M/s Royel Krishi Rasayan Private Limited vs M/s Maharashtra Bio Fertilizers India Pvt. Ltd.

I. The Operational Creditor is engaged in the business of importing and supplying Organic Fertilizer, Plant Growth Promoters, Sulphate Nutrients, Water Soluble Fertilizer and Solvent Fertilizer in India. The Operational Creditor also stated that the Corporate Debtor is a MSME and is among India's leading manufacturers of Agrochemicals, plant growth regulators and micro-nutrients.

II. As submitted by the Operational Creditor, during 2023, the Corporate Debtor approached the Operational Creditor for the purchase of agrochemicals to be utilized as raw material in the production of MBF product and the said request made by the Corporate Debtor was accepted by the Operational Creditor.

III. It was further submitted that pursuant to the Corporate Debtor's orders, the Operational Creditor supplied Agro-Chemicals and other materials in accordance with the purchase orders raised by the Corporate Debtor.

IV. As submitted, the Operational Creditor raised invoices for the goods supplied to the Corporate Debtor and the said invoices were duly acknowledged by the Corporate Debtor without any objection.

V. The Operational Creditor also alledged that no dispute was ever raised by the Corporate Debtor regarding the delivery, quality, or product specifications of the supplied goods, and the said goods were never returned by the Corporate Debtor.

VI. It was further submitted that the Operational Creditor supplied products worth Rs. 4,80,52,653/- to the Corporate Debtor. While the Corporate Debtor made payments amounting to Rs. 2,78,07,545/-, a balance of Rs. 2,38,34,471/- still remains due and payable by the Corporate Debtor.

VII. As alleged, the Operational Creditor approached the Corporate Debtor numerous times for the payment of the outstanding debt due and in furtherance of the same, conducted several meetings and made numerous telephonic calls to the Corporate Debtor requesting settlement of the outstanding payment. Despite the aforementioned efforts, the Corporate Debtor failed to discharge its liability.

VIII. As stated by the Operational Creditor, with no other recourse available, a demand notice dated 21.05.2024 was served upon the Corporate Debtor at its registered office address, demanding payment of the outstanding debt. However, as contended, the Corporate Debtor did not provide any concrete reply to the said Demand Notice and thus, the Operational Creditor filed the present application before this Hon’ble Tribunal for initiating corporate insolvency resolution process under Section 9 of the Insolvency & Bankruptcy Code, 2016.

I. The Corporate Debtor is engaged in the business of manufacturing compost, agrochemicals, plant growth regulators and micro nutrients. As submitted, the Corporate Debtor, at the outset, denied all contentions raised by the Operational Creditor.

II. The Corporate Debtor submitted that its products are utilized by farmers across 20 states and can be applied during the farming of more than 30 crops. Furthermore, the Corporate Debtor's facility is situated in Maharashtra's D+ Zone, a designated backward area as per notification no: PSI-2019/CR 46/IND-8 dated 16 September 2019 issued by Government of Maharashtra. As stated by the Corporate Debtor, it has been providing employment to over 300 people in the region for the past 15 years and maintains business relationships with approximately 50 active suppliers and 3000 active distributors and dealers across the country.

III. The Corporate Debtor further contended that the Operational Creditor has made false statements regarding the commencement of their business relationship in 2023. As submitted, the business transactions between the parties commenced in the financial year 2018-19 for the purchase of various types of Agrochemical Fertilizers.

IV. The Corporate Debtor also stated that while the initial quality of goods supplied by the Operational Creditor was satisfactory, it subsequently deteriorated. Despite this, the Corporate Debtor maintained regular payments of approximately 4 to 5 crores annually based on the assurances provided by the Operational Creditor.

V. The Corporate Debtor submitted that during the COVID-19 pandemic, it experienced significant financial stress and liquidity crunch. However, as stated, the Corporate Debtor continued making payments despite these challenges until the second wave of COVID-19, when the company's financial situation further deteriorated, leading to irregular payments.

