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Judgment
[Per: Mr. Prasanta Kumar Mohanty, Member (T)]
The present petition has been preferred by the Operational Creditor, i.e. MP Resources under Section 9 of the Insolvency and Bankruptcy Code, 2016 (herein after referred to as a “Code”) seeking for initiation of Corporate Insolvency Resolution Process (“CIRP” in Short) in respect of the Corporate Debtor Company, namely, M/s. ARC Lamicraft Private Limited.
The Petitioner/Operational Creditor, i.e. MP Resources, having its office B/164, Sakar-VII, Nr. Nehru Bridge Corner, Ashram Road, Ahmedabad – 380009.
The Respondent/Corporate Debtor, namely, M/s. ARC Lamicraft Private Limited. was incorporated on 23.01.2007 with CIN: U2502GJ2007PTC049846. The Authorised Share Capital of the Corporate Debtor as on date is Rs.1,20,00,000/- divided into 12,00,000 equity share of Rs. 10/- each. The issue subscribed and paid-up Share Capital is Rs.1,08,20,000/- divided into 10,82,000 equity shares of Rs. 10/- each. The registered office of the Corporate Debtor Company is situated at: Survey No. 148 Part, Nr. Sadguru Cotton Mill, Rajpar-Khanpar Road, Village-Rajpar, Morbi-363641, Gujarat.
It is submitted by the Petitioner that the Respondent/Corporate Debtor is indebted to the Petitioner for Rs.4,86,63,554.00 (Rupees Four Crore Eighty Six Lakh Sixty Three Thousand Five Hundred Fifty Four Only) along with interest @ 24 % per annum pending payment on account of non payment for the supply of goods i.e. Absorbent, Kraft, Paper, Formaldehyde, Phenol etc...
It is submitted that the first default by the Respondent occurred on 06.04.2016 for amount of Rs. 227815/- and thereafter number of defaults occurred between 06.04.2016 to 07.05.2017 as per the list enclosed.
It is submitted that the Operational Creditor has supplied, Absorbent, Kraft, Paper, Formaldehyde, Phenol, Methanol, Melamine to the Corporate Debtor, namely, M/s. ARC Lamicraft Private Limited. In this regard various invoices/bills were raised by the Operational Creditor for supply of Absorbent, Kraft, Paper, Formaldehyde etc. and the same were duly accepted by the Corporate Debtor.
It is submitted that the said invoices/bills are still outstanding and they have remained unpaid till date. That as on date there is an outstanding amount of Rs.4,86,63,554.00 (Rupees Four Crore Eighty Six Lakh Sixty Three Thousand Five Hundred Fifty Four Only) along with interest @ 24 % per annum pending payment which is due and defaulted and payable by the Corporate Debtor. Details of Invoices raised to the Corporate Debtor is Annexed with Petition. (at Page no. 29 to 138 of the of the paper book).
It is submitted that the Form 3 Demand Notice was issued by the operational creditor on 24.11.2018 which was duly served at the registered office of the Corporate Debtor. The said Notice was received by the Respondent on 27.11.2018. In spite of Demand Notice, the Respondent did not choose to make payment of outstanding amount of Rs. 4,86,63,554/-
It is submitted that a certificate issued by the HDFC Bank Ltd, Business Banking -WC, 3rd Floor, Prerna Arcade, Opp. Doctor House, Nr. Parimal Cross Road, Amwadi, Ahmedabad-380006, stating that no amount has been credited in the account of the Applicant from 20.07.2016 to 05.12.2018, the same is annexed with the Petition. (as Annexure-III at page no. 139 of the paper book.)
Thereafter the Operational Creditor has approached this Tribunal by filing instant application under section 9 of the Insolvency & Bankruptcy Code, 2016 dated 20.12.2018.
It is further submitted that the Corporate Debtor had never raised any objection/complain with regard to the quality of the goods in position. (at Para 8 of Reply of Respondent).
It is submitted that with respect to Para 13 of the reply is frivolous and false as the Corporate Debtor is deliberately misguiding the Hon'ble Tribunal. It is further submitted that the Corporate Debtor is admitting the debt/outstanding that there is a due payment of Rs. 3,18,88,968.00. As per the Corporate Debtor the Kraft paper/base paper worth of Rs. 2,39,04,653.00 was sent by 10 invoices attached with the objection of Respondent filed by the Corporate Debtor at annexure c, it is pertinent to note that the 10 invoices which are attached with the objection are forged invoices forged lorry receipt and forged tax receipt.
