Rexel India Private Limited vs Proto D Industries Private Limited

[PER: BENCH]

This is an Application bearing C.P. (IB) No.417/MB/2025 filed on 10.07.2024 by Rexel India Private Limited, the Applicant (Operational Creditor) under 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 (hereinafter referred to as “the AAA Rules”). The Application is signed by Mr. Suraj Alhat authorised vide Board Resolution dated 24.01.2024 for initiating Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP”) in respect of Proto D Industries Private Limited, the Corporate Debtor (CD).

The Applicant is a Private Limited Company by shares which is incorporated on 24.01.2012, under the Companies Act, 1956, and in the business of a long range of sustainable and innovative products, services and solutions in the field of technical supply, automation and energy management for industrial, residential, non-residential spaces. The CD is a company incorporated under the provisions of the Companies Act, 1956.

The Applicant has relied on the following documents:

As per Part-IV of the Application the total amount claimed to be in default by the Applicant is Rs. 5,82,19,776 /- (Five Crore Eighty-Two Lakh Nineteen Thousand Seven Hundred Seventy-Six Rupees). The details of the outstanding as well as the dates of defaults with respect to each pending invoice are attached as Annexure E on page no. 58 of the Application. The same is reproduced hereunder:

The dates of default are mentioned as 29.05.2023 onwards as per details given above. The date of default is based on agreed 45 days credit period.

The Tribunal vide interim order dated 01.04.2025 directed the Applicant to file additional affidavit on the request of the Applicant to satisfy the Tribunal regarding service of demand notice upon the CD.

The Applicant complying with the above directions of the Tribunal filed an Additional Affidavit dated 09.04.2025 and submitted the following: -

The CD has filed the Affidavit-in-Reply dated 19.09.2025. The same is affirmed by Mr. Dipakkumar Ramdas Shinde – Director of the CD.

The CD in its reply denies the contents of the Applicant. The CD submits that the Application suffers from defect of gross suppression of facts since material facts have been concealed and disclosed facts have been distorted to suit the claim made in the Application. On this ground alone, the Applicant ought to be dismissed.

There are sufficient triable issues in the matter, which warrant relegating the parties to a Civil/Criminal Court(s) to establish the claim, if any, by leading evidence in the matter.

The CD submits that undertaking between the parties was given by the CD under business pressure and for maintaining further congenial relations between the parties. The Applicant has already initiated proceedings under the Negotiable Instruments Act against the CD vide Case No. 107218/2023 that is currently being tried before the Hon’ble Judicial Magistrate, First Class (JMFC) Court at Pune. The case filed before the JMFC, Pune is based on the same claims and amount as the present Application and in accordance with the doctrine of Res Judicata, this Tribunal is not obligated to entertain this present suit in the interest of justice.

The CD further placed the findings contained in the case bearing no. CP(IB)/68/MP/2020 as follows:

Furthermore, Section 238 of the Code is as follows:

In accordance with section 238 of the Code that deals with prevention of parallel proceedings on the same issue, the present application before this Tribunal cannot be permitted as the CD is currently being tried for the same claim before another court i.e the JMFC, at Pune. The Court has also issued process against the accused in the same case.

The CD submits that there is a pre-existing dispute over the total debt amount and also as regards the actual dealings and transactions between the parties.

The CD has failed to produce any material on record to establish that there in-fact existed a pre-existing dispute between the parties prior to issuance of the Demand Notice dated 12.04.2024, which in true sense is the real test to allege the contention of pre-existing dispute. Merely raising such an issue and using it as an afterthought is nothing but a delay tactic by the CD.

It is submitted that the allegation that the undertaking was given under business pressure and to maintain congenial relations between the parties is wholly misconceived, self-serving and devoid of merit. It is submitted that these allegations are an afterthought to avoid the consequences of default under the Code.

It is settled law that the remedies available under the said Code and The Negotiable Instruments Act, 1881 operate in independent spheres. The proceedings under these statutes are not mutually exclusive. Proceedings under The Negotiable Instruments Act, 1881 are quasi-criminal in nature intended to impose penal consequences for the dishonour of the cheques. In contrast, the proceedings under the said Code are civil in nature aimed at the resolution of insolvency in a time bound manner through a structured and statutory framework.