VI. The Corporate Debtor also submitted that the date of default as mentioned by the Operational Creditor in the present Petition is 04.04.2023. However, as submitted, the Corporate Debtor has been continuously making payments, with the most recent payment being made on 20.05.2024. Thus, in light of the same, the Corporate Debtor contended that the Operational Creditor is misusing the Insolvency and Bankruptcy Code by treating this Hon'ble Bench as a recovery forum.

VII. The Corporate Debtor further submitted that it remains committed to resolving its outstanding obligations, and the same is evident from the payment history reflected in the account statement annexed by the Operational Creditor.

VIII. The Corporate Debtor also submitted that it does not intend to default and is prepared to resolve the matter with the Operational Creditor. Furthermore, as contended, the Corporate Debtor is actively working on a plan to address its financial situation and is in the process of arranging the necessary funds for payment. However, during the course of arguments, the Ld. Counsel for the Corporate Debtor stated that despite efforts to arrange the said necessary funds, the Corporate Debtor was unable to resolve the issue.

IX. Thus, in light of the abovementioned submissions, the Corporate Debtor prayed before this Hon’ble Tribunal to dismiss the present Petition.

I. In view of the submissions made by the Learned Counsel of both the parties and on the strength of documents and pleadings placed on record, it is evident that an amount of Rs. 2,38,34,471/- is due and payable by the Corporate Debtor and thus, the present Petition has been preferred by the Operational Creditor before this Hon’ble Tribunal.

II. On perusal of the reply submitted by the Corporate Debtor and also in view of the arguments advanced, it is evident that there is no denial and dispute concerning the outstanding amount due and payable to the Operational Creditor. As far as the liability of the Corporate Debtor is concerned, the same stands admitted in the reply to the present Petition filed by the Corporate Debtor. In the said reply, it has been admitted that the Operational Creditor, in accordance with the purchase orders placed, delivered the agrochemicals and other materials timely to the Corporate Debtor and then issued invoices thereof. An attempt has been made on the part of the Corporate Debtor to justify the non-payment of the outstanding amount by stating that the business of the Corporate Debtor was severely affected due to the Covid-19 pandemic and particularly during its second wave, which led to significant financial stress and liquidity crunch. Further, despite all the efforts put in by the Corporate Debtor to pay off the amount due to the Operational Creditor, including the most recent payment made on 20.05.2024, the Corporate Debtor was unable to meet its commitments fully. The case of the Corporate Debtor further is that it is actively working on a plan to address its financial situation and is in the process of arranging the necessary funds for payment. However, it is pertinent to note that during the course of arguments, the Ld. Counsel for the Corporate Debtor admitted that despite efforts to arrange the said necessary funds, the Corporate Debtor was unable to resolve the issue.

III. Thus, given the above-stated facts, the debt and default on the part of the Corporate Debtor stands established.

IV. Keeping in view of the totality of the circumstances of the present case and in view of the fact that there is an admitted debt due towards the Operational Creditor and admittedly there is a default duly acknowledged by the Corporate Debtor, with no pre-existing dispute in question, it is a fit case for admission. While the Corporate Debtor has contended that the business relationship commenced in 2018-19 rather than 2023 as stated by the Operational Creditor, this contention does not constitute a pre-existing dispute regarding the quality, delivery, or specifications of the goods supplied, as evidenced by the Corporate Debtor's continued business relationship with the Operational Creditor and regular payments made until the onset of financial difficulties. Furthermore, the amounts stated to be due in this case is above the threshold limit as stipulated under Section 4(1) of IBC and in view of the settled law wherein the Hon'ble NCLAT has been pleased to hold in the matter of Naresh Choudhary vs. Sterling Enamelled Wires Pvt. Ltd Company Appeal (AT)(Insolvency) No. 39 of 2023 & I.A. No.137 of 2023

During the CIRP period, the management of the Corporate Debtor will vest in the IRP/RP. The board of directors of the Corporate Debtor shall stand suspended. The members of the suspended board of directors and the employees of the Corporate Debtor shall provide all documents in their possession and furnish every information in their knowledge to the IRP/RP.