M/s. Sicagen India Limited vs M/s. Roshan Fruits India Private Limited

Per: ANIL KUMAR B, MEMBER (TECHNICAL)

Under Adjudication is an Application that has been filed by M/s. Sicagen India Limited (hereinafter referred to as 'Operational Creditor') under Section 9 of the Insolvency & Bankruptcy Code 2016 (in short, 'I&B Code, 2016') r/w Rule 6 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 against M/s. Roshan Fruits India Private Limited, (hereinafter referred to as 'Corporate Debtor'). The prayer made is to admit the Application, to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor, declare moratorium and appoint Interim Resolution Professional.

Part-I of the Application sets out about the details of the Operational Creditor from which, it is evident that the Operational Creditor is a Private Limited Company with CIN:L74900TN2004PLC053467. Part-II of the Application gives all the particulars of the Corporate Debtor from which it is evident that the Corporate Debtor is a Private Limited Company with CIN:U15137TZ2003PTC010769 which was incorporated on 11.09.2003 and that its Nominal share capital and Paid up share capital are Rs.1,10,00,000/- and Rs.70,00,000/- respectively. The Registered Office of the Corporate Debtor as per the Application is stated to be situated at 6 A, South Mada Street new pet, Krishnagiri, Dharmapuri District, Tamil Nadu 635 001. Part-III of the Application shows that the Operational Creditor has not proposed any "Interim Resolution Professional" (IRP) and left it to the discretion of this Tribunal to appoint the IRP.

From Part-IV of the Application, it is seen that the Operational Creditor has claimed a sum of ₹88,82,716/- as due from the Corporate Debtor since the month of November 2018. The Operational Creditor has established an Industrial Packagers manufacturing unit at Ponneri High Road, Gounderpalayam Village, S.R.Palayam Post, Chennai 600 120 with an installed capacity of manufacturing 1,67,000 drums per annum.

Part V of the Application contains the details of invoices or similar other documents, etc. of which are mentioned below, in addition of Purchase Order (Pages 41 to 44).

It is submitted by the Learned Counsel for the Operational Creditor that during the course of business, the Corporate Debtor approached the Operational Creditor to purchase up to 8000 Nos. of open Top Type MS Drums with G1 Lever type lock Ring Top and Bottom made out of 1.00mm thickness CRCA coil and shell (body) made out of 0.8mm thickness CRCA coil Colour – Oxford blue/Internal White Lock Ring vide the Purchase Order issued by the Corporate Debtor, vide P.O. 0009/2018-19 dated 02.05.2018 for the quantity of 6000 Nos. and P.O. 0020/2018-19 dated 21.06.2018 for the Quantity of 2000 Nos. The Operational Creditor claims to have supplied Industrial packers on time as per the schedule given by the Corporate Debtor under the said Purchase Order without fail. The Operational Creditor further states that they raised Tax Invoices along with the materials and also acknowledged the receipt of the same.

The Learned Counsel for the Operational Creditor submitted that as per the Invoices and the Purchase Order, the credit period for making the payment is 120 days from the date of delivery and if there is a failure to make payment within the due date, then interest @ 24% per annum shall be charged on the amount due computed from the due date till the date of payments. Further, it was submitted that the Operational Creditor raised totally 36 Invoices to the tune of Rs.1,23,19,202/- against Corporate Debtor during the course of business and the same was promptly served on the Corporate Debtor, for which the Corporate Debtor paid the adhoc amount of Rs.49,00,000/- by seven instalments and the balance amount of Rs.74,19,202.00 is still pending.

The Learned Counsel for the Operational Creditor further submitted that when they demanded for the balance payment over phone and by e-mail, the Corporate Debtor kept on requesting for some more time to pay the debt amount, however they have not made the payment of admitted debt of Rs.74,19,202.00 till date. Though the Corporate Debtor had given various promises to make payment of the admitted debt amount, so far the Corporate Debtor had never paid any amount to the Operational Creditor. Hence, all such efforts of the Operational Creditor to recover the admitted debt amount payable by the Corporate Debtor had gone in vain.

