M/s Shree Krishna Automobiles vs Nava Healthcare Private Limited

PER: SH. L. N. GUPTA, MEMBER (T)

M/s Shree Krishna Automobiles through its Partner, Sh. Rajesh Jindal (for brevity, the ‘Applicant’) has filed the present petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for brevity, ‘IBC, 2016’) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 with a prayer to initiate the Corporate Insolvency Resolution Process against M/s Nava Healthcare Private Limited (for brevity, the ‘Respondent’).

The Respondent namely, M/s Nava Healthcare Private Limited is a Company incorporated on 17.07.2006 with CIN U24233DL2006PTC151081 under the provisions of the Companies Act, 1956 having its registered office at C-1/10, Upper Ground Floor Janak Puri, New Delhi – 110058, which is within the territorial jurisdiction of this Tribunal. The Authorized Share Capital of the Respondent Company is Rs.6,00,00,000/- and Paid-up Share Capital is Rs.4,83,93,020/- as per Master Data.

It is stated by the Applicant that the Respondent is engaged in the marketing and distribution of drugs, pharmaceuticals, chemicals, etc. and the Applicant is a registered partnership firm and was appointed as Clearing & Forwarding Agent/Mother Warehouse (CFA) for the products being distributed by the Respondent. On 01.03.2020, the Respondent entered into an Agreement (hereinafter referred to as “Agreement”) as per which, the Applicant placed a security deposit of Rs. 2,00,00,000/- (Two Crores) only in 04 instalments of Rs. 50,00,000/- each. Due to non-payment of regular payment of CFA services, on 02.07.2021, the Applicant sent a legal notice for termination of the CFA service agreement and also demanded the refund of the security deposit of Rs. 2,00,00,000/- along with interest @ 9% and other dues.

It is stated by the Applicant that it had earlier filed a Section 9 petition against the Respondent vide CP No. (IB)-424(ND)2022, however, the said petition was dismissed vide order dated 10.11.2022 on the ground that Security Deposit with Interest cannot be considered an operational debt. Subsequently, the applicant filed another CP (IB)-47/ND/2023 under section 7 of IBC, 2016, which was withdrawn on 19.01.2023 with the liberty to file a fresh petition.

The particulars of the unpaid financial debt claimed and the date of default are mentioned in Part IV of the application, which is reproduced below:

As per Part IV of the Application, the Applicant has claimed Rs.2,00,00,000/- towards security deposit + Interest (@ 9% in terms of the Agreement) of Rs. 33,00,000/- as of 28.02.2023.

The Applicant has relied on the following documents to prove the existence of financial debt -

ii) Statement showing the calculation of Amount in default as of 31.03.2022.

iii) Copy of Ledger Statements & relevant pages of 26AS i.e. TDS statement.

iv) Copies of email communications between parties.

vi) Copy of Cheque number 386220 dated 16.10.2021 along with return memo dated 12.11.2021 & Bank Statements.

Based on the aforesaid facts and documents, the Applicant has prayed for the initiation of CIRP against the Respondent.

On issuance of the notice, the Respondent has filed its reply and stated that the present application is filed merely for the recovery of money, which is defeating the purpose ·of the IBC, 2016. It has relied on the judgment passed by the Hon'ble Supreme Court in the matter of M/s Invent Asset Securitization and Reconstruction Pvt. Ltd. Vs. M/s Gimar Fibres Ltd. in Civil Appeal No. 3033 of 2022. The Respondent has further submitted that -

The application is not maintainable in terms of the provisions of section 10A of the Insolvency and Bankruptcy Code, 2016. The applicant has filed the record of default registered with NeSL admitting that the date of default was 01.06.2020 and therefore, the application is liable to be dismissed in terms of the provision of sec 10A of the Code.

The Respondent is a Company registered under the MSME Act, 2006, and CIR proceedings against a going concern jeopardizing the livelihood of several families are against the objectives of IBC.

The applicant herein is, again and again, abusing the process of law by filing bogus and frivolous applications for the recovery of monies only. It is humbly submitted to take note that -

After hearing the submission of both parties and perusing the documents placed on record, this Bench observes that on an earlier occasion, the Applicant had filed an application bearing no. (IB)-424(ND)/2022 under Section 9 of IBC 2016 which was dismissed by this Adjudicating Authority on the ground that the debt claimed by the Applicant was not an Operational Debt. The Applicant has now filed the instant Application under Section 7 of IBC 2016 claiming its debt as a Financial Debt.

On a perusal of Part IV of the application, it is observed that the claim of the Applicant is arising out of the Security Deposit amount, which was disbursed against interest @ 9% in terms of Clause 18 of the Agreement dated 01.03.2020, which reads thus:

Since the Applicant has disbursed the Security amount to the Respondent against the time value of money, the debt meets all the ingredients to be termed as Financial Debt. Even otherwise, the Respondent has not questioned the category of debt. The only legal objection taken by the Respondent is that the present Application is barred under Section 10A of IBC 2016. Hence, we would like to examine this contention.

It is contended by the Respondent that the Applicant has filed a record of default of NeSL, as per which the date of default is 01.06.2020, which falls within the Section 10A period. However, when we peruse Part IV of the present application, we observe that the date of default mentioned by the Applicant is 28.02.2023. However, in the interest of justice, we would like to examine when the financial debt in question became due and payable.

As per Clause 19 of the Agreement, the Security Deposit was refundable within 01 month of the termination of the Agreement, which reads thus:

From the Application, it is seen that the Agreement was terminated by the Applicant vide its letter dated 02.07.2021, which reads thus:

Hence, in terms of the conjoint reading of Clause 19 of the Agreement and the termination letter dated 02.07.2021, the debt became due and payable on 01.08.2021 and the said debt does not fall within the Section 10A period. Hence, we do not find any merit in the objection.

During the course of the hearing on 12.06.2023 as well as in the pleadings, the Ld. Counsel appearing for the Respondent had contended that the present application has been filed by the Applicant for the purpose of recovery and not for resolution of the Respondent. However, we do not find anything placed by the Respondent on record as to how the application is not for the purpose of resolution of the Respondent. Hence, we reject this contention of the Respondent being devoid of merit.

In the given facts and circumstances, the present Application being complete and the Applicant/Financial Creditor having established the default on the part of the Respondent for an amount above the threshold limit, the present Application is admitted in terms of Section 7(5) of the IBC and accordingly, and Moratorium is declared in terms of Section 14 of the Code. As a necessary consequence of the Moratorium in terms of Section 14(1) (a), (b), (c) & (d), the following prohibitions are imposed, which must be followed:

As proposed by the Applicant, this Bench appoints Mr. Gurdev Bassi as IRP having Registration No. IBBI/IPA-001/IP-P-01633/2019-2020/12504, Email id: <[email protected]> subject to the condition that no disciplinary proceeding is pending against the IRP so named and disclosures as required under IBBI Regulations, 2016 are made by him within a period of one week from this Order. This Adjudicating Authority further orders that:

The Applicant is directed to deposit Rs.2,00,000/- (Two Lakh) only with the IRP to meet the immediate expenses. The amount, however, will be subject to adjustment by the Committee of Creditors as accounted for by Interim Resolution Professional and shall be paid back to the Applicant.

A copy of this Order shall be communicated by the Registry/Court Officer of this Tribunal to the Applicant, the Respondent, and the IRP mentioned above.

In addition, a copy of this Order shall also be forwarded by the Registry/Court Officer of this Tribunal to the IBBI and NeSL for their records.