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Judgment
The present Application was filed on 27.07.2024 under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred as “the Code/IBC”) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred as “the Rules”) by M/s Saurav Misira Enterprises Private Limited (hereinafter referred as "Applicant/Operational Creditor") to initiate the Corporate Insolvency Resolution Process (hereinafter referred as "CIRP") against M/s Bihariji Packaging Products Private Limited (hereinafter referred as "Corporate Debtor") due to its failure to pay the total outstanding operational debt of Rs. 7,38,67,413/- to the Operational Creditor. The date of default is 11.06.2024, as stated in the Supplementary Affidavit filed in compliance with the Order dated 03.09.2024.
The operational debt became due, on account of goods i.e., Gold Bullion supplied by Operational Creditor to the Corporate Debtor as per their requirement from time to time. As per the details provided in the application, the Operational Creditor issued various invoices from 24.12.2019 till 25.08.2020 for the materials supplied, fastening the liability on the Corporate Debtor to make payments to the Operational Creditor for the material supplied.
It is further submitted that as per the Ledger Account of the Corporate Debtor maintained in the books of Operational Creditor, the payment by the Corporate Debtor was made from time to time and the last payment of Rs. 6,20,000/- was received on 01.03.2024, thereby leaving a balance amount of Rs. 3,78,87,709/- which remains due and payable by the Corporate Debtor to the Operational Creditor.
It is further submitted that the Corporate Debtor failed to make any payments against remaining outstanding amounts which was due to the Operational Creditor despite follow ups. As the Corporate Debtor did not address the repeated requests of the Operational Creditor for payment, the Operational Creditor issued a demand notice in Form 3 under Section 8 of the Code dated 31.05.2024 via email, demanding payment of the outstanding amount of Rs. 7,38,67,413/- (Principal outstanding Rs. 3,78,87,709/- + Rs. Interest @ 12% PA Rs. 3,59,79,704) as on 31.05.2024.
The Respondent/Corporate Debtor through its director, Sh. Rajesh Agarwal in response to the notice under section 8 of the Code, dated 31.05.2024 sent a reply, through email dated 03.06.2024, stating that company is into financial crunch and assured that the company shall be able to repay the said unpaid amount in full within a period of one week.
The Operational Creditor further submits that the Corporate Debtor raised no dispute in its reply to the demand notice, and despite the lapse of 10 days from the date of the receipt of the demand notice, no payment has been made by the Corporate Debtor as made out from the reply in its email dated 03.06.2024 to the demand notice. The Applicant also filed an affidavit as required u/s 9(3)(b) in this regard and stated as under:
“4.That the deponent states that the no reply to the aforesaid notice has been received from the corporate debtor indicating the existence of dispute except the aforesaid email dated 03.06.2024 in which the corporate debtor has admitted the default and the Corporate Debtor has not paid the amount in default.”
The Operational Creditor has also placed on record, the Record of Default in “Form D” issued by the National E-Governance Services Limited (NeSL), wherein the default by the Corporate Debtor is recorded. The said Form reflects the total outstanding and default amount as Rs. 7,38,67,413/- in accordance with the provisions of the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017.
Aggrieved by the delay in clearing of the debt by the Corporate Debtor and its continued failure to clear the outstanding payments, the Operational Creditor filed the present Application seeking for initiation of CIRP against the Corporate Debtor.
REPLY ON BEHALF OF THE CORPORATE DEBTOR
The Corporate Debtor acknowledging the admission of debt filed its reply vide Filing No. 090210900764/2024/5 dated 08.03.2025. The relevant excerpt of the aforesaid reply is reproduced below:
“8.That the deponent further states that the corporate debtor has replied to the notice u/s 8 of the Code sent by the petitioner/Operational Creditor via email dated 03.06.2024 stating that the corporate debtor is facing financial difficulties and sought some time to settle the dues. Further, the talks were on and the deponent assured the applicant for the payment but as an arm-twisting measure, the present petition has been filed.
9.That the deponent states that the corporate debtor is facing Financial crunch owing to various factors and the company is very hopeful that the Company shall generate profits and arrange funds and that will be sufficient to make payment of the debt due to the Operational creditor. The company has fair chances for bouncing back and repay its debt.
10.That the deponent states that the Management of the Respondent have been devoting full time exclusively for management and business of the Respondent. The business of the Respondent is managed with full passion and dedication. In spite of this, the Corporate Debtor is facing tough financial crunch. This Hon'ble Tribunal may consider the impact of CIRP on the Respondent and the employees/stakeholders who are depending on it.”
