2023 (7) TMI 310 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - demand notice and application was barred by 10A of IBC - total claim is more than Rs.1 Crore which include the Principal Amount of Rs.56,63,061/- and interest - HELD THAT - The emails which have been sent by the Operational Creditor, which have been brought on the record along with the Reply filed in this Appeal, indicate that the claim contains Principal Amount as well as interest as was due on the date when email was sent. The Corporate Debtor chose not to file reply and filed an I.A. for dismissing the application under Section 9. I.A. which was filed by the Appellant was dismissed for non-prosecution. We may also look into the grounds taken in the I.A. for dismissing the Company Petition. In the I.A. the ground taken was that the interest component cannot be added in the Operational Debt. Further Section 10A of the Code was relied referring to Demand Notice dated 21.12.2020. Learned counsel for the Operational Creditor has rightly relied on judgment of this Tribunal in Prashant Agarwal vs. Vikash Parasrampuria Anr 2022 (7) TMI 835 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , where three Member Bench of this Tribunal held that the total amount for maintainability of claim will include both principal debt amount as well as interest on delayed payment which is stipulated in the invoice has to be added - the above judgment of Prashant Agarwal clearly supports the submission of learned counsel for the Respondent that for calculating the amount for maintainability of the claim, for threshold purpose, both Principal Amount and Interest has to be calculated when the interest is stipulated between the parties. The ground taken in the I.A. under 10A is clearly misconstrued since the default is being claimed by the Operational Creditor w.e.f. 26.07.2018 which was much before the 10A period. The mere fact that the Demand Notice was dated 21.12.2020 shall not has any effect on the maintainability of the application under Section 9 when default is committed on 26.07.2018 and admitted thereafter. In the facts of the present case, the Adjudicating Authority did not commit any error in admitting Section 9 application which clearly fulfils the threshold. The Corporate Debtor despite having been allowed time, failed to file reply and did not appear on the date when matter was fixed for hearing. The Adjudicating Authority rightly proceeded ex-parte against the Corporate Debtor when he chose not to file reply and failed to appear on the date fixed. No error has been committed by the Adjudicating Authority in admitting Section 9 application. There is no merit in the Appeal - appeal dismissed.

Summary

Issues Involved:
1. Admission of Section 9 application.
2. Calculation of operational debt including interest.
3. Applicability of Section 10A of the Insolvency and Bankruptcy Code (IBC).
4. Procedural conduct and ex-parte proceedings.

Summary:

1. Admission of Section 9 Application:
The appeal was filed by the Suspended Director of the Corporate Debtor challenging the order dated 26.04.2023 by the Adjudicating Authority (National Company Law Tribunal), New Delhi, admitting the Section 9 application filed by the Operational Creditor. The Corporate Debtor and Operational Creditor had a Distributorship Agreement dated 20.07.2016, which included terms of payment and delivery. The Operational Creditor issued purchase orders and made advance payments, with a condition that delivery should be done within 90 days, failing which the advance would be returned with interest at 18% p.a. The Operational Creditor sent emails demanding amounts including interest and issued a demand notice under Section 8 dated 21.12.2020. The Corporate Debtor failed to reply, leading to the filing of the Section 9 application.

2. Calculation of Operational Debt Including Interest:
The Adjudicating Authority held that the debt and default were proved, and the Corporate Debtor failed to repay the amount. The Operational Creditor's claim included both the principal amount and interest, which exceeded the threshold of Rs.1 crore. The Tribunal referred to the judgment in "Company Appeal (AT) (Ins.) No. 690 of 2022, Prashant Agarwal vs. Vikash Parasrampuria & Anr.," which held that the total amount for maintainability of the claim includes both principal debt and interest on delayed payment stipulated in the invoice.

3. Applicability of Section 10A of IBC:
The Corporate Debtor argued that the application was barred by Section 10A since the demand notice was issued on 21.12.2020. However, the Tribunal clarified that the default occurred on 26.07.2018, which was before the 10A period, making the application maintainable.

4. Procedural Conduct and Ex-parte Proceedings:
The Corporate Debtor failed to file a reply despite being granted multiple opportunities and did not appear on the date fixed for hearing. The Adjudicating Authority proceeded ex-parte against the Corporate Debtor. The Tribunal found no error in the Adjudicating Authority's decision to admit the Section 9 application and dismissed the appeal, noting that the Corporate Debtor's conduct showed an attempt to delay the proceedings.

The appeal was dismissed, affirming the Adjudicating Authority's order admitting the Section 9 application.