M/s Sai Kripa Associates vs M/s Kstar Naturalle Resources Pvt. Ltd.

This is a petition filed by M/s. Sai Kripa Associates invoking the provision of Section 9 of Insolvency and Bankruptcy Code, 2016 (""the Code"")

against the Respondent (M/s. Kstar Naturalle Resources Private Limited) for initiating Corporate Insolvency Resolution Process (""CIRP"") against the

Respondent.

The Applicant has averred as follow:

a. On 05.04.2016 the Corporate Debtor placed a work order being No. KSNRPL/SKA/2016-2017/0135 upon the Operational Creditor for Drilling,

Blasting, Loading and Transporting of WMM and GSB Materials from quarry to Crusher plant, Hopper and stock At Pangadi, Bhatwa, Rewa

(Madhya Pradesh).

b. From 16.05.2016 to 30.06.2017 several invoices were raised totaling to Rs. 2,02,54,811/- upon the Corporate Debtor which were received by him

without any objection and subsequently part payments were also made. At times, the Corporate Debtor even made advance payment to the

Operational Creditor.

c. On 30.6.2017 the Operational Creditor issued reminders to the Corporate Debtor for non-receipt of Rs.38, 56, 779/-. But the said amount was not

paid by the Corporate Debtor. As can be seen from the Ledger Accounts maintained by the Operational Creditor, the total principal outstanding

amount is Rs.38, 56,779/-.

d. The Operational Creditor was entitled to an amount of Rs.38, 56,779/- along with interest @18% per annum which amounted to Rs.7,53,181/-

calculated from 30.6.2017 to 30.7.2018.

e. On 30.7.2018 the activities of the Corporate Debtor qualified as ""events of default"". As no payments were coming from the Corporate Debtor to

the Operational Debtor, the Operational Creditor had to issue Notice in Form 3 under Rule 5 of the Insolvency and Bankruptcy (Application to the

Adjudicating Authority) Rules, 2016. But the same could not be served even after several attempts at the address available as the door was always

found lock.

As Evident From The Reply Filed On Behalf Of The Corporate Debtor:

a. The primary contention of the Corporate Debtor was that the application filed by the Applicant was not maintainable in Law and under IBC, since

the Proprietorship concern was not a legal entity and thus could not sue or be sued in its own name and therefore the present petition deserved to be

dismissed.

b. That the Demand notice served in Form-3 by the Applicant was defective and did not confirm to the mandatory requirements of law as according

to Rule-5 of the Insolvency and Bankruptcy (Application to adjudicating authority) Rules, 2016 the Demand Notice or Invoice demanding payment

should have also been supplemented by an information utility which the Applicant failed to file.

c. That there was no debt due and payable by the Respondent Company to the Applicant as there was no outstanding liability, rather the Corporate

Debtor had paid excess amount to the Operational Creditor. The Corporate Debtor also contended that the alleged amount claimed was not clear and

rather vague.

d. That the Respondent Company pursuant to Work Order, paid an advance amount of Rs.6,82536/- to the Applicant which was duly received for the

period between 16.12.2015 to 15.2.2016 which got adjusted. It is pertinent to mention that the Respondent Company had paid a total amount of

Rs.1,63,98,032/-to the Applicant as confirmed by them in their Application. Needless to say, that all such payments were being made against the sole

basis of agreed rate of Rs.100/- per Metric Ton of the required material. Hence the amount of Rs.41,06,768/- shown for Machinery Hiring charges

was against the stipulated terms and conditions of the said work order.

The Section 3 (23) of the Insolvency and Bankruptcy Code, defines 'Person' which states that,

Person"" includes-

a. An individual;

b. A Hindu Undivided Family;

c. A company;

d. A trust;

e. a partnership;

f a limited liability partnership; and

g. any other entity established under a statue;

and includes a person resident outside India;

It is also contended by the Respondent in its reply that the Application filed by the Applicant was not maintainable in Law and under IBC, since the

Proprietorship concern was not a legal entity and thus could not sue or be sued in its own name. Thus, in view of the above, the Operational Creditor

being a sole proprietorship concern should have filed the present Petition in the name of its sole proprietor and not in the name of proprietorship

concerned. Hence the Petition is dismissed without costs. However, liberty is given to the Sole Proprietor to file a fresh Petition after giving a Notice

under Section 8 of IBC, 2016 and in compliance with the applicable Provisions of IBC, 2016.