The Applicant has filed its rejoinder on 20.01.2025 which has been taken on record and not repeated for the sake of brevity.
During the course of hearing held on 23.10.2024, the Ld. Counsel representing the Operational Creditor while arguing the matter, referred to the Supplementary Affidavit filed vide diary no. 2082 dated 07.10.2024, particularly para no. 4 of the said affidavit, where the Corporate Debtor in its email dated 03.06.2024 assured to repay the unpaid amount within a period of one week. It was further stated that one week period from 03.06.2024 had expired on 10.06.2024, therefore the date of default is 11.06.2024 as stated in para no. 4 of the aforesaid affidavit.
FINDINGS AND ORDER
We have heard the arguments of the Learned Counsels appearing for both parties, Applicant/Operational Creditor and Respondent/Corporate Debtor and perused the pleadings, records, and exhibits/annexures marked thereto. Further, on perusal of the records, exhibits/annexures and after considering the arguments advanced by respective Learned Counsels, we find that the following issues are for consideration to be decided for admissibility or otherwise of this Application u/s 9 of the Code.
a. Whether there is a Debt and Default
b. Whether there is a Pre-Existing Dispute
a. Debt and Default
As per the present Application filed by the Operational Creditor in Form 5, seeking initiation of CIRP against the Corporate Debtor is based on the outstanding dues mentioned in Part-IV of the Application amounting to Rs. 7,38,67,413/- in total, with the date of default being 11.06.2024, as mentioned in the supplementary affidavit filed in terms of order dated 03.09.2024.
The facts leading to the above debt and default are that the Operational Creditor supplied goods i.e. Gold Bullion to the Corporate Debtor on different occasions and raised invoices from 24.12.2019 to 25.08.2020. However, the said invoices remained unpaid despite follow ups. The details of the said invoices are as follows:
| SI No. | Invoice No. | Date |
|---|---|---|
| 1 | 002 | 24.12.2019 |
| 2 | 003 | 25.12.2019 |
| 3 | 004 | 25.12.2019 |
| 4 | 005 | 26.12.2019 |
| 5 | 006 | 26.12.2019 |
| 6 | 004 | 24.08.2020 |
| 7 | 005 | 24.08.2020 |
| 8 | 006 | 25.08.2020 |
| 9 | 007 | 25.08.2020 |
| 10 | 008 | 25.08.2020 |
Subsequently, the Operational Creditor issued a Demand Notice dated 31.05.2024 through email upon the Corporate Debtor demanding the outstanding payment in default under section 8 of the IBC, 2016. Thereafter, the Applicant filed an application under Section 9 of the Code before this Tribunal on 27.07.2024, which falls within the three-year limitation period from the date of default, i.e., 11.06.2024.
We also noted that in response to the Operational Creditor's Demand Notice through email dated 31.05.2024, the Corporate Debtor sent a reply through email dated 03.06.2024 candidly acknowledging the dues and assuring repayment within one week and stated as follows:
“Dear Sir, Please take note that the company is into some financial crunch due to some unavoidable circumstances, however we assure you that the company shall be able to repay the said unpaid amount in full within a period of one week. Please provide us with reasonable time for the same. Thanks and Regards. For Bihariji Packaging Products Pvt. Ltd Rajesh Agarwal (Director)”
Further, it is also observed that the Corporate Debtor failed to make the payment of the outstanding dues within one week as stated in the aforesaid email and in its reply dated 08.03.2025, the Corporate Debtor reiterated its financial difficulties and expressed the intent to settle the outstanding dues upon improvement of business operations, however, the Corporate Debtor failed to do so.
Further, during the hearing of the present matter on 25.04.2025, the Ld. Counsel representing the Corporate Debtor confirmed the financial distress and referenced paragraphs 8 to 11 of their reply, wherein the liability towards the Operational Creditor stood impliedly admitted.
