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Velji Dosabhai And S... v. Trimurti Foodtech Pr...

National Company Law Tribunal
Jan 1, 2020
Judgment
Subsequent
References
CaseIQ
Case Information
CITATION CODES
citation codes
CASE NO.

CP (IB) 4736/MB/C-IV/2018

Attorney(S)

Mr. Shreyas Hingmire, i/b Vis Legis Law Practice, Advocates for the Operational Creditor;

None for the Corporate Debtor.

JUDGES

Rajasekhar V.K., Member (Judicial)

Ravikumar Duraisamy, Member (Technical)

ACTS

section 9 of the IBC read with rule 6(1) of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016

SECTION 139 NEGOTIABLE INSTRUMENTS ACT 1881

SECTION 9 INSOLVENCY AND BANKRUPTCY CODE 2016

sections 15, 17, 18, 19, 20 and 21 of the IBC. (g)

provisions of sub-section (1) of section 14

section 2(20) of the Companies Act, 2013,

Security Interest (SARFAESI) Act, 2002; (iv)

sub-section (1) of section 31

COMPANIES ACT 2013

section 9(3)(b)

section 4(1)

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Smart Summary (Beta)

Structured Summary of the Opinion (NCLT Mumbai Bench IV — CP(IB) 4736/MB/C-IV/2018)

Factual and Procedural Background

This opinion, delivered by Rajasekhar V.K., Member (Judicial), concerns a company petition under section 9 of the Insolvency & Bankruptcy Code, 2016 (IBC) filed by Velji Dosabhai and Sons Private Limited ("Operational Creditor"). The Operational Creditor is a company (CIN U63090MH1945PTC082465) and filed the petition on the basis of a Board Resolution dated 28.09.2018 seeking initiation of Corporate Insolvency Resolution Process (CIRP) against Trimurti Foodtech Private Limited ("Corporate Debtor").

The Corporate Debtor is a private company (CIN U51220MH2004PLC148269) with registered office at Plot No. A-5, MIDC Area, Railway Station, Aurangabad 431005, Maharashtra. The Bench has jurisdiction over the petition.

The Operational Creditor alleged that the Corporate Debtor failed to pay principal of INR 6,67,151 and interest of INR 1,28,673 up to 10.02.2018, totaling INR 7,95,825 as per the petition (statement of computation of default at p.23). The Operational Creditor provided freight and customs clearance services and submitted five invoices (copies at pp.28–37) with contractual provision for interest at 24% per annum for delayed payments. The date of default is stated as 01.10.2017.

The Corporate Debtor issued three cheques purportedly towards payment (Nos. 469108 dated 23.06.2017 for INR 1,99,026; 469109 dated 03.06.2017 for INR 2,56,858; 469110 dated 13.06.2017 for INR 2,04,122), but all three cheques were dishonoured on 30.06.2017. Copies and proof of dishonour are placed on record (pp.24–27).

The Operational Creditor served a Demand Notice in Form 3 dated 27.02.2018 (Annexure B, pp.14–22) under section 8 of the IBC; the notice was sent by Speed Post on 02.04.2019. The Corporate Debtor did not reply to the Demand Notice or the petition. The Operational Creditor filed an affidavit under section 9(3)(b) stating there was no notice of dispute by the Corporate Debtor (pp.38–39).

The petition was served on the Corporate Debtor on 20.12.2018 and again on 14.10.2019. Despite intimation of hearing dates by letters, the Corporate Debtor did not appear. The Tribunal heard counsel for the Operational Creditor, reviewed the record, and proceeded to consider admission of the petition.

Legal Issues Presented

  1. Whether the Operational Creditor has established a default by the Corporate Debtor of an operational debt, such that the petition under section 9 of the IBC should be admitted and the CIRP initiated.
  2. Whether the documentary evidence (invoices, demand notice, dishonoured cheques and affidavit under section 9(3)(b)) suffices to establish admission of liability and absence of a disputed debt under the statutory scheme.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court's reasoning proceeds from documentary facts and statutory presumptions set out in the record, summarized step-by-step as follows:

