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Judgment
ORDER
[Per: K.R. SAJI KUMAR, MEMBER (JUDICIAL)]
1. Background
This application, bearing C.P. (IB) No. C.P. (IB)/277/MB/2022 was filed on 25.11.2021 by M/s Steel Resources, the Operational Creditor (OC), under section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) for initiating Corporate Insolvency Resolution Process (CIRP) in respect of Pritdip Impex (India) Private Limited, the Corporate Debtor (CD). The OC operates as a dealer and stockist of Alloy, Carbon, Free Cutting Steel, Wire rods, and Bars, while the CD primarily engages in wholesale business of non-agricultural intermediate products, waste and scrap. An outstanding amount of Rs. 1,03,45,240/- remains due and payable to the OC from the CD, pertaining to the sale of goods and remains unpaid. The OC prays for initiation of Corporate Insolvency Resolution Process (CIRP) in respect of the CD under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC).
2. Contentions of OC
The OC contends that the amount payable by the CD to the OC arises under various heads, namely –
Supply of goods by the OC, comprising a principal sum of Rs. 58,88,988/-(Fifty-Eight Lakhs, Eighty-Eighty Thousand, Nine Hundred, Eighty-Eight Rupees) along with interest of Rs. 44,56,252/-(Forty-Four Lakhs, Fifty-Six Thousand, Two Hundred Fifty-Two Rupees), calculated at the rate of 12% per annum beyond 30 days from the date of the outstanding invoice amount. The total debt amounts to Rs 1,03,45,240/- (One Crore, Three Lakhs, Forty-Five Thousand, Two Hundred Forty Rupees) comprising of principal amount of Rs. 58,88,988/- and Rs. 44,56,252/- as interest upon the principal amount for the period from 23.01.2019 to 28.06.2021.
Partial payment amounting to Rs. 16,88,061/- (Sixteen Lakhs, Eighty-Eight Thousand, Sixty-One Rupees) was received by OC in January,2019 against the outstanding sum of Rs. 81,77,049/- (Eighty-One Lakhs, Seventy-Seven Thousand, Forty-Nine Rupees) relating to the sale of goods and an additional sum of Rs 6,00,000/- (Six Lakh Rupees) was received on 30.03.2019, following the issuance of a notice dated 22.12.2018.
The goods supplied were in compliance with the requisitions of the CD, and in accordance with the purchase orders placed by it. Several invoices for the goods supplied were issued to the CD from February to April, 2016.
The OC issued a Demand Notice under Section 8 of the IBC on 28.06.2021 and subsequently, by e-mail on 1.07.2021 to the CD for demanding payment of the unpaid operational debt pertaining to which default has occurred. The CD failed to respond to the Demand Notice and no payment has been released in favour of the OC till date.
The OC further contends that it maintained a running account in respect of the goods supplied by the CD. The OC submits that ICICI Bank issued a letter dated 19.07.2021 which certifies that the last payment received by the OC from the CD was the partial payment of Rs 6,00,000/- on 30.03.2019.
3. Contentions of CD
We observe that on 26.04.2023, Adv. Mavai Dipak, representing the corporate debtor (CD), was present; thereafter, the CD has not been represented, despite having been duly notified in our daily orders. Hence, we do not have specific contentions of the CD to consider. We therefore, proceeded to hear the OC after setting the CD ex-parte.
4. Analysis & Findings
The Application filed by the OC explicitly specified the date of default i.e., 30.09.2019 in Part IV. It is noted that the present Application was filed on 25.11.2021, well within the 3 years from the date of default. Consequently, we find that the Application remains maintainable for adjudication by us under Section 238A of the IBC read with Article 137 of the Limitation Act, 1963. The debt against the goods supplied also falls within the meaning of “operational debt” u/s. 5(21) of the IBC.
We find that despite issuing a Demand Notice under Section 8 of the IBC in Form 3 of the AA Rules, followed by e-mail communications, the CD failed to respond to the demand notice. There has not been any payment or reply from the CD pursuant to the Demand Notice. We find that the OC had received last payment on 30.03.2019 as evidenced by ICICI Bank letter (Exhibit ‘C’). Since the application was filed on 25.11.2021, it falls within the reset limitation period.
We further find that despite several opportunities granted by this Adjudicating Authority to the CD to file its reply and argue its case on merits, the CD consciously opted not to avail itself any opportuny. As a result, on 27.06.2023, this Bench proceeded to set the CD ex-parte.
On perusal of the documents submitted by the OC, it is evident that the operational debt surpasses the threshold of Rs.1,00,00,000/- (One Crore Rupees) due, payable and remains unpaid by the CD to the OC u/s. 4 of IBC and thus, this Application u/s. 9 of the IBC is maintainable. The CD has not notified the existence of any dispute to the OC. The Application is complete and has been filed under the proper form. In view of the above, we do not have any further evidence to be sought for and find that the matter is fit for admission under section 9(5)(i) of the IBC.
ORDER
This Application bearing C.P. (IB) No. 277/MB/2022 under Section 9 of the IBC, filed by the M/s Steel Resources, (OC), for initiating CIRP in respect of Pritdip Impex (India) Private Limited., the CD is admitted. We further declare moratorium u/s 14 of IBC, with consequential directions as follows:
I. We prohibit-
the institution of suits or continuation of pending suits or proceedings against the CD 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 CD any of its asset or any legal right or beneficial interest therein;
any action to foreclose, recover or enforce any security interest created by the CD in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);
the recovery of any property by an owner or lessor where such property is occupied by or in possession of the CD.
II. That the supply of essential goods or services to the CD, if continuing, shall not be terminated or suspended or interrupted during the moratorium period.
III. That the order of moratorium shall have effect from the date of this order till the completion of the CIRP or until this Bench approves the resolution plan under sub-section (1) of section 31 of the IBC or passes an order for the liquidation of the CD under section 33 of IBC, as the case may be.
IV. That the public announcement of the CIRP shall be made in accordance with the IBC, the Rules and Regulations made thereunder.
V. That this Bench hereby appoints Mr. Rajesh Ramesh Kamath, a registered Insolvency Professional having the Registration Number-IBBI / IPA-001 / IP-P01606 / 2019-2020 / 12481 and email-iprrkamath@gmail.com as the Interim Resolution Professional (IRP), having valid Authorisation for Assignment up to 06.06.2024 to carry out the functions under the Code. The fee payable to IRP/RP shall be in accordance with the Regulations/Circulars issued by the IBBI.
VI. During the CIRP period, the management of the CD shall vest in the IRP or the RP, as the case may be, in terms of section 17 of the IBC. The officers and managers of the CD 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 under the IBC read with Rule 11 of the National Company Law Tribunal Rules, 2016 (NCLT Rules). The CD or any of its directors or officers shall not commit any offence under Chapter VII of Part II of the IBC.
VII. In exercise of the powers under Rule 11 of the NCLT Rules, 2016, we order the OC to deposit a sum of Rs.5,00,000/- (Five Lakh Rupees) with the IRP to meet the initial CIRP cost, if demanded by the IRP to fund initial expenses on issuing public notice and inviting claims, etc. The amount so deposited shall be interim finance and paid back to the OC on priority upon the funds available with IRP/RP. The expenses, incurred by IRP out of this fund, are subject to approval by the Committee of Creditors (CoC).
VIII. A copy of this Order be sent to the Registrar of Companies, Maharashtra, Mumbai, for updating the Master Data of the CD.
IX. The Registry is directed to immediately communicate this order to the OC, the CD and the IRP by way of email and WhatsApp, not later than two days from the date of this Order.
X. Compliance report of the order by Designated Registrar is to be submitted today.