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TMI Blog2021 (9) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of sales proceeds credited and the said bank account maintained. Derivative arrangement or provision is also not there. The Auditor has not shown this amount as Overdue/NPA in its report. Tea Industry is a going concern. The Applicant has reportedly given further advance of ₹ 98,50,000.00 on its own. Auditor has reported that the copy of the Original Agreement was not furnished to them while the balance sheet was being prepared by them. No further balance sheet has been prepared after 31.03.2018. Existence of debt and dispute or not - HELD THAT:- One of the prime conditions for admission of Application filed under Section 7 of IBC is that there should exist a debt which has become due and payable by the CD, the CD has committed default in payment of the same on due date and the date of default must be established. In this case, the documents have not been produced by the Petitioner to show the quantum of green tea leaves received from CD, the rate at which green tea leaves purchased/sold and the amount payable to/receivable from the CD and thereby it is clear that the amount of default and the date of default are not established. Then the pleadings of the Applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Khaitan, 2nd Floor, Sanmati Plaza, G.S. Road, ABC, Guwahati 781 005, Email ID: [email protected], mobile No. +918011048037 having Registration No. IBBI/IPA-001/IP-P00532/2017-2018/10957 to be appointed as IRP. 5. It is stated that the Corporate Debtor M/s. Bochapathar Tea Estate Pvt. Ltd. executed an agreement on 01.02.2017 with the Applicant Damayanti Tea Industries and availed advance of ₹ 3,34,30,000.00 (Rupees Three Crores Thirty Four Lacs Thirty thousand) only with an interest payable at 16% per annum which was accrued to ₹ 1,16,47,912.00 (Rupees One Crore Sixteen thousand Forty Seven thousand Nine hundred Twelve) only till 30.11.2020, disbursed on dates mutually agreed upon and the same was to be paid back in the form of 12,50,000 kgs. Of green tea leaves divided over in instalments till December, 2017. 6. It is stated that the total amount in default is ₹ 2,67,05,726.00 (Rupees Two Crore Sixty Seven lacs Five thousand Seven hundred Twenty Six) only. The total principal amount paid to the Corporate Debtor is ₹ 3,34,30,000.00 and the total amount received by the Petitioner from the Corporate Debtor is ₹ 1,83,72,185.80 and interest for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Bochapathar Tea Estate Pvt. Ltd. - Annexure-7. 12. The Applicant has prayed for the following relief/s: 1. To admit the application and pass an order for initiating the Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016 ( Code ); 2. To appoint an Interim Resolution Professional in terms of Section 16 of the Code; 3. To cause a public announcement of initiation of Corporate insolvency resolution process and calling for submission of claims under Section 15 of the Code; and 4. To declare a moratorium in terms of Section 14 of the Code; 13. When the matter came up, this Bench directed the Applicant to clarify the following points: a. The Advance is given by the Petitioner to the Respondent for supply of Green leaves to the tune of 12,50,000 Kgs. and both the parties bind themselves to specifically perform their part of the Contract without fail. In the event of default one can take action against the defaulting party. b. The amount of advance would be ₹ 2,35,80,000.00 but the application filed for the amount paid is ₹ 3,34,30,000.00. c. The rate of per Kg of Green leaves is not fix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gives right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured. v. In the present matter, the Respondent failed to repay the advanced amount in terms of green tea leaves as per the terms of the agreement dated 01.02.2017, and hence gave rise to the Petitioner's claim, which the Respondent was liable to pay and hence a 'debt'. In lieu of which the Petitioner/Financial Creditor has filed the above-noted application under Section 7 of IBC and is well within its capacity to do so as Financial Creditor to the Respondent. Clarification to para 3(b): vi. The Petitioner/Financial Creditor, as per the agreement 01.02.2017, agreed to advance amount of ₹ 2,35,80,00.00 but then as per the mutually agreed terms advanced an amount of ₹ 3,34,30,000.00 which was advanced as per the need of the Respondent/Corporate Debtor. The details of the advanced loan amount on different dates is provided in detail at Annexure-3 (Page 26 to 29) of the Petition, and is substantiated with the bank statements in Annexure-5. vii. The Respondent/Corporate Debtor initially made the repayments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate at the date of agreement was not possible as the same could be in prejudice to either the Financial Creditor or Corporate Debtor on account of rise and fall in market rates of green tea leaves. Hence, an arrangement of declaring the rate of green tea leaves based on the market rate of green tea leaves for the respective fortnight declared in the area was agreed