In response to the instant application, the Respondent/Corporate Debtor filed its reply/objection on 15.04.2019.
It is submitted by the Respondent that the instant petition is required to be rejected because the petition is incomplete and not as per the format prescribed sub rule (1) of rule 9 of the Insolvency and Bankruptcy Code, 2016 as certificate from the proposed Interim Resolution Professional required in Form-2 is not provided in the petition even the date mentioned in written communication of proposed IRP is 18.12.2018 which is prior to affidavit of the petitioner i.e 19.12.2018, therefore, petition is liable to be rejected.
It is submitted that the total amount of debt in question mentioned under the petition is disputed as the goods supplied to the respondent were defective and inferior quality and did not conform to the agreed standard even often it has been found that the rates charged by the Petitioner were higher than the agreed rated. Above issues brought to the notice of petitioner telephonically several time.
It is submitted that there was good business relation between respondent and petitioner and they were having business from the year 2012 and business transaction were continued between them till 2017-18. It is further submitted that in every year there were several discrepancies in the statement of account exchanged between the parties. There was no specific agreement between the parties in respect of final amount owing to issue of quality of goods and higher rates charged by the respondent. As a result, no conciliations have been carried out till date and neither petitioner nor respondent raised any demand in during these years. All of sudden, without reconciliation of books of accounts, petitioner has filed this petition for initiate insolvency proceedings without following standard account procedure for reconciliation.
It is submitted that the petitioner deliberately not disclosing the fact that against that outstanding respondent have sent raw material of KRAFT PAPER/BASE PAPER worth of Rs. 2,39,04,563/- to petitioner in the year 2018 against the demand of Rs. 3,18,88,968/- raised by petitioner and upon the instruction of the petitioner, respondent has supplied the raw material to the other parties for the value of the rest of the amount payable to the petitioner. (Copy of the same is annexed as Annexure C colly).
It is submitted that there is contradiction in the present petition and cases filed against respondent under Section 138 of the N.I. Act. Regardless of invoices relied by the petitioner in both proceedings are the same, this ill attempt of petitioner clearly shows his mollified intention to substantiate its illegal demand and creating multiplicity of proceedings available under the laws.
It is submitted that the Petitioner is neither an operational creditor nor the amount purportedly sought in the petition is an operational debt. Hence, petitioner is not entitled to invoke the provisions of the Code to initiate the CIRP against the respondent.
In light of the abovementioned facts and circumstance the Applicant has prayed before this Adjudicating Authority to Cause public announcement of the initiation of Corporate Insolvency Resolution Process and call for the submission of claims in accordance with Clause (b) of Sub-section (1) of Section 13 read with Section 14 of the Insolvency and Bankruptcy Code, 2016 and be pleased to pass any further order in the interest of justice.
The Petition is filed on 20.12.2018 under Section 9 of the Insolvency and Bankruptcy Code, 2016 for the unpaid Operational Debt due of Rs.4,86,63,554/-
The case was taken up by this Adjudicating Authority on 21.12.2018, 02.01.2019, 13.02.2019, 15.04.2019, 27.05.2019, 26.06.2019, 30.07.2019, 20.08.2019, 17.09.2019, 25.11.2019 and 18.12.2019. Arguments from the counsels for both sides were heard 18.12.2019.
During the arguments, the Learned Counsel for the Operational Creditor submitted that the Petition may be admitted and an Interim Resolution Professional appointed in accordance with the provisions of the Section 16 of the Insolvency and Bankruptcy Code, 2016. Further, it is submitted that the Corporate Insolvency Resolution Process be initiated as per Section 9 of the Insolvency and Bankruptcy Code, 2016 and the moratorium period may also be declared.
Further, the Operational Creditor has suggested the name of an Interim Resolution Professional ("IRP" for short) Mr. Pinakin Shah to appoint him as IRP.
It is observed that -
The Application has been filed on 20.12.2018 for operational debt due and defaulted of Rs.4,86,63,554/- (Rupees Eight Crore Eighty Six Lakhs Sixty Three Thousand Five Hundred Fifty Four Only) as per the respective Invoices enclosed.