  1. Documentary foundation: The Operational Creditor placed invoices on record (pp.28–37) which show services rendered and a contractual rate of interest for delayed payments (24% per annum). The total debt claimed is INR 7,95,825 as stated at p.3 of the petition.
  2. Proof of payment attempts and dishonour: Three cheques issued by the Corporate Debtor (with numbers and dates recorded at p.4 of the petition) were produced; the cheques were dishonoured and proof of dishonour is on record (pp.24–27). The existence and dishonour of the cheques were relied upon by the Tribunal.
  3. Statutory presumption under section 139 of the Negotiable Instruments Act, 1881: The Tribunal invoked section 139's presumption that a holder of a cheque received it for the discharge of a debt or liability. The opinion notes that while this is a rebuttable presumption, it stands unless contrary is proved; therefore, the issued cheques are treated as proving admission of liability by the Corporate Debtor (para 13).
  4. Absence of dispute and compliance with section 9(3)(b): The Operational Creditor filed an affidavit under section 9(3)(b) affirming that no notice of dispute was given by the Corporate Debtor and that there was no dispute in respect of the operational debt (pp.38–39). The Corporate Debtor did not reply to the Demand Notice or appear at hearings despite service and intimation.
  5. Quantitative threshold under section 4(1) IBC: The Tribunal observed that the default alleged exceeded the statutory minimum threshold of INR 1 lakh required to maintain a section 9 petition; consequently, the statutory default criterion was satisfied (para 14).
  6. Completeness of the application: The Tribunal found the application complete as required by law and concluded that the Operational Creditor had shown the Corporate Debtor was in default of a debt due and payable, with no reason to deny admission of the petition (para 14).
  7. Conclusion on admission: For these reasons—documentary invoices, dishonoured cheques coupled with statutory presumption, affidavit under section 9(3)(b), non-response of Corporate Debtor, and threshold default—the Tribunal admitted the petition and ordered initiation of CIRP (paras 14, 16–17).

Holding and Implications

Core ruling: The petition filed under section 9 of the IBC by Velji Dosabhai and Sons Private Limited against Trimurti Foodtech Private Limited is admitted, and the Tribunal ordered initiation of the Corporate Insolvency Resolution Process (CIRP).

Direct consequences and procedural directions given in the order (as recorded in the opinion):

  • A moratorium under section 14 of the IBC is declared with effect from the date of the order until completion of the CIRP, approval of a resolution plan under section 31(1), or an order for liquidation under section 33, whichever is applicable. The moratorium covers institution or continuation of suits, transfer or disposal of assets, actions to enforce security, and recovery of property where occupied by the Corporate Debtor (paras 17–20).
  • Exceptions: supply of essential goods or services shall not be terminated or suspended during the moratorium; sub-section (1) of section 14 shall not apply to transactions notified by the Central Government in consultation with sectoral regulators (paras 21–22).
  • Public announcement of CIRP is to be made immediately as per section 13 of the IBC read with regulation 6 of the IBBI (para 23–24).
  • IRP appointment: The Operational Creditor did not propose an Interim Resolution Professional (IRP); accordingly, the IRP shall be appointed by the Adjudicating Authority by a separate order. Fees payable to the IRP/RP must comply with relevant regulations, circulars and directions issued by the IBBI. The IRP shall perform functions envisaged under sections 15, 17, 18, 19, 20 and 21 of the IBC (paras 16, 24–25).
  • Management and cooperation: Management of the Corporate Debtor vests in the IRP (section 17). Officers and managers of the Corporate Debtor must furnish all documents and information to the IRP within one week from receipt of the order, failing which coercive steps will follow (para 25).
  • Security for IRP expenses: The Operational Creditor is directed to deposit INR 1,00,000 with the IRP to meet expenses of public notice and inviting claims; such expenses are subject to CoC approval (para 25).
  • Administrative actions: The Registry is directed to communicate the order to the parties and the IRP by Speed Post and email within two days. A copy of the order is to be sent to the Registrar of Companies, Maharashtra, Mumbai, to update the Master Data of the Corporate Debtor, with a compliance report due within seven days (para 26).

Broader precedent: The opinion contains no statement forming a new legal precedent; it applies statutory provisions and the presented documentary record to admit the petition. The decision's effect is procedural and directed at initiating CIRP in this matter.

Order signed by: Ravikumar Duraisamy (Member Technical) and Rajasekhar V.K. (Member Judicial) on 01.01.2020.

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Per: Rajasekhar V.K., Member (Judicial)

1. This is a Company Petition filed under section 9 of the Insolvency & Bankruptcy Code, 2016 (IBC) by Velji Dosabhai and Sons Private Limited ("the Operational Creditor"), a Company within the meaning of section 2(20) of the Companies Act, 2013, having CIN U63090MH1945PTC082465, and represented by its Senior Accounts-Executive, Mr. Nilesh Dolatrai Kansara, on the basis of Board Resolution dated 28.09.2018 seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Trimurti Foodtech Private Limited ("the Corporate Debtor"). A copy of the Board Resolution has been placed at Annexure A at pp.12-

13 of the Petition.