The CD has relied on the following judgments:

We have heard the Ld. Counsels for the Applicant as well as the CD and have perused the records as placed before us. Our findings in the matter are as under: -

The Applicant has submitted that the CD had defaulted in payment of the invoices details of which are as reproduced in the above para no. 2.1. The total amount in default is Rs. 5.8 Crore. The Applicant has attached purchase orders bearing no. 30,610, 30,611, 30,847, 30886, 30896, 31438 and 31450 dated 15.03.2023, 11.04.2023, 15.04.2023, 02.05.2023, 03.05.2023 and various invoices which were acknowledged by the CD and a comment on the receipt of the invoice stating, “All goods are received in good condition as per requirement”.

The claim amount is based on the invoices raised by the Applicant between 14.04.2023 to 30.05.2023 against the CD for the goods supplied by the Applicant. Details of the same are given on page no. 58 of the Application.

On perusal of the invoices we see that the payment term of each invoice was 45 days from the date of each invoice and the same was accepted by the CD, which can be confirmed from the stamp and sign by the CD on the invoice.

Thereafter, the Applicant sent repeated reminders, which can be seen from Exhibit-E dated 07.09.2023 at page no. 58 of the Application but no payments came forth to the Applicant. Further, the CD issued multiple cheques which were returned for the reason – “payment stopped by drawer”. Copies of the cheques along with the return memo are attached on page no.60 to 86 of the Application.

Further, it is observed that an undertaking was executed by the CD dated 24.07.2023 which is reproduced as follows: -

From this undertaking it is observed that the CD had undertaken to pay a sum of Rs. 6,31,27,094/- against supply made to the CD under various invoices raised during March to May 2023 and agreed to pay an interest at the rate of 12% p.a. from due date of invoice till the date of payment. The timeline of payment is also mentioned in the above chart supplied. Since, no payments were made by the CD, the Applicant sent a Demand Notice dated 12.04.2024 as per Section 8 of the Code demanding the outstanding amount from the CD. A copy of the Demand Notice along with the postal receipts and track consignment reports are attached to the Application as a proof of delivery of Demand Notice to the CD. The CD has not replied to this Demand Notice.

The date of default mentioned by the Applicant is 29.05.2023 onwards, which is the due date of the first invoice dated 14.04.2023. The Applicant has filed the Application within limitation period as the Applicant has filed the Application on 10.07.2024.

Therefore, from the above documents we note that the Applicant had supplied goods to the CD and the CD has never denied or disputed the supply of goods and the outstanding amount.

Further, the NeSL record of default in Form C and Form D have been produced by the Applicant. The NeSL record in Form D shows the status of authentication as “Deemed to be Authenticated” and the outstanding amount mentioned is Rs. 5,82,19,776/- and the date of default as 30.05.2023.

The Applicant has attached the 9(3)(b) Affidavit stating that there is no dispute raised by the CD with regard to the unpaid operational debt.

The CD has raised the contention that the Application filed by the Applicant is not maintainable due to Res Judicata as there are parallel proceedings initiated against the CD under Negotiable Instruments Act, 1881. It is submitted by the CD that the proceedings under Section 138 of the Negotiable Instruments Act against the CD vide Case No. 107218/2023 are currently being tried before the Hon’ble Judicial Magistrate, First Class (JMFC) Court at Pune and therefore the present case falls under the doctrine of Res Judicata.

Section 11 of the Civil Procedure Code, 1908 reads as follows:

As per Section 11 of the CPC, the essential requirements - namely identity of issues, identity of subject-matter, and adjudication by a court of competent civil jurisdiction— must be satisfied for a case to fall under the doctrine of Res Judicata. It is an established legal position that proceedings under Section 138 of the NI Act are quasi-criminal in nature, aimed solely at determining whether the accused has committed the statutory offence of dishonour of cheque. Such proceedings are penal, quasi-criminal, and are governed by a standard of proof beyond reasonable doubt. They do not adjudicate upon, determine, or declare the civil liabilities, contractual rights, or financial dues between the parties. The scope and object of criminal proceedings are materially distinct from those of proceedings before this Tribunal. This Tribunal, on the other hand, is empowered to determine civil consequences affecting the corporate debtor, its management, creditors, and stakeholders. Owing to this fundamental difference in jurisdiction, object, and standard of proof, the findings or pendency of a criminal prosecution cannot operate as res judicata in subsequent civil or IBC proceedings. Moreover, the proceedings under 138 of NI Act have not attained finality as the CD has failed to bring any adjudication order on record and in view of the same also said pendency cannot operate as res judicata against the proceedings in the present Application.