Date of invoice is 06.02.2016, 09.02.2016, 18.11.2015, 28.11.2016, 18.11.2015 and 05.10.2016. Date of first default is 06.04.2016 25.3 Application is filed within the limitation period as the date of default is 06.04.2016 and the date of filing this petition under Section 9 of IBC is 20.12.2018. 25.4 No pre-existing dispute before the filing of this application is observed. 25.5 One suit has been seen filed by the Respondent/ARC Lamicraft Pvt. Ltd. bearing S.P Civil Suit No. 49 of 2019 before the Hon'ble Principal Senior Civil Judge Court at Morbi, against the MP Resources. But the same suit has been filed on 22.07.2019 which is after issuance of demand notice by the Operational Creditor.
ORDER
Considering the materials, papers filed by the Petitioner on record and the facts mentioned in the Para No. 25, 25.1, 25.2, 25.3, 25.4 & 25.5, this Adjudicating Authority is satisfied that,
Existence of debt is above Rs. One Lac;
Debt is due;
Default has occurred on 06.04.2016;
Petition has been filed within the limitation period as the date of default is 06.04.2016 and the petition has been filed on 20.12.2018
Copy of the Application filed before the Adjudicating Authority has been sent to the Corporate Debtor, Petitioner under Section 9 of IBC is found to be complete for the purpose of initiation of Corporate Insolvency Resolution Process against the Corporate Debtor.
Hence, the present IB petition is admitted today i.e. 03.06.2020 with the following directions:
As per the provisions of Section 13 and 14 of the I.B. Code on the date of commencement of insolvency, this adjudicating authority declares moratorium for prohibiting all of the following, namely: -
I.(a) The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal arbitration panel or other authority.
Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein.
Any action to foreclose, recover or enforce any security interest created by the corporate debtor 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 the possession of the corporate debtor.
II. 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.
III. The provisions of sub-section (1) shall not apply to
such transactions as may be notified by the Central Government in consultation with any financial sector regulator.
IV. The order of moratorium shall have effect from the date of this order till the completion of the Corporate Insolvency Resolution Process.
The Petitioner/Operational Creditor has suggested the name of Interim Resolution Professional (IRP) in the present Petition.
Hence, this Adjudicating Authority hereby appoints Mr. Pinakin Shah, having Insolvency Professional Registration No. IBBI/IPA-002/IP-00106/2017-18/10248, Email ID - [email protected] Address: A-201, Siddhi Vinayak Tower, Next to Kataria House, Off. S.G. Highway, Makabara, Ahmedabad-380051 as an Interim Resolution Professional. The Interim Resolution Professional is further directed to make public announcement of moratorium in respect of Corporate Debtor Company soon after receipt of an authenticated copy of this order and to act further as per the order/direction issued by this Adjudicating Authority and to follow the provisions Section 13 and 14 and relevant provisions of the Insolvency and Bankruptcy Code. The Interim Resolution Professional shall perform all his functions contemplated, inter-alia, in Sections 15, 17, 18, 19, 20 & 21 of the Code and transact proceedings with utmost dedication, honesty and strictly in accordance with the provisions of the 'Code', Rules and Regulations. It is further made clear that all the personnel connected with the Corporate Debtor, its promoters or any other persons associated with the management of the Corporate Debtor are under legal obligation under Section 19 of the Code to extend every assistance and cooperation to the Interim Resolution Professional as may be required by him in managing the day-to-day affairs of the 'Corporate Debtor'. In case there is any violation, the Interim Resolution Professional would be at liberty to make appropriate application to this Tribunal with a prayer for passing an appropriate order. The Interim Resolution Professional shall be under duty to protect and preserve the value of the property of the 'Corporate Debtor' as a part of its obligation imposed by Section 20 of the Code and perform all his functions strictly in accordance with the provisions of the Code, Rules and Regulations.
An authentic copy of this order to be communicated by this Registry to the Operational Creditor, Corporate Debtor, as well as to the Interim Resolution Professional and the Registrar of Companies by Speed Post/Registered Post at the earliest.
Hence, this CP (IB) No.633/9/NCLT/AHM/2018 is admitted on 03.06.2020 with the above Observations and Directions.