2. The Corporate Debtor is a private company limited by shares and incorporated on 24.07.2015 under the Companies Act, 2013, with the Registrar of Companies (RoC), Maharashtra, Mumbai. Its CIN is U51220MH2004PLC148269. Its registered office is at Plot No.A-5, MIDC Area, Railway Station, Aurangabad 431 005, within the State of Maharashtra. Therefore, this Bench has jurisdiction to deal with this petition.

3. The present petition was filed before this Adjudicating Authority on the ground that the Corporate Debtor failed to make payment of a total sum of 6,67,151.00 (Rupees six lakh sixty-seven IN THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH-IV CP (IB) 4736/MB/C-IV/2018 Page 3|10 thousand one hundred and fifty-one only) as the principal amount and 1,28,673.00 (Rupees one lakh twenty-eight thousand six hundred and seventy-three only) as interest till 10.02.2018. This is the amount claimed as per p.3 of the petition. The Statement of Computation of Default is at p.23.

4. The case of the Operational Creditor is as follows: - (a) The Operational Creditor provided freight and customs clearance services to the Corporate Debtor. As per the service provided by Operational Creditor, the Operational Creditor raised five invoices as follows (at page 28-37 of the Petition): (1) Invoice No.012409 dated 09.03.2017 for a sum of 1,99,046.16. Invoice copy is at p.28; (2) Invoice No.013051 dated 25.03.2017 for 2,56,884.24 Invoice copy is at p.32; (3) Invoice No.013174 dated 29.03.2017 for 2,04,141.52 Invoice copy is at p.32; (4) Invoice No.1118-71100003081 dated 11.10.2017 for 3,540.00. Invoice copy is at p.34; (5) Invoice No.1118-71100004140 dated 31.10.2017 for 3,540.00. Invoice copy is at p.34; (b) The date of default is stated to be 01.10.2017. IN THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH-IV CP (IB) 4736/MB/C-IV/2018 Page 4|10 (c) The Corporate Debtor issued three cheques bearing No.469108 dated 23.06.2017 for 1,99,026/-, No.469109 dated 03.06.2017 for 2,56,858/- and No.469110 dated 13.06.2017 for 2,04,122/- towards payments of outstanding amount. But all these three cheques were dishonoured on 30.06.2017. Proof of the same are placed at pp. 24-27 of the Petition.

5. Invoices have been placed on record as Exhibit A at pp.28-37. The invoices provide for interest at the rate 24% per annum in case of delayed payments. Bank Statements are not attached to the Petition. The total debt due and payable to the Operational Creditor is 7,95,825.00 (Rupees seven lakh ninety-five thousand eight hundred and twenty-five only), as mentioned at page 3 of the Petition.

6. The Operational Creditor had served a Demand Notice in Form 3 dated 27.02.2018 to the Corporate Debtor (Annexure B, pp.14- 22) in terms of section 8 of the IBC. The said Demand Notice was served on the Corporate Debtor by Speed Post on 02.04.2019. The Corporate Debtor has not replied to the said Demand Notice.

7. The Operational Creditor has filed an affidavit under section 9(3)(b) of the IBC to the effect that there is no notice given by the Corporate Debtor relating to a dispute of the unpaid operational debt. Further, the Operational Creditor stated that there is no IN THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH-IV CP (IB) 4736/MB/C-IV/2018 Page 5|10 dispute with respect to operational debt (at pp.38-39 of the Petition).

8. The copy of the Petition was served on the Corporate Debtor on 20.12.2018 and again on 14.10.2019. Necessary affidavits of service in this regard have been placed on record.

9. In compliance with various orders of this Tribunal, the Operational Creditor has, vide letters dated 28.02.2019, 24.06.2019, 05.10.2019 and 12.01.2019, intimated the dates of hearing to the Corporate Debtor. Necessary Affidavit in this regard has been placed on record by the Operational Creditor.

10. Considering the non-appearance in spite of serving the Notices of next date to the Corporate Debtor, and that there is no reply either to Demand Notice or to the Petition, it can be safely presumed that the Corporate Debtor does not want to contest the matter and accepts the liability.