upon by both Financial Creditor and the Corporate Debtor while executing the agreement dated 01.02.2017. Clarification to para 3(e): xi. The rate of green tea leaves is declared by the Petitioner/Financial Creditor as per the market rates of green leaves for the respective fortnight declared in the area as explained in the above para and the declaration of the said rate is completely dependent on existing market rate for green tea leaves. xii. Further, after declaration of the market rate for green leaves, the same is subject to finalization as provided under Clause 6 and subject to agreement of both the Parties in consonance with the existing market rate of green tea leaves. Hence, the determination of rate per Kg of green tea leaves weighs heavily on the existing market rate in the area subject to rise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cited the following Judgments of the Hon'ble Supreme Court in support of its claims: 1. Innovative Industries Ltd. Vs. ICICI Bank 2. Radha Exports (India) (P) Ltd. Vs. K.P. Jayaram: (2020) 10 SCC 538 3. Pioneer Urban Land and Infrastructure Ltd. Vs. Union of India (2019) 8 SCC 416 Hence, it is respectfully prayed that this Hon'ble Adjudicating Authority may be pleased to admit the present application under Section 7 of IBC and initiate the corporate insolvency resolution process. 15. The Corporate Debtor vide its reply dated 02.03.2021 to the petition submitted that the Company Petition in CP (IB) No. 05/2021 is not maintainable for the reasons that (a) the applicant is not a person under IBC 2016 and cannot file an application under section 7 of IBC, 2016 and (b) the applicant has omitted following material facts knowing it to be material and are liable for punishment under section 75 of IBC 2016: (i) One Mr. Sunil Kumar Agarwalla is the Managing Director of Chandrabali Commercial (I) Pvt. Ltd., a closely held private company. Damayanti Tea Industries is a division of Chandrabali Commercial (I) Pvt. Ltd. Mr. Sunil Kumar Agarwalla has signed the Boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able in respect of the alleged transactions pursuant to the aforesaid agreement dated 01.02.2017. (a) The purported claim in CP (IB) No. 05/2021 is based on an agreement dated 01.02.2017 between Damayanti and BTCO, a copy of which is enclosed as Annexure 'G'. It would appear from para 7 of the aforesaid agreement that it was agreed between Damayanti and BTCO that by the end of tea season, 2017, the accounts would be settled and whichever party is entitled to receive any amount from the other party can claim the same from the other party after such settlement. From 29 September 2017 the entire management and control of BTCO including its tea Gardens and factory was given to the said Mr. Sunil Kumar Agarwalla. It would be pertinent to mention that the entire control and management of BTCO was with the aforesaid Mr. Sunil Kumar Agarwalla from 27th September, 2017. It would also be pertinent to mention that no accounts, no ledger, no details of any transaction has been shared by Mr. Sunil Kumar Agarwalla with BTCO or its Board of Directors for the period starting from 27th September 2017. Further, there is no information available with BTCO or Board of Directors of BTCO as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a gardens of BTCO were attached by the Office of Recovery Officer, Assam Tea Employees Provident Fund Organization, Dibrugarh Zone (here in after referred as Provident Fund Department , vide orders of attachment dated 13th December, 2017, copes whereof are collectively attached as Annexure 'H'. The Provident Fund Department appointed the aforesaid Mr. Sunil Kumar Agarwalla as Receiver to manage all the gardens of BTCO, vide the appointment letters dated 29th January, 2018, copies of which are collectively attached as Annexure 'E'. (d) Collusive Transactions: In the facts and circumstances as narrated above, it would be apparent that it is one Mr. Sunil Kumar Agarwalla, who is in overall charge of BTCO as well as of Damayanti and that in fact CP (IB) No. 05.2021 is based on collusive transactions. On the basis of which there cannot be a financial debt within the meaning of the term under Section 5(8) of IBC, 2016. In the facts and circumstances as narrated above, it would also appear that CP (IB) No. 05/2021 has been filed with a malicious intent to initiate Insolvency Resolution Process/liquidation and that CP (IB) No. 05/2021 has been filed for fraudulent a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It would be pertinent to mention that due to non-sharing of financial information by Mr. Sunil Kumar Agarwalla, the present management is not able to prepare the accounts. Annual financial statements of BTCO have neither been prepared nor audited for the financial years ended 31/03/2018, 31/03/2019 and 31/03/2020. (h) False and misleading submission: (a) False claim regarding the amount of loan: The applicant in CP(IB) No. 05/2021 has repeatedly alleged that BTCO had executed an agreement dated 1st February, 2017 with Damayanti and availed financial assistance of ₹ 3,34,30,000.00 (Rupees Three Crores Thirty Four lakhs Thirty thousand). Kindly refer:- (I) Para 