It was further submitted that, the Operational Creditor sent the Statutory Demand Notice as mandated under Section 8 of IBC, 2016 dated 10.09.2019 to the registered office of the Corporate Debtor, which is stated to have been received by the Corporate Debtor on 14.09.2019 and the timeline for payments by the Corporate Debtor expired on 24.09.2019, (i.e.) 10 days from the date of receipt of the Demand Notice. It was stated that the total amount of admitted debt, which the Corporate Debtor is liable to pay to the Operational Creditor as per the Statutory Demand Notice dated 10.09.2019 under Section 8 of the Code, is as under: INR Rs.74,19,202.00 (Rupees Seventy Four Lakhs Nineteen Thousand Two Hundred and Two only) @ 24% p.a. (i.e.) plus Rs.14,63,514/-(Rupees Fourteen Lakhs Sixty Three Thousands Five Hundred and Fourteen only) from due date as on 09th September 2019 to the Operational Creditor.

The Corporate Debtor has filed the counter and it has been alleged that:

In the Rejoinder filed by the Applicant/Operational Creditor, it has been stated that the very dispute now raised by the Corporate Debtor relating to the name and status of applicant and deliberately confusing it with M/s. Beta Industries is mala fide and afterthoughts. It was submitted by the Learned Counsel for the Operational Creditor that they have not at all suppressed any facts or the role of Beta Industries and the Operational Creditor has not portrayed any false picture before this Tribunal and the fact remains that the Operational Creditor has promptly mentioned in the Cause title and in the Part-I and Part-II of the petition, as "M/s. Sicagen India Ltd. Industrial Packaging (formerly Beta Industries)". All the materials in the subject transactions were supplied to the Corporate Debtor by "M/s. Sicagen India Ltd., Industrial Packaging (formerly Beta Industries)" only. All the materials in the subject transaction were received and promptly acknowledged by the Corporate Debtor. Also all the invoices given by the Operational Creditor to the Corporate Debtor in the name of "M/s. Sicagen Industries Ltd. Industrial Packaging (Formerly Beta Industries)" alone. The said M/s. Beta Industries Ltd., had been merged with MAC INDUSTRIAL PRODUCTS LTD. with effect from 01.04.1995 vide Company Petition No. 12/1996 order, dated 22.03.1996 by the Hon'ble Madras High Court and after the said merger, the Beta Industries have been functioning as a division of MAC Industrial Products Ltd. Thereafter MAC INDUSTRIAL PRODUCTS LTD. have been merged with SOUTH INDIA CORPORATION AGENCIES LTD., with effect from 01.04.1996 by Company Petition No. 206 to 208/1996 vide order dated 25.04.1997 passed by Hon'ble Madras High Court. Therefore there is no industry in the name of BETA INDUSTRIES LTD., from 001.04.1995 and thereafter the name of SOUTH INDIA CORPORATION AGENCIES LTD., has been changed as SICAL LOGISTICS LTD.,(SICAL) vide Registrar of Companies (ROC) Incorporation Certificate dated 14.02.2006. Further, during the year 2011-12 SICAL LOGISTICS LTD. (SICAL) sold the entire business operation of manufacture of Industrial Drums and Barrels to SICAGEN INDIA LIMITED, vide Registered Sale Deed dated 29.07.2011 and the entire business of operations of manufacture of Industrial Steel Drums and Barrels is being carried out as division of SICAGEN INDIA LIMITED.

The Learned Counsel for the Operational Creditor submitted that, on verification of the records, the Corporate Debtor issued the same purchase order in the name of SICAGEN INDIA LTD and further submitted that the Corporate Debtor taking advantage of the clarification sought by this Hon'ble Tribunal on 23.01.2020, diverted the actual facts before this Tribunal. It is submitted that the Corporate Debtor acknowledged each and every delivery challans and tax invoices by putting the signature with seal of the company, which are the strict proof of the materials having been received by the Corporate Debtor. The Operational Creditor denied that the allegations made in paragraph 14 of the Corporate Debtor counter that "the Beta Industries had supplied only 4,869 drums to the Corporate Debtor through the applicant, thus grossly violating the mutually agreed terms of contract. Out of 4,869 drums delivered only 1662 drums in time balance 3207 drums delivered after huge delay. Only due to the satisfaction in the quality of the materials supplied, the Corporate Debtor issued further order for supply of another 2,000 Nos. of steel drums as per the Purchase Order No. P.O. 020/2018-19, dated 21.06.2018. The Operational Creditor further submits that the Corporate Debtor has taken Input Tax credit of GST from our supplies made from May 2018 to July 2018. Thus, the Operational Creditor supplied all the 8,000 Nos. of steel drums to the Corporate Debtor as per Purchase Orders viz., 7,580 Nos. of Steel drums were supplied as on 18.07.2018 and the remaining 420 Nos. of Steel drums were supplied on 19.07.2018.