Further, the default has also been recorded under Form D, Record of Default by National E-Governance Services Limited (NeSL) as follows:
| (a) Name of the Submitter: | M/s SAURAV MISIRA ENTERPRISES PRIVATE LIMITED |
| (b) Schedule-2 Bank (Y/N): | N |
| (c) Name of the Corporate Debtor: | M/s BIHARIJI PACKAGING PRODUCTS PRIVATE LIMITED |
| (d) Unique Debt Identifier Number: | AAPCS9826G_AADCB7117P04 |
| (e) Registered Address: | 119/372, DARSHAN PURWA, GUMTI NO. 5, Kanpur, KANPUR, Uttar Pradesh, India, 208012 |
| (f) Total Outstanding Amount: | 73867413.00 |
| (g) Default Amount: | 73867413.00 |
| (h) Date of Default: | 24-04-2019 |
| (i) Status of Authentication of Default: | DEEMED TO BE AUTHENTICATED |
| (j) Date of Last Acknowledgement of Debt (AoD): | 01.03.2024 |
After considering the above facts and circumstances of the case, we are of the view that the admission of liability by the Corporate Debtor through its email dated 03.06.2024, as well as the submissions made through its reply before this Tribunal as mentioned in para 9 of this Order, collectively establish the existence of a legally enforceable debt. The failure to make payments towards the invoices raised by the Operational Creditor confirms the occurrence of default. The plea of financial hardship further reinforces the fact that the outstanding dues remain unpaid. Thus, it is evident that a valid debt has been incurred and remains unpaid, leading to a default on the part of the Corporate Debtor.
As per section 4 of the Code, the minimum threshold for initiating a CIRP application is Rs. 1 Crore. In the present case, the Applicant has placed sufficient documents to show that a debt of more than Rs. 1 crore, as also mentioned in Part IV of the Application, is due and that there has been a default in payment on the part of the Corporate Debtor. Therefore, we are satisfied that there is a debt of more than Rs. 1 Crore and also a default has occurred on the part of the Respondent to pay this debt.
b. Whether there is a Pre-Existing Dispute.
As regards there being any pre-existing dispute in respect of the claim made by the Operational Creditor as discussed above, we find that no notice of dispute was raised by the Corporate Debtor against the demand notice dated 31.05.2024, as required under Section 9(5)(i)(d) of the Code.
Additionally, in the email dated 03.06.2024, as well as the submissions made by the Corporate Debtor through its reply, the Corporate Debtor reiterated its financial distress without raising any substantial or bona fide dispute as to the existence of debt. Therefore, no pre-existing dispute has been found in existence in the present case.
After finding that in the present case, the present Application is filed within limitation period, there is debt more than the threshold limit of Rs. 1 crore, there is a default in repayment of the said debt and there is no pre-existing dispute with respect to this debt, further, all other conditions for admission of application under Section 9(5)(i) of the I & B Code 2016 against the Corporate Debtor, have also been found to be fulfilled, we find this application as being fit for admission under Section 9(5)(i) of the I & B Code, 2016 for starting CIRP against the Corporate Debtor.
We note that the Operational Creditor has proposed the name of Mr. Sumit Shukla, the Insolvency Professional, to be appointed as Interim Resolution Professional (IRP), having Registration No. IBBI/IPA-003/IP-N00064/2017-18/10550, address: B-4/702, Krishna Apra Garden, Plot-7, Vaibhav khand Indrapuram, Ghaziabad, Uttar Pradesh, 201014 and email id: [email protected]. The verification of the said IRP has been carried out by the Law Research Associate of this Tribunal, Ms. Akshita Singh, and it is found that there is no proceeding pending against the proposed IRP, and it is also found that this Insolvency professional holds valid authorization till 31.12.2025.
Accordingly, this application is admitted u/s 9 of the Code, 2016, under the following terms and conditions.
The application filed by the Operational Creditor under Section 9 of the Insolvency & Bankruptcy Code, 2016 for initiating the Corporate Insolvency Resolution Process against the Corporate Debtor i.e., M/s Bihariji Packaging Products Private Limited is hereby admitted.
We hereby declare a moratorium and public announcement in accordance with Sections 13 and 15 of the I & B Code, 2016.
This Adjudicating Authority hereby appoints Mr. Sumit Shukla to act as the IRP under Section 13(1)(c) of the Code as decided by us in para 24 above.
The IRP shall cause a public announcement for the initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor and call for the submission of claims under Section 15. The public announcement referred to in clause (b) of sub-section (1) of Section 15 of the Insolvency & Bankruptcy Code, 2016 shall be made immediately.
Moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016 has commenced from the date of this order prohibiting the following:
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;
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 Securitization 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.
Apart from above prohibitions in respect of the corporate debtor, it is further directed that 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.
The provisions of Section 14(3) shall, however, not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator and to a surety in a contract of guarantee to a corporate debtor.
The order of moratorium shall have effect from the date of this order till completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of the corporate debtor under Section 33 as the case may be.