2 of synopsis and list of dates in page 1 of the application. (II) List of dates in Page 2 of the application. (III) Part-IV of Form-1 on page 10 of the application The aforesaid allegation is manifestly false and misleading. It is denied and disputed that BTCO availed financial assistance of ₹ 3,34,30,000.00 (Rupees Three Crores Thirty Four lakhs Thirty thousand). A careful reading of the aforesaid agreement dated 1st February, 2017 between BTCO and Damayanti would make it absolutely cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid Mr. Sunil Kumar Agarwalla, we don't even know as to how much money has been paid to Damayanti or any other unit of Chandrabali Commercial (I) Pvt. Ltd. or to any other person. Further, there is no information available with BTCO or Board of Directors of BTCO as to what quantity of green tea leaves has been transferred from BTCO to Damayanti since 27th September, 2017, that is the due date on which the entire management and control went in to the hands of Mr. Sunil Kumar Agarwalla. (j) Misleading submission in the additional affidavit: (i) On page 6 and 7 of the Additional Affidavit and under the heading Clarification to Para 3(D) the Applicant has submitted that rate of green tea leaves was fixed on the existing market rate in agreement of both Petitioner and Respondent. The said submission is entirely false. It is denied and disputed that the rates of green tea leaves was fixed on the existing market rate in agreement with the Respondent in CP (IB) No. 05/2021. In fact the Respondent in aforesaid application do not know even today the rate at which the green tea leaves were valued by the Damayanti and whether they were market rate or not. (ii) I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been submitted that the averments made in Para 6(b) are wholly wrong, misconceived, untenable and denied to its entirety, except to what is a matter of record, for the following reasons: i. The Power of Attorney executed by Mr. Sunil Kumar Aggarwal with the Corporate Debtor was in his own personal capacity whereas the agreement dated 01.02.2017 was executed between the Corporate Debtor and the Financial Creditor i.e. Damayanti Tea Industries is totally distinct with no overlapping of any sorts as both the parties to the agreement are corporate entities and have executed the said agreement within their separate legal capacities. ii. The said Mr. Sunil Kumar Aggarwal had no role in management of affairs of Corporate Debtor. The said Mr. Sunil Kumar Aggarwalla vide e-mail dated 29.09.2020 had brought to the notice of the Corporate Debtor that he had no involvement with the affairs of Corporate Debtor since 29.01.2018 and warned the Corporate Debtor to restrain from using his name before its creditors and making false claims on its behalf. iii. Vide a letter dated 12.10.2020 addressed to the said Mr. Sunil Kumar Aggarwalla, the Corporate Debtor has acknowledged the very ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity of Corporate Debtor and the same does not subside even if the tea gardens have been attached by the Provident Fund Department. 32. It is submitted that the averments made in Para 10 are wrong, misconceived and denied as the present application has been filed solely due to default of the Corporate Debtor in payment of due debt and no other reason. The Corporate Debtor has failed to provide any information with respect to question of debt due has instead tried to mislead the Hon'ble Adjudicating Authority. The Financial Creditor, a separate corporate entity, is not concerned with the actions of Mr. Sunil Kumar Aggarwal in his personal capacity and the same is not a matter for consideration with respect to default in payment of debt by Corporate Debtor. The agreement dated 01.02.2017 between the Corporate Debtor and Financial Creditor is not at all affected by actions of Mr. Sunil Kumar Aggarwal in his personal capacity and hence, shall not be of any consequence in the present application. 33. It is submitted that the averments made in Para 11 are wrong, irrelevant and wholly denied, except to what is a matter of record, as the present application has been filed und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Annexure-5 of the Application (Page 39 to 116) and the calculation of interest accrued upon financial assistance has been annexed under Annexure 6 of the Application [Page No. 117 to 158]. ii. The Corporate Debtor has not provided any evidence as to refute the calculation of debt by the Financial Creditor instead tried to misguide the Hon'ble Adjudicating Authority with meaningless averments. It is submitted that the Averments of the Corporate Debtor that financial assistance of ₹ 97,00,000.00 between the period of 03.10.2017 to 18.01.2018 is outside the purview of agreement dated 01.02.2017 is inherently false and misconceived as the said additional amount was transferred under mutual agreement during the period when agreement dated 0-1.02.2017 was operational i.e. between 01.02.2017 to 31.01.2018. iii. In addition to the above, the said amount was accepted by the Corporate Debtor and no dispute as to transfer of the said amount was ever raised by the Corporate Debtor and neither has been returned to the Financial Creditor till date. The Corporate Debtor has wilfully accepted the said amount within the period of operation of the agreement dated 01.02.