Accordingly, the Tribunal is of the considered view that the plea of res judicata is misconceived. The prior criminal proceedings neither bar nor restrict the jurisdiction of this Tribunal to adjudicate the present application on its own merits.

The CD has placed reliance on the judgments of Hon’ble Supreme Court in Kaushik Cooperative Building Society v. N. Parvathamma, (2017) 13 SCC 138, Order dated 11.04.2017 and Bombay Gas Co. Ltd. v. Jagannath Pandurang, (1975) 4 SCC 690, Order dated 12.08.1975 and by Hon’ble NCLT, Mumbai in Kotak Mahindra Bank Limited v. India Steel Works Limited, CP(IB)/779/MP/2023, that principle of Res Judicata is applicable to all cases and not only to matters governed by the provisions of the Code of Civil Procedure. For the reasons stated in para 6.14 and 6.15 especially considering that there is no finality to the Section 138 proceedings, in our view the doctrine of Res Judicata does not apply to the present case and that the judgments referred to above are not applicable.

The CD also relies on the judgment of Hon’ble Supreme Court in Swiss Ribbons Pvt. Ltd. v. Union of India, (2019) 4 SCC 17 stating that Applicant has misused the provisions of the Code to pressurize the CD. Although, after examining the said judgment it is seen that the Hon’ble Supreme Court has held the following:

As the Hon’ble Supreme Court has held that the Code is a beneficial legislation to revive the corporate debtors and not a mere recovery mechanism, and hence the Applicant has rightly come to this Tribunal not for making recovery but to revive the CD by way of resolution. Therefore, we are of the view that reliance by the CD on this judgment is misplaced.

Further, reliance is made by the CD on the order of Ld. Hon’ble NCLT, Indore Bench in Indian Potash Limited v. Suman Phosphates and Chemicals Limited CP(IB)/68/MP/2020 dated 05.09.2024 stating that the “3. (vi): Proceeding initiated under section 138 of NI Act is pending, and in view of pendency of such case, application under section 9 of the Code is not maintainable as per the Doctrine of Election”. The Tribunal after examining the said judgment, finds that the Ld. NCLT Indore Bench, has not stated the above findings rather that was the contention of the CD in that case and the Ld. Tribunal had held that, “The acknowledgement by the corporate debtor by letter dated 21.07.2017, 30.08.2017 and 12.02.2018 extends the limitation period. Accordingly, the present petition is well within the limitation period. As such the petition deserved to be admitted. Accordingly, we allow this petition….”. Therefore, reliance by the CD is grossly misplaced.

The CD has raised the contention that there is a pre-existing dispute with regard to total debt amount and transactions between the parties. We see that the CD has not replied to the Demand Notice dated 12.04.2024 sent by the Applicant and has not produced any documents in his reply to prove any dispute prior to the issue of demand notice.

Only bald averments are made qua the dispute, which in our considered view are moonshine in nature.

The Applicant has attached NeSL record of default in Form-D, as per which status of authentication of default is under “Deemed to be Authenticated” stage. Perusal of the same reveals that no dispute was raised before the information utility by the CD and hence, the dispute which is raised in the reply appears to be a moonshine defence.

In view of the above findings, it is clear that the Applicant has placed on record the necessary evidences and materials to demonstrate the existence of the financial debt exceeding the minimum threshold of Rs.1 Crore prescribed under Section 4 of the Code due and payable by the CD as well as the default in repayment thereof by the CD. The Applicant has served the Demand Notice upon the CD, and that the CD has failed to establish the existence of any pre-existing dispute. The Application is complete as all the relevant documents have been attached by the Applicant along with the Application.

The Applicant has not proposed the name of IRP and therefore, this Tribunal has appointed Mr. Rishabh Sethi as an IRP to carry out the functions as mentioned under the Code.

We find that all pre-requisites of Section 9 of the Code are fulfilled and, accordingly, we are satisfied that the instant Application is fit for admission under Section 9 of the Code. The Applicant has attached all the documents as required and therefore the Application is complete.

We make it clear that at this stage we have not crystalized the amount as claimed in this Application, the same is left to be collated by the IRP.

In view of the aforesaid findings, Application bearing C.P.(IB) No. 417/MB/2025 filed under Section 9 of the Code by Rexel India Private Limited Operational Creditor, for initiating CIRP in respect of Proto D Industries Pvt. Ltd, the Corporate Debtor is hereby admitted.

We further declare moratorium under Section 14 of the Code with consequential directions as mentioned below: -