The IRP is directed to take steps as mandated under section 13 and 15 of the IBC for making public announcement about the commencement of CIRP against the Corporate Debtor and moratorium against it u/s 14, and also take necessary actions as per sections 17, 18, 20 and 21 of IBC, 2016.
The IRP shall after collation of all the claims received against the Corporate Debtor and the determination of the financial position of the Corporate Debtor and to constitute a Committee of Creditors ( hereinafter referred as “COC”) and shall file a report certifying the constitution of the COC to this Tribunal on or before the expiry of thirty days from the date of his appointment, and shall convene the first meeting of the COC within seven days of filing the report of the constitution of the COC.
The COC in its first meeting shall appoint a Resolution Professional (hereinafter referred as “RP”) as per the provision of section 22(2) and file an application before this Tribunal for confirmation of the appointment of the RP.
The Suspended Board of Directors of the corporate debtor is directed to give to IRP/RP complete access to the Books of Accounts of the corporate debtor maintained under section 128 of the Companies Act. In case, the books are maintained in the electronic mode, the Suspended Board of Directors are to share with the IRP/RP all the information regarding maintaining the Backup and regarding service provider kept under Rule 3(5) and Rule 3(6) of the Companies Accounts Rules, 2014 respectively as effective from 11.08.2022, especially the name of the service provider, the internet protocol of the service provider and its location, and also address of the location of the Books of Accounts maintained in the cloud. In case, accounting software for maintaining the books of accounts is used by the corporate debtor, then IRP/RP is to check that the audit trail in the same is not disabled as required under the notification dated 24.03.2021 of the Ministry of Corporate Affairs.
The Statutory Auditor is directed to share with the Resolution Professional the audit documentation and the audit trails, which they are mandated to retain pursuant to SA-230 (Audit Documentation) prescribed by the Auditing and Assurance Standards Board ICAI.
The IRP/RP is directed to take custody and control of all the records of information relating to assets of the Corporate Debtor, its Books of Account in physical form or the computer systems storing the electronic records at the earliest in accordance with the provision of Regulation 3A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (hereinafter referred to as “CIRP Regulations, 2016”).
The Operational Creditor shall also provide necessary assistance to IRP/RP in obtaining the necessary information about the Corporate Debtor as envisaged in Regulation 4(3) of the CIRP Regulations, 2016.
In case of any non-cooperation by the Suspended Board of Directors or the Statutory Auditors, IRP/RP may take the help of the police authorities to enforce this order. The concerned police authorities are directed to extend help to the IRP/RP in implementing this order for the retrieval of relevant information from the systems of the corporate debtor.
The IRP/RP may take the assistance of Digital Forensic Experts empaneled with this Bench/IBBI/MCA for this purpose.
The Suspended Board of Directors is also directed to hand over all user IDs and passwords relating to the corporate debtor, particularly for government portals, for various compliances.
The IRP/RP is also directed to make a specific mention of non-compliance, if any, in this regard in his status report filed before this Adjudicating Authority immediately after a month of the initiation of the CIRP.
The IRP/RP is directed to approach the Government Departments, Banks, Corporate Bodies and other entities with requests for information/documents available with those authorities'/institutions/ others pertaining to the Corporate Debtor which would be relevant in the CIR proceedings.
The IRP/RP is directed to approach all the concerned Government Departments and authorities as discernible from the books of account of the Corporate Debtor requesting them to file claims if any amount is outstanding against the Corporate Debtor.
The Government Departments, Banks, Corporate Bodies and other entities are directed to render the necessary information and cooperation to the IRP/RP to enable him to conduct the CIR Proceedings as per law.
The IRP/RP shall collate the data obtained from (a) the claim(s) made before it and (b) information gathered from the records including those maintained by the Corporate Debtor.
The IRP/RP is further directed to send regular progress reports to this Tribunal every month.
We direct the Operational Creditor to deposit a sum of Rs.1,00,000/- with the Interim Resolution Professional, to meet out the expenses to perform the functions assigned to him in accordance with Regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations, 2016. The amount, however, is subject to adjustment by the Committee of Creditors as accounted for by the Interim Resolution Professional on the conclusion of CIRP.
A certified copy of the order shall be communicated to both the Applicant Operational Creditor and the Respondent Corporate Debtor. The learned counsel for the Applicant Operational Creditor shall deliver a certified copy of this order to the IRP forthwith. The Registry is also directed to send a certified copy of this order to the IRP at his e-mail address forthwith.
List the CP (IB) 69/ALD/2024 on 10.07.2025 for filing of the progress report/further proceedings.