Nu World Global Hongkong Limited vs Silveroak Home Appliances Private Limited

For the Petitioner: Adv. Zerik Dastur a/w Adv. Palak Agarwal and Adv. Anubhav Singh i/b Adv. Anubhav Sinha (PH)

The present Company Petition has been filed by Nu World Global Hong Kong Limited (hereinafter referred to as the “Petitioner/Operational Creditor”) as per the provisions of Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the Code”) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 against M/s. Silveroak Home Appliances Private Limited (hereinafter referred to as the “Respondent/Corporate Debtor”) to initiate the Corporate Insolvency Resolution Process (hereinafter referred to as the “CIRP”) for the Corporate Debtor’s inability to repay the outstanding debt of INR 13,27,77,397.55 (Rupees Thirteen Crore, Twenty-Seven Lakhs, Seventy-Seven Thousand, Three Hundred Ninety-Seven and Fifty-Five Only) [USD 15,86,600].

The facts averred by the Operational Creditor which lead to the filing of the present Petition are enumerated below: -

a. The Operational Creditor is a limited liability company registered under the laws of Hong Kong and is the authorized license holder for JVC Branded Television units in the contractual territory of India.

b. The Operational Creditor entered into an Exclusive Distribution Agreement with Corporate Debtor on 02.11.2020 (hereinafter referred to as “the Agreement”). The Agreement granted the Corporate Debtor the right to sell/resell/rent or to provide services in the territory of India for the products. As per Clause 3.1.1 of the Agreement, the Corporate Debtor was to use the materials bearing trademarks and/or copyrights belonging to the Operational Creditor in manner approved by the Operational Creditor.

c. As per Clause 6.1.1 of the Agreement, the Corporate Debtor was required to make fixed royalty payments to the Operational Creditor and other payments under Clause 6.1.2 and 6.1.2.1 of the Agreement.

d. As per Clause 6.1.1 and 6.1.2 of the Agreement, the Operational Creditor raised various invoices from 12.11.2020 until 01.11.2023. The invoices raised by the Operational Creditor are tabulated below: -

e. The Operational Creditor issued the following credit notes to the Corporate Debtor for financial assistance during Covid: -

f. It is submitted that the Corporate Debtor made payments with respect to the invoices and the last payment towards these invoices was made on 01.03.2024, however through email dated 11.03.2024, the Corporate Debtor partially admitted the Operational Debt and referred to a remittance of a partial payment towards the Operational Debt and that the Corporate Debtor admitted an amount of INR 3,34,91,834/- on the date of the email.

g. On 11.07.2024, the Operational Creditor issued a Demand Notice to the Corporate Debtor vide email and Registered Post (RPAD). The Demand Notice was sent to the Corporate Debtor's Registered Address, which was returned back with the remark "Addressee not found left without instructions". The Demand Notice was also sent to the Corporate Debtor's Corporate Address, which was delivered with the remark "Item Delivered to silver oak company (Addressee)". The Demand Notice was also served through an email to the Key Managerial Persons of the Corporate Debtor. The Operational Creditor has not received any Reply to the Demand Notice nor has the Corporate Debtor raised any dispute with respect to the Operational Debt.

h. The Operational Creditor relied on the following case laws: -

The Respondent made the following submissions: -

a. This Tribunal has no jurisdiction under Insolvency & Bankruptcy Code, 2016 since Clause 12.1 of Exclusive Distribution Agreement dated 02.11.2020 provides for resolution of disputes between all the four signatories to the agreement to be governed by the laws of Hong Kong and place of jurisdiction at Hong Kong.

b. The captioned Petition is not maintainable at behest of Nu World Global Hong Kong Ltd. in absence of any supply of goods or services to the Corporate Debtor under the Exclusive Distribution Agreement dated 02.11.2020 being signed by four separate entities. As per clause 1B of the agreement, "NU WORLD" is the authorized license holder for JVC Branded Television units (Products) in the contractual territory in terms of written license agreement between "Nu World" and "JVC Kenwood Corporation". There is no written license agreement produced on record by the Operational Creditor in the captioned Petition and as such there is no operational debt.

