2020 (1) TMI 1519 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - application is filed by an authorised person on behalf of the operational creditor - proper authority of present petition or not - qualified demand notice or not - proper documents annexed to the application or not - agreement between the applicant and respondent in relation to the rate of interest to be charged on account of delay, present or not - delivery of goods took place or not - HELD THAT - In toto, the respondent has denied the contentions raised by the applicant. Even the respondent has denied having received the consignment of goods against which the invoices are raised by the applicant. Present petition is with proper authority or not - HELD THAT - The applicant company has duly passed a resolution in meeting of the Board of Directors on 04.12.2017, which has already been produced in the proceedings at page No. 39 whereby Mr. Pratik D. Shah is authorised as authorised representative of the petitioner to file company petition, Insolvency Petition etc. apart from other powers as required to proceed with applications or cases etc. Hence it cannot be said to be bad in law. Notice dated 11.12.2017 issued by the applicant qualifies as a demand notice or not - HELD THAT - The notice issued on 11.12.2017 by the applicant demanding the operational debt is supported by all the required documents like copy of sale contract, list of invoice and copy of invoices as contemplated and envisaged under the provisions of the Code. As per the provisions of the code, Section 8 read with Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 either a demand notice in form 3 or a copy of invoice attached with a notice in form 4, is required to initiate an Insolvency Application and so the demand notice duly qualifies as a demand notice under the Code. Whether the copies of relevant accounts from the bank/financial institution maintaining accounts of the applicant confirming that no payment is received from the respondent is annexed to the application or not - HELD THAT - There is a requirement of furnishing other information and documentary evidence involving particulars of operational debt as well along with the application. This can be gathered from a reading of Section 9(3)(d) of the Code along with the entries mentioned in part V of form 5 under Rule 6. The important condition precedent is an occurrence of a default which can be proved, by means of other documentary evidence such as a letter written by the corporate debtor to the operational creditor confirming that a particular operational debt is due and payable. Whether there is an agreement between the applicant and respondent in relation to the rate of interest to be charged on account of delay? - HELD THAT - In case if there is no agreement with respect to the interest in case of late payment, the provisions on the Interest Act, 1978 would apply. As per the Interest Act, 1978, interest can be claimed in any process of recovery of any debt or damages. Thus, the applicant is entitled to claim interest on the payment even in absence of any agreement between the applicant and the respondent, more so when there is nothing on record in writing showing that the applicant will not charge any interest for the payments delayed beyond due dates. Further, such statement itself is an admission on the part of the applicant that amount is due and payable to the petitioner but not the interest. Delivery of goods took place or not - HELD THAT - On perusal of the records it is found that, prior to filing of the instant application, the respondent has never questioned about the delivery of goods in the communication made between the respondent and the applicant. That itself shows that the claim made by the respondent that no goods have been delivered to them is misleading, more so when all the documents like sales contract, tax invoice, bill of lading, packing list, certificate of origin, certificate of weight and declaration annexed to the application at page 10-16 bear stamp and signature of the respondent which shows that the respondent had received delivery of such goods. On perusal of the record it is found that the petition is complete in all respect - the amount involved is an operational debt and the same is due and payable to the applicant - the scheme is approved - application allowed.

Summary

Issues Involved:
1. Proper authority to file the petition.
2. Validity of the demand notice.
3. Requirement of bank/financial institution confirmation.
4. Agreement on the rate of interest for delayed payments.
5. Evidence of delivery of goods.

Detailed Analysis:

1. Proper Authority to File the Petition:
The respondent contended that the petition was filed without proper authority. The tribunal found that the applicant company had duly passed a resolution in a Board of Directors meeting on 04.12.2017, authorizing Mr. Pratik D. Shah to file the petition. This resolution was produced in the proceedings, and thus, the tribunal concluded that the petition was filed with proper authority and was not bad in law.

2. Validity of the Demand Notice:
The respondent argued that the notice dated 11.12.2017 did not qualify as a demand notice. The tribunal examined the notice and found it to be supported by all required documents, such as the sale contract, list of invoices, and copies of invoices, as stipulated under the Insolvency and Bankruptcy Code. The tribunal determined that the notice qualified as a valid demand notice under the Code.

3. Requirement of Bank/Financial Institution Confirmation:
The respondent raised an objection that the application did not include copies of relevant accounts from the bank or financial institution confirming that no payment was received from the respondent. The tribunal referred to the Supreme Court's decision in Macquarie Bank Limited v. Shilpi Cable Technologies Limited, which clarified that such confirmation is only a piece of evidence and not a condition precedent for triggering the insolvency process. The tribunal noted that other documentary evidence can prove the occurrence of default, and thus, this objection was not upheld.

4. Agreement on the Rate of Interest for Delayed Payments:
The respondent contended that there was no agreement between the parties regarding the rate of interest for delayed payments. The tribunal referred to the Interest Act, 1978, which allows for the claiming of interest in the recovery of any debt or damages, even in the absence of an explicit agreement. The tribunal concluded that the applicant was entitled to claim interest on the delayed payments.

5. Evidence of Delivery of Goods:
The respondent denied receiving the metal scrap and argued that none of the documents provided by the applicant evidenced the delivery of goods. The tribunal found that prior to the filing of the application, the respondent had never questioned the delivery of goods in their communications with the applicant. The tribunal noted that the documents, such as the sales contract, tax invoice, bill of lading, and others, bore the stamp and signature of the respondent, indicating receipt of the goods. Therefore, the tribunal concluded that the respondent's claim of non-delivery was misleading.

Findings:
The tribunal found that the petition was complete in all respects and that the amount involved was an operational debt due and payable to the applicant. The tribunal referenced the Supreme Court's decision in Mobilox Innovative Private Limited vs. Kirusa Software Private Limited, which outlined the conditions for admitting an application under Section 9 of the Insolvency and Bankruptcy Code. The tribunal determined that all conditions were met and thus admitted the petition.

Order:
The tribunal declared a moratorium prohibiting the institution or continuation of suits or proceedings against the corporate debtor, transferring or disposing of assets, and other specified actions. The tribunal directed the Interim Resolution Professional to make a public announcement of the initiation of the Corporate Insolvency Resolution Process and call for submission of claims. The tribunal appointed Shri Sunil Kumar Agarwal as the Interim Resolution Professional and directed the registry to inform the Registrar of Companies about the corporate insolvency resolution process.

Conclusion:
The petition was admitted, and a moratorium was declared, initiating the Corporate Insolvency Resolution Process against the corporate debtor. The tribunal directed the necessary actions to be taken as per the provisions of the Insolvency and Bankruptcy Code.