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TMI Blog2021 (8) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 6 of Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016. 2. The counsel for the petitioner submitted that there were various agreements between the petitioner and the respondent starting from the year 2009 including agreements dated 03.11.2010, 24.01.2012, 08.11.2013, 22.01.2016 and 04.10.2016 for supply of agricultural implements, tractor drawn implements, power tillers, self-propelled machines, HDPE Pipes, pump sets, plant protection equipment etc. The counsel stated that in accordance with these agreements, the petitioner had been performing its part of obligation and has supplied the required implements/equipment to the respondent. In view of this, the petitioner had raised invoices to the respondent. 3. The counsel for the petitioner submitted that the respondent enjoyed the supplies made by the petitioner since the year 2009 but has made only part payments towards the same and has conveniently ignored clearing the entire invoice amount in a timely manner. On account of the respondent's failure to clear the invoices for the past many years, the outstanding dues towards the petitioner have increased to the tune of around Rs. 1,18,96,237/- out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 15, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in an law for the time being in force, be liable to pay compound interest with monthly rests to the supplier on that amount from the appointed day or, as the case may be from the date immediately following the date agreed upon, at three times of the bank rate notified by the Reserve Bank." 8. The counsel for the respondent on the other hand submitted that the present petition is malafide and non-maintainable. He alleged that the present petition has been maliciously filed with an attempt to wrongfully initiate CIRP against the respondent. 9. The respondent submitted that the respondent is an undertaking promoted by the Government of Maharashtra and is inter alia engaged in the business of developing and promoting agro-based industries and providing assistance to them. It employs about 700 employees and workmen, mostly from the local area of its operations. Its brand i.e. NOGA products are well accepted in the institutional market segment which covers Canteen Stores Department, Army Purchase Organization, Indian Airline, Air India, Air Caterers, Star Hotels et ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vi. An amount of Rs. 8,52,105/- is deducted by the Respondent on account of dispute of the petitioner with the Sales Tax/VAT Department in respect of goods supplied by the Petitioner to the Respondent. The Sales Tax/VAT department has issued notices to the Petitioner regarding its liability to charge sales Tax/VAT on the goods supplied by the Petitioner to the Respondent as the Petitioner has not charged Sales Tax/VAT on such goods. The Respondent, by way of abundant caution, has withheld this amount from the sums payable to the Petitioner as the Sales Tax/VAT as the Sales Tax/VAT Department may recover this amount from the Respondent. The dispute between the Sales Tax/VAT Department has not been resolved. The Respondent has informed the Petitioner about the same and the petitioner is aware of the same. vii. An amount of Rs. 1,32,000/- has been retained by the Respondent as security deposit which is payable after completion of the contract as per the terms of the contract and receipt of moneys from SAU including subsidy amount. The petitioner is also aware of the same. Since the contract dated 04.11.2016 is not yet completed the respondent is not liable to refund Rs. 1,32,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of alleged short supply, penalty and rate difference. But none of these issues were raised by the respondent while replying to the demand notice of the petitioner. On the contrary, the respondent went on to admit its liability to the tune of Rs. 91,89,253/- out of the total amount of Rs. 1,18,96,237/- and informed the petitioner that the same shall be paid to the petitioner upon receiving the amount from the concerned Government Authority i.e. the Zilla Parishad. The respondent has also remitted an amount of Rs. 29,20,278/- as part payment of the outstanding dues under the invoices, thereby re-confirming its liability to pay. Also, the respondent has made part payments. In this matter, the debt and default can be established and therefore, the above reasons stated by the respondent are nothing but admissions on its part. Therefore, we conclude that the contentions raised by the respondent are merely an after-thought for running away from its liability. 10. Now here, the question arises as to whether CIRP can be initiated against a government owned company? Here, it is important to note that the Insolvency Law Committee of 2018 in its Report had unanimously agreed that intro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een in the light of whether the Company is performing any sovereign functions and if the answer is yes, then such a Company cannot be brought under IBC. In fact, the Supreme Court was consistent in its application of the principles enunciated in the earlier judgments in determining whether a Government Company is an instrumentality of State. If a Government Company is an instrumentality of the State, then IBC will not be applicable to it but otherwise such Government Company can be brought under the purview of IBC. Therefore, from the above, it is evident that the Corporate Debtor which has taken goods from the Operational Creditor and has admitted the rightful and just dues of the Operational Creditor in its reply to the Demand Notice, CIRP can be initiated against the Corporate Debtor despite being a government owned company. 13. Further, we would like to state that the parties have argued based on the interest component whether it is to be excluded, the corporate debtor being a MSME. We believe that the interest component need not be looked into because the principal amount due and payable is above the minimum required amount. Hence, we believe that all the requisite condition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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