c. The present company petition was filed on 04.11.2024 pursuant to issuance of Form 3 Notice dated 11.07.2024 which was hit by Section 10A of the Code since it included invoices, falling within the period of Covid. However, as per Daily Order dated 31.01.2025, the Tribunal allowed the Operational Creditor to amend Form 5 and refile the same without any application seeking amendment and calling for objections from the Respondent on the said amendment. It is a well settled principle of law that the Tribunal cannot allow the amendment in the Petition without any amendment application or specific pleading made for such an amendment.

d. The Form 3 Notice dated 11.07.2024 was not received by speed post on the registered address of the Corporate Debtor. The tracking report at Page No. 104-105, relied upon by the Operational Creditor to show the notice has returned for the remark "Addressee Left Without Instructions", cannot be deemed to be a valid service as it was not sent to the registered address. There is no corporate office of Corporate Debtor at the address mentioned and as such no demand notice has been served on the corporate address of the Corporate Debtor and as such the name of the Corporate Debtor is "Silveroak Home Appliances Private Limited" and not "Silver Oak Company". It was further submitted that Form 3 notice dated 11.07.2024 was intentionally not served upon the registered Email Id of the Corporate Debtor i.e., [email protected].

e. The invoices relied upon by the Operational Creditor in filing the present Petition were never raised by the Operational Creditor upon the Corporate Debtor. There is no evidence on record in the Petition to show that the said invoices were ever raised by the Operational Creditor or even issued by the and served upon the Corporate Debtor and in absence of the same the Petition deserved to be dismissed.

f. The Corporate Debtor relied on the following submissions: -

We have heard the Ld. Counsel for both the parties and perused the documents placed on record.

In the present case, as per Daily Order dated 31.01.2025, the Respondent was directed to file a Reply before the next date of hearing and the matter was adjourned to 03.03.2025. However, on 03.03.2025, the matter was listed but could not be heard due to paucity of time and thereafter the matter was adjourned to 07.04.2025. In Daily Order dated 07.04.2025, the Bench observed that since no Reply had been filed by the Respondent, the Respondent was set ex-parte.

The Respondent had filed I.A 2323 of 2025 in C.P.(IB)1054 of 2024 on 02.05.2025, seeking recall of the ex-parte order dated 07.04.2025 in which the Ld. Counsel for the Applicant submitted that since he was before the Hon'ble High Court in an unavoidable case, therefore he could not appear in the present case which was listed before this Tribunal on the same day. With regards to the issue raised by the Applicant in I.A. 2323 of 2025, we took the following cognizance in Daily Order dated 17.07.2025: -

In view of the aforesaid facts, there is affidavit in reply filed by the Respondent in this case, however the written submission filed is being considered for deciding the case.

The Corporate Debtor has contended that, the invoices raised by the Operational Creditor come under Section 10A of the Code. We note that, as per section 10A of the Code, any default arising on or after 25.03.2020 for a period of six months but not exceeding one year from such date, no application shall be filed for initiating corporate insolvency resolution process of the Corporate Debtor for the default which has occurred during the said period. Pursuant to Clause 6.1.1 and 6.1.2 of the Agreement dated 02.11.2020, out of all the invoices that were raised by the Operational Creditor, invoices; (i) NWG INV 4452 dated 12.11.2020 for the amount of USD 30,000; (ii) NWG INV 4490 dated 23.12.2020 for the amount of USD 30,000; (iii) NWG INV 4494 dated 01.01.2021 for the amount of USD 30,000; (iv) NWG INV 4535 dated 09.02.2021 for the amount of USD 48,000 & (v) NWG INV 4536 dated 01.03.2021 for the amount of USD 48,000; fall within the time period established under Section 10A of the Code.