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial Creditor. The term expected itself connotes that the quantity of green leaves was to be determined as per the prevalent market rates. The detailed market rate and dated at which repayments were made by the Corporate Debtor has been provided in Annexure R-1 of this rejoinder. Even if the above averment is taken to be true, the Corporate Debtor has still defaulted in making repayments as per the agreement. The whole exercise of the Corporate Debtor is nothing but an attempt to mislead the Hon'ble Adjudicating Authority and should not be relied upon in any manner. 38. It is submitted that the averments made in Para 16, 17 18 are denied to its entirety. It is denied that the present application is not maintainable. 39. It is denied that the present application filed by the Financial Creditor deserves to be rejected by this Hon'ble Tribunal with costs. In view of the preliminary submissions stated above. It is submitted that it has been sufficiently proved by the Applicant/Financial Creditor that the debt was due and the Corporate Debtor committed default in payment of debt but not even a single document has been placed on record by the Respondent Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the strength of the execution of an agreement dated 01.02.2017 between Damayanti Tea Industries (a Unit of M/s. Chandrabali Commercial India Pvt. Ltd.), the party of the First Part and M/s. Bochapathar Tea Estate Pvt. Ltd., the party of the Second Part. As per this agreement, the Party of the First Part will pay a sum of ₹ 2,35,00,000/- (as per Annexure 1) in total to the Party of the Second Part on different dates as mutually agreed in between themselves as Advance amount towards purchase of the green tea leaves and the said amount shall be adjusted towards supply of green tea leaves by the Party of the Second Part. On the other hand, the Party of the Second Part will supply quality green tea leaves to the tune of 12.50 lac kgs. approximately to the Party of the First Part. Both the parties bind themselves for special performance on their part without fail. In the event of default on the part of any one of the parties, the other party can take action against the defaulted party. Hence, it is clearly established that the amount given is Advance only for procurement of green tea leaves from the Respondent Company. This advance is certainly not for utilisation of production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leaves till the debit of the account is retained with the Applicant. In addition to that, it is submitted by the Applicant that it has given further advance after September, 2017 when the CD is reportedly defaulting and the entire management of the CD was with Mr. Sunil Kumar Aggarwalla. It is not clear the purpose and intention of the Petitioner to give further reported advance to the CD without any request from or any fresh agreement with the Respondent. The Applicant has cited the balance sheet of 2017-2018 of the CD but the said Balance Sheet was prepared only on 01.11.2019 which shows ₹ 84,72,870.00 (Eighty Four lacs Seventy Two thousand Eight hundred Seventy only) as Other Current liabilities towards Damayanti Tea Industries. The Auditor has not shown this amount as Overdue/NPA in its report. Tea Industry is a going concern. The Applicant has reportedly given further advance of ₹ 98,50,000.00 on its own. Auditor has reported that the copy of the Original Agreement was not furnished to them while the balance sheet was being prepared by them. No further balance sheet has been prepared after 31.03.2018. One of the prime conditions for admission of Applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es availing advance from others for supply of Green Tea Leaves are prohibited from the Debt Trap, Exploitation, Imminent Closure, Hostile Takeover and Liquidation, When Advances/loans are available from the established Financial Institutions/Banks with transparent, fair terms conditions, insurance coverage and reasonable/lower rate of interest to the Tea Estates/Tea Plantation/Agriculture Advance/MSME Tea Industries. 25.3. The role of Mr. Sunil Kumar Aggarwalla right from the Agreement dated 01.02.2017 till the filing of this Petition. As per the documents submitted by the Applicant and the Respondent, Shri Sunil Kumar Aggarwalla- (a) Signed the agreement on behalf of the Applicant on 01.02.2017 for advance. (b) Has taken over entire charge of the CD from 27.09.2017. (c) Has been appointed as Receiver of the CD Tea Gardens by EPFO. (d) Has not ensured preparation of the balance sheet of the CD during the crucial period for determination of debt due as on 31.03.2017 - 31.03.2018. The balance sheet has been prepared for the year 2017-18 only on 01.11.2019 i.e. after the induction of the New Director by this Bench while disposing the Company Petition filed unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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