Sunrise Industries (India) Limited vs EDAC Engineering Limited

Per: SAMEER KAKAR, MEMBER (TECHNICAL)

This Application has been filed by the Operational Creditor namely Sunrise Industries (India) Limited under Section 9 of the Insolvency & Bankruptcy Code, 2016 seeking commencement of the Corporate Insolvency Resolution Process (CIRP) on the Corporate Debtor namely EDAC Engineering Limited.

From Part -I of the Application, it is seen that the Operational Creditor is a company having CIN No. U17119GJ1992PLC017745, registered office at Block No. 30, Village Garadhia, Jarod- Samlaya Road, Savli Baroda - 391520, Gujarat.

The Corporate Debtor is a company having CIN No. U45201TN1987PLC014584. The Company was incorporated on 26.06.1987 and the Authorised Share Capital of the Corporate Debtor is Rs. 197,20,00,000/- and Paid-up Share Capital of the Corporate Debtor is Rs. 167,39,34,000/-. The registered office of the Corporate Debtor is situated at 97-Mount Road, Madras - 600032. Tamilnadu - 600032.

From Part-IV of the Application discloses that the total amount of debt as claimed is Rs.1,36,13,785/- and that the said debt fell due on 18.04.2018.

The operational debt arises due to 5 purchase / work orders received from the Corporate Debtor against which certain part payments have been made.

The Table-A appended at page No. 18 of the Applicant's typed set is as follows: -

From the table it is evident that the total invoices amount was Rs.95.23 lakhs, of which the Operational Creditor has received Rs.23.41 lakhs and pending principal amount receivable is Rs.71.82 lakhs. The Operational Creditor claims unpaid interest calculated @ 24% per annum amounting to Rs.64.31 lakhs and thus total dues of Rs.136.14 lakhs.

It is seen from the application that tax invoices are attached from page Nos. 19-25 of the Applicant's typed set.

Demand notice under Section 8 was sent by the Operational Creditor on 20.09.2021. The original receipt by the post office is attached at page No.93. The said Demand Notice was delivered on 27.09.2021 and the track consignment report is attached at page No.51.

It is submitted that certificate dated 12.11.2021 is placed at page No. 53 which is issued by Bank of Baroda, Vadodara. A perusal of the said certificate reveals that the Operational Creditor has received the last payment from the Corporate Debtor on 11.07.2018 and this Application was filed before this Tribunal on 22.11.2021. The Applicant Counsel submitted that taking into consideration the suo-moto order of Supreme Court extending the limitation in Miscellaneous Application No. 21 of 2022 in Miscellaneous Application No. 665 of 2021 in suo motu Writ Petition (C) No. 3 of 2020, the present Application is within the limit as prescribed.

The Respondent had filed Counter Affidavit vide SR.No.1432 dated 02.03.2022.

The main objections taken by the Corporate Debtor are summarised below:-

a. The instant application is not within the threshold limit as prescribed under Section 4 of Insolvency & Bankruptcy Code, 2016. It is stated by the Respondent that unpaid due is Rs.71,82,303/- which is below the threshold limit and only after the adding the interest amount at the rate of 24% total amount claimed comes to about Rs.1.36 crore.

b. The claim of the Petitioner along with interest portion @ 24% is not maintainable and debt is not ascertained. It was submitted that there was no agreement as to payment of interest and claim of interest amounting to Rs.64.31 lakhs deserves to be rejected.

c. Existence of disputes raised by the Respondent Company. It was submitted that there was a claim and counter claims between the Petitioner and the Respondent herein. As per the Respondent, the Petitioner has not completed the contract and was liable to pay a sum of Rs.63.21 lakhs as liquidated damages in terms of the purchase orders and work orders.

It was submitted that the Respondent herein on 06.02.2020 had issued notice to the Petitioner that no amount is due from the Respondent that was protected exchange of correspondence between the two parties and the same is annexed at page Nos. 64-72 of the Respondent's typed set.

Post the correspondence, the Respondent has invoked the Arbitration clause and issued a notice to the Petitioner on 30.11.2020 and the same is annexed at Page Nos. 73-74 of the Respondent typed set. Without settling the case, the Petitioner approached the District Legal Services Authority, Vadodara. The said Authority has dismissed the case of the Petitioner. The Respondent thereafter approached the Hon'ble Madras High Court.

The Petitioner knowing well that the Arbitration proceedings are pending issued the Demand Notice dated 20.09.2021, the Petitioner approached the Madras High Court for appointment of Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 which is pending. In the rejoinder, the Applicant was unable to deny the Arbitration proceedings.

Heard the submissions of both the parties.

Apropos, Section 9(5) of Insolvency & Bankruptcy Code, 2016 is extracted below:-

It is an admitted fact that the proceedings under the Arbitration and Conciliation Act 1996 are presently going on between the parties.

Reliance is placed on Mobilox Innovations Private Limited vs. Kirusa Software Private Limited, (2018) 1 SCC 353, para 51 which is reproduced below :-

The present matter is squarely covered in the case of Mobilox Innovations Private Limited -vs- Kirusa Software Private Limited in CIVIL APPEAL NO. 9405 OF 2017 as there was a pre-existing dispute between the parties, accordingly this Application is dismissed. No costs.