The Hon'ble NCLAT in Décor Paper Mills Limited Vs. Mahashakti Plasto Private Limited [Company Appeal (AT) (Insolvency) No. 2022 of 2024] observed that invoices which fall within the 10A period must be excluded from default claims. However, rest of the invoices which do not fall within the ambit of Section 10A of the Code, the amounts raised therein if add up to more than 1 Crore, need to be considered. In the present case, even after excluding above 5 invoices, the amount payable through rest of the invoices would be well above the threshold limit of 1 Crore. Accordingly, it cannot be said that the present petition is hit by the provisions of section 10A of the Code.

Another contention raised by the Corporate Debtor is that, the Demand Notice in Form 3 was not served upon the Corporate Debtor. On perusal of the Company Petition along with the exhibits, we observe that the Operational Creditor served the Demand Notice upon the Corporate Debtor's 'Registered Address' which was returned with the endorsement “Addressee Left without instructions”. This Registered Address also reflects on the Corporate Debtor’s details on the MCA website. The Operational Creditor also served the Demand Notice on the Corporate Debtor’s ‘Corporate Address’ wherein as per the track report, the Demand Notice was delivered to the Corporate Debtor. The Demand Notice was also served upon the Key Managerial Persons of the Corporate Debtor: Mr. Sydersgab Shelgaocar, CEO; LM Narkhede, Production Head; RK Bang, Vice President and Hitendera Kapadia, Finance General Manager, through email. Also, as per the track report, the Demand Notice was served upon the Corporate Debtor. Therefore, the contention of the Corporate Debtor is not found to be acceptable, as it appears that despite service of the demand notice, the respondent is trying to make out as case of non-service of the same.

The Corporate Debtor has also raised a contention that the Agreement signed between both the parties was an exclusive agreement involving joint participation of both the parties not to establish a debtor-creditor relationship. Per contra, the Operational Creditor argued that as per the Agreement, the Corporate Debtor was supposed to use materials bearing trademark and/or copyrights involving belonging to the Operational Creditor in a manner approved by the Operational Creditor for which, the Corporate Debtor was required to make fixed royalty payments to the Operational Creditor. It is also noted that in terms of the Exclusive Distribution Agreement dated 02.11.2020 entered into between both the parties and as per Clause 6.1.1, 6.1.2 and 6.1.2.1 of the agreement, the Corporate Debtor was obliged to pay royalties to the Operational Creditor in respect of the use of materials baring trademark and/or copyrights belonging to the Operational Creditor.

Further, in the case of Somesh Choudhary & Ors. Vs. Knight Riders Sports Private Limited & Ors. Company Appeal (AT)(Insolvency) No. 501 of 2021 Hon'ble NCLAT held as under: -

Accordingly, the Corporate Debtor's contention about the Agreement signed between the parties being an exclusive agreement involving joint participation of the parties and not establishing a debtor-creditor relationship is not found to be acceptable and is rejected.

Another contention raised by the Corporate Debtor is that the invoices raised by the Operational Creditor, were not delivered to the Corporate Debtor. The Operational Creditor argued that the invoices which were raised were duly sent to the Corporate Debtor from time to time and that the Corporate Debtor has made part payments towards discharge of their liability arising out of the invoices. The Operational Creditor also admitted a part of their liability towards the invoices raised, by way of an email dated 11.03.2024. After perusing the Demand Notice dated 11.07.2024 issued by the Operational Creditor, we note that out of all the invoices that form part of the Demand Notice, Invoices NWG-INV4452 and NWG-INV4490 have been paid. Whereas part payment has been made in Invoices NWG-INV4494, NWG-INV4535, NWG-INV4536 and NWG-INV4572. The Hon'ble NCLAT in the matter of Ashish Sudeshkumar Goyal, Suspended Director of Superchem Coatings Pvt. Ltd. Vs. Padam Electronics and Another [2022 SCC OnLine NCLAT 1199] observed as follow: -

The payment of two invoices and part payment in other invoices is an acknowledgment and admission of debt by the Corporate Debtor. The rest of the invoices sum up to a lot more than the threshold of 1 Crore. Therefore, the debt and the default in payment of the invoices on behalf of the Corporate Debtor is established.