11. We have heard the arguments of Learned Counsel for Operational Creditor and perused the records.

12. It is observed that the Operational Creditor has submitted three cheques issued by the Corporate Debtor and the same have been dishonoured is at p.24 of the Petition and the proof of dishonour of cheques is at p.25 of the Petition. IN THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH-IV CP (IB) 4736/MB/C-IV/2018 Page 6|10

13. In terms of section 139 of the Negotiable Instruments Act, 1881, there is a presumption that the holder of a cheque received the cheque for the discharge, in whole or in part, of any debt or other liability. While this is no doubt a rebuttable resumption, the presumption stands unless the contrary is proved. Thus, the cheques given by the Corporate Debtor proves the admission of liability on the part Corporate Debtor.

14. The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor.

15. The Operational Creditor has not proposed the name of any Interim Resolution Professional (IRP) in the matter.

16. It is, accordingly, hereby ordered as follows: - (a) The petition bearing CP(IB) 4736/MB-IV/2018 filed by Velji Dosabhai and Sons Private Limited, the Operational Creditor, under section 9 of the IBC read with rule 6(1) of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiating Corporate Insolvency IN THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH-IV CP (IB) 4736/MB/C-IV/2018 Page 7|10 Resolution Process (CIRP) against Trimurti Foodtech Private Limited [CIN: U51220MH2004PTC148269], the Corporate Debtor, is admitted. (b) There shall be a moratorium under section 14 of the IBC, in regard to the following:

(i) The institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;

(ii) Transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein;

(iii) Any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the Securitisation and Reconstruction of Operational Assets and Enforcement of Security Interest (SARFAESI) Act, 2002;

(iv) The recovery of any property by an owner or lessor where such property is occupied by or in possession of the Corporate Debtor. IN THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH-IV CP (IB) 4736/MB/C-IV/2018 Page 8|10 (c) Notwithstanding the above, during the period of moratorium,-

(i) The supply of essential goods or services to the corporate debtor, if continuing, shall not be terminated or suspended or interrupted during the moratorium period;

(ii) That the provisions of sub-section (1) of section 14 of the IBC shall not apply to such transactions as may be notified by the Central Government in consultation with any sectoral regulator; (d) The moratorium shall have effect from the date of this order till the completion of the CIRP or until this Tribunal approves the resolution plan under sub-section (1) of section 31 of the IBC or passes an order for liquidation of Corporate Debtor under section 33 of the IBC, as the case may be. (e) Public announcement of the CIRP shall be made immediately as specified under section 13 of the IBC read with regulation

6 of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. (f) Since the Operational Creditor has not proposed the name of any Interim Resolution Professional (IRP) in the matter, the IRP shall be appointed by this Adjudicating Authority by a separate order. The fee payable to IRP or, as the case may be, the RP shall be compliant with such Regulations, Circulars IN THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH-IV CP (IB) 4736/MB/C-IV/2018 Page 9|10 and Directions as may be issued by the Insolvency & Bankruptcy Board of India (IBBI). The IRP shall carry out functions as contemplated by sections 15, 17, 18, 19, 20 and

21 of the IBC. (g) During the CIRP Period, the management of the Corporate Debtor shall vest in the IRP or, as the case may be, the RP in terms of section 17 of the IBC. The officers and managers of the Corporate Debtor shall provide all documents in their possession and furnish every information in their knowledge to the IRP within a period of one week from the date of receipt of this Order, in default of which coercive steps will follow. (h) The Operational Creditor shall deposit a sum of 1,00,000/- (Rupees one lakh only) with the IRP to meet the expenses arising out of issuing public notice and inviting claims. These expenses are subject to approval by the Committee of Creditors (CoC).

(i) The Registry is directed to communicate this Order to the Operational Creditor, the Corporate Debtor and the IRP by Speed Post and email immediately, and in any case, not later than two days from the date of this Order. (j) A copy of this Order be sent to the Registrar of Companies, Maharashtra, Mumbai, for updating the Master Data of the Corporate Debtor. The said Registrar of Companies shall IN THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH-IV CP (IB) 4736/MB/C-IV/2018 Page 10|10 send a compliance report in this regard to the Registry of this Court within seven days from the date of receipt of a copy of this order. Sd/- Sd/- RAVIKUMAR DURAISAMY RAJASEKHAR V.K. Member (Technical) Member (Judicial) 01.01.2020

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