debtor has not paid dues arising from such supply during the moratorium period or in such circumstances as may be specified.
(3)The provisions of sub-section (1) shall not apply to
- (a) such transactions, agreements or other arrangements as may be notified by the Central Government in consultation with any financial sector regulator or any other authority; - (b) a surety in a contract of guarantee to a corporate debtor.
The duration of the period of moratorium shall be as provided in Section 14(4) of the Code and for ready reference reproduced as follows:
(4)The order of moratorium shall have effect from the date of such order till the completion of the Corporate Insolvency Resolution Process: Provided that where at any time during the Corporate Insolvency Resolution Process period, if the Adjudicating Authority approves the Resolution Plan under sub-Section (1) of Section 31 or passes an order for liquidation of the Corporate Debtor under Section 33, the moratorium shall cease to have effect from the date of such approval or Liquidation Order, as the case may be.
The Operational Creditor is directed to pay a sum of Rs.2,00,000/- to the Interim Resolution Professional upon the Interim Resolution Professional filing the necessary declaration form as required under the provisions of the Code to meet out the expenses to perform the functions assigned to her in accordance with Regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
Based on the above terms, CP(IB)/4(CHE)/2023 stands admitted in terms of Section 9(5) of IBC, 2016 and the moratorium shall come into effect as of this date. A copy of the order shall be communicated to the Operational Creditor as well as to the Corporate Debtor above named by the Registry. In addition, a copy of the order shall also be forwarded to IBBI for its records. Further, the Interim Resolution Professional above named who is figuring in the list of Resolution Professionals forwarded by IBBI is also furnished with a copy of this order forthwith by the Registry, who will also communicate the initiation of the CIRP in relation to the Corporate Debtor to the Registrar of Companies concerned.