During the course of the argument, the Corporate Debtor raised the contention that the invoices were raised by “NU WORLD GLOBAL LIMITED”, however the Operational Creditor who filed the present Company Petition and issued these invoices is “NU WORLD GLOBAL HONG KONG LIMITED”. In this regard it is noted that the Corporate Debtor has made payments and part payments as per the invoices raised by “NU WORLD GLOBAL LIMITED” which reflects that they were well aware of the fact that these two names are interchangeably used and that the invoices were issued and the present company petition was filed by the same company.

Although the Corporate Debtor hasn’t replied to the Demand Notice issued by the Operational Creditor, the payments and part payments made with respect to the Invoices raised by the Operational Creditor, clearly establish the debt and consequent default on part of the Corporate Debtor. Under such facts, even if the Corporate Debtor is solvent and a going concern it cannot be absolved from the consequences under IBC, if the application filed by the Operational Creditor is complete and valid. We refer to the law laid down in the Hon’ble Supreme Court in the matter of Vidarbha Industries Power Limited Vs. Axis Bank Limited (Civil Appeal No. 4633 of 2021) decided on 12.07.2022 stated that: -

Further we refer to the Hon’ble Supreme Court, in the matter of Innoventive Industries Limited vs. ICICI Bank and Another (2018)1 SCC 407 dated 31.07.2017 held as follows:

At this juncture and for the purposes of completeness, we deem it appropriate to look into and deal with the decisions/authorities relied upon by the Corporate Debtor. The Corporate Debtor contended that the Adjudicating Authority cannot allow the amendment in the Petition without any amendment application and relied in the matter of M/s. Shri Sadguru Traders Vs. M/s. Gajalee Coastal Foods Pvt. Ltd. in [C.P. No. 3443/IBC/MB/2019] and Royal Construction Vs. Gannon Dunkerley & Company Ltd. [Company Appeal (AT)(Insolvency) No. 393 of 2025] wherein the Hon'ble NCLAT held that: -

In this regard we take note of the Daily Order dated 31.01.2025, wherein this Bench considering the facts of the case passed order as under: -

As per the abovementioned Daily Order, the Bench had allowed the Counsel for the Petitioner to carry out the necessary corrections in Part-IV of the petition. Also, the Invoices which form part of the Demand Notice stretch from 12.11.2020 up until 01.12.2023. Even if invoices which have been paid and the ones which come under Section 10A are excluded then to the rest of the invoices sum up more than the threshold limit of 1 Crore and the present company petition is also filed well within limitation. Accordingly, and in view of the fact that this bench allowed correction in Part-IV of the petition and such order is not under challenge by the Corporate Debtor, it not open for the corporate debtor to object on the issue now before us.

The Corporate Debtor, with regards to the Demand Notice issued under Section 8 not being served, has relied upon the judgement of Mr. Shailendra Sharma, Director of R&M International Pvt. Ltd. Vs. Ercon Composites and Ors. [Company Appeal (AT) (Insolvency) No. 159 of 2020] Spik Enviro Management Private Limited Vs. Vision Earthcare Private Limited [Company Appeal (AT) (Insolvency) No. 1507 of 2023] and Quess Corp Limited Vs. Wardwiz (India) Solutions [C.P. (IB) No. 523/MB/2022]. In this regard we have already dealt with the issue and have held that the Operational Creditor was served the Demand Notice to the Corporate Address as also through Email Id on the Key Managerial persons of the Corporate Debtor, hence the judgements cited above do not help case of the Corporate Debtor.

The Application made by the Operational Creditor is complete in all respects as required by the law. The Debt and default in this case is established. Further the debt in this case of Rs. 1,00,00,000/- which meets the threshold of section 4(1) of the IBC. Also, the petition is filed within limitation and no pre-existing dispute has been reported. Considering the above facts and circumstances, the Tribunal admits this Petition and orders the initiation of CIRP against the Corporate Debtor.

a. the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;

b. transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;

c. 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 Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;

d. the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the Corporate Debtor.

The Company Petition No. 1054 of 2024 is admitted.