The Operational Creditor has also denied the allegations of the Corporate Debtor in Paragraph 16 to 23 of its Counter as false and baseless. The fact of the Operational Creditor supplied all the materials from M/s. Sicagen India Ltd., Industrial Packaging (Formerly Beta Industries) proved the following strict evidence for the receipt of materials.

ii) The Corporate Debtor signed with seal for proof of acknowledgement for receipt of materials in all the Tax Invoices and delivery challans. iii) The Corporate Debtor received the GST and also taken and utilized the Input credit from the Operational Creditor Tax Invoices. iv) The Operational Creditor never raised the delay supplies. After the receipt of the Demand Notice only raised new allegations for delayed supplies.

The Learned Counsel for the Operational Creditor submitted that the Operational Creditor has approached the Corporate Debtor and in a joint meeting held on 09.03.2019 with the Operational Creditor and that as per outcome of the meeting the Managing Director of Corporate Debtor Company agreed to clear the 50% of the outstanding by March 2019 end and the balance 50% in April 2019. The Corporate Debtor is yet to pay an amount of Rs.74,19,202.00 (Rupees Seventy Four Lakhs Nineteen Thousands Two Hundred and Two only) as detailed below:

Total Value of Supply made to the Respondent Rs.1,23,19,202.00

Amount paid by the Respondent till Feb. 2019 Rs.23,00,000.00

Amount paid by the Respondent in March & April 2019 Rs.26,00,000.00

Balance Payable by Corporate Debtor Rs.74,19,202.00

This Adjudicating Authority heard both the parties during the successive stages of hearing, in detail and examined the Petition, Annexures, Counter, Rejoinder and other documents and having regard to the averments in these documents and submissions made during the course of hearing, this Adjudicating Authority has satisfied itself about the existence of the debt amounting to Rs.74,19,202/- towards principal and Rs.14,63,514/- towards interest and the same is acknowledged by the Corporate Debtor particularly when they have accepted the delivery and claimed input tax credit on the goods supplied by the Operational Creditor. The dispute raised by the Corporate Debtor with reference to the delay in delivery of the goods cannot be accepted because it is the duty of the Corporate Debtor to ensure that their production is scheduled scientifically by ensuring that adequate packing material is in stock and at the same time, they are aware that they are procuring Mango which is perishable in nature during the season which in any case is required to be held in stock in their integrated cold chain and for the said reason we are unable to accept the contention of the Learned Counsel for the Corporate Debtor. Since the existence of 'operational debt' is proved and the Corporate Debtor has committed 'default' in respect of the payment to the Operational Creditor and the dispute raised by the Corporate Debtor with respect to loss of perishable mango is not accepted, this Adjudicating Authority has no hesitation in admitting this Petition and initiating the Corporate Insolvency Resolution Process (CIRP) as against the Corporate Debtor

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 Petition as filed by the Operational Creditor is required to be admitted under Section 9(5) of the IBC, 2016. Since the Operational Creditor has not named the Insolvency Resolution Professional, this Tribunal based on the latest list furnished by Insolvency and Bankruptcy Board of India appoints Mr. SUBRAMANIAM S with Registration Number IBBI/IPA-001/IP-P00946/2017 – 2018/11566 (email id:- [email protected]) as the “Interim Resolution Professional” subject to the condition that no disciplinary proceedings are pending against such an Interim Resolution Professional named and disclosures as required under IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 are made within a period of one week from the date of this order. 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:

However, during the pendency of the moratorium period in terms of Section 14(2) (2A) and 14(3) as extracted hereunder:

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:

The Operational Creditor is directed to pay a sum of Rs.2,00,000/- (Rupees Two Lakhs Only) 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 to Regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

Based on the above terms, the Application stands admitted in terms of Section 9(5) of IBC, 2016 and the moratorium shall come in to 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 be also furnished with 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.