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M/s. Energo Engineering Projects Ltd. Versus M/s. Levcon Valves (P) Limited And M/s. HMTC Engineering Co. (Kolkata) Pvt. Ltd.

2017 (10) TMI 516 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI

Corporate Insolvency Resolution Process - Corporate Debtor under Insolvency & Bankruptcy Code, 2016 - Held that:- Operational Creditor that a statutory notice dated 12.8.2015 was issued under the erstwhile provisions of the Companies Act, 1956 for winding up the company on the grounds of inability to pay its debt and even though the said notice was received, no reply was forthcoming on the part of the Corporate Debtor. Despite subsequent reminders, the Corporate Debtor was not paying the balance .....

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n regarding payment made in relation to the debt/default due has been specified and in the circumstances, the present application seeking for initiation of the Corporate Insolvency Resolution Process (CIRP) has been filed against the Corporate Debtor. - (IB)-130(PB)/2017, (IB)-160(ND)/2017, (IB)-180(ND)/2017, (IB)-181(ND)/2017 - Dated:- 5-9-2017 - MR. R. VARADHARAJAN, J. For The Petitioner : Soumitra Chatterjee and Ms. Sriparna Chatterjee, Advs For The Respondent : K. Datta and Hemant Sharma, Ad .....

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tion for initiating the CIRP vide Application No. IB-130(PB)/2017 under Section 10 of Insolvency & Bankruptcy Code, 2016, the other three applications have been filed under Section 9 of IBC, 2016, by persons who claim to be its Operational Creditors on the basis that each of them have supplied goods for value and the payment of consideration in relation to the same are in default. 2. All the four applications, even though as stated earlier, relate to the initiation of CIRP of the Corporate D .....

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onal Creditor or Corporate Debtor and as to which one of the application is required to be taken first or preference given, has not been specified, for its disposal. However, NCLT being named as an Adjudicating Authority under IBC, 2016 and being a Court of Equity and this Tribunal in the absence of a petition filed by any Financial Creditor seeking for initiation of CIRP against the Corporate Debtor, considers it appropriate to take up the Petitions as filed by the Operational Creditors, before .....

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ntainable. In case none of the three Petitions/applications are held to be maintainable, this Tribunal will proceed to take up the application as filed by the Corporate Debtor under Section 10 of IBC, 2016 for initiation of CIRP against it. Turning first in this regard to CA No. (IB)-160(PB)/2017 being filed prior in point of time, the following facts are noticed: CA No. (IB)-160 (PB)/2017 5. (a) Perusal of the above application as filed under Section 9 of IBC, 2016 read with the Insolvency & .....

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o the delivery of goods in terms of the Purchase orders, it is averred that invoices had been raised by the Operational Creditor, which remain unpaid even as of today even though the payment fell due on 31st March, 2016. In addition to the amount payable under 4 invoices in a sum of ₹ 54,60,771/-, the Operational Creditor also contends that interest is payable @24% on the billed amount as per the invoices which aggregates to a sum of ₹ 14,47,029/- till 21st April, 2017 and, thus, the .....

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the operational creditor claims the above petition in CA No. (IB)-160 (PB)/2017 has been filed before this Tribunal seeking for the initiation of CIRP against the Corporate Debtor. CA No. (IB)-180(ND)/2017: 6(a) This application is filed by another Operational Creditor against the Corporate Debtor and the Operational debt claimed as stated in the prescribed Form-5 as given in AAA Rules, 2016 is in a sum of ₹ 26,56,747/-. It is stated that based on Purchase Order, EETL No./PO/1017/1041 dat .....

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Application C.A No. l80(ND)/2017 claims that supply of all the equipment were made under 10 invoices totalling to ₹ 87,42,725/- inclusive of taxes as raised against the Corporate Debtor. (c) The Operational Creditor further claims that in all, as against the invoices raised, a sum of ₹ 60,85,978/- had been paid inclusive of the advance amount paid in a sum of ₹ 19,40,000/- by the Corporate Debtor however, there yet remains a balance sum of ₹ 26,56,747/- as due and unpaid .....

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nal Creditor, it is stated caused a notice dated 9.2.2017 to be issued under the relevant provisions of IBC, 2016. Subsequent to the receipt of notice, the Corporate Debtor through its Advocate, it is stated to have caused a reply to be sent to the notice sent by the Operational Creditor dated 28.2.2017. However, it is contended by the Operational Creditor that in the reply, no dispute had been raised against the claim of the Operational Creditor nor any intimation regarding payment made in rela .....

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nt three invoices raised, aggregating in all to ₹ 5,39,821/-. (b) In addition to the above sum, it is claimed that a sum of ₹ 1,59,399/- is also payable towards interest @18% p.a. in view of the provisions of Interest Act, 1978. (c) The total claim as specified in Form-5 of AAA Rules thereby aggregates in all to ₹ 6,99,220/-. In view of the non-payment of the amount arising under the invoices raised, the Operational Creditor claims that prior to filing of the application, a dem .....

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strained to file the above application seeking for the CIRP as against the Corporate Debtor. C.P. (IB)-130(PB)/2017: 8(a) In relation to the above petition, it is seen that even prior to the date of filing of the 3 petitions earlier dealt with, this petition has been filed on 26.5.2017 by the Corporate Debtor itself seeking for the initiation of CIRP. The application as detailed above, has been filed as already stated by virtue of Section 10 of IBC, 2016 read with AAA Rules, 2016. The applicatio .....

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rporation had also been issued by the Registrar of Companies, NCT of Delhi & Haryana. It is also stated that the authorized share capital of the company is ₹ 5,50,00,000/- divided into 55,00,000 equity shares of ₹ 10/- each and that the paid-up equity share capital of the company stands at ₹ 5,12,25,000/- divided into 51,22,500 equity shares of ₹ 10/- each. (b) The name, address and authority of the person submitting the application on behalf of the Corporate Debtor/C .....

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bed format that in view of the default in payment to the Financial Creditors, both Secured & Unsecured, the application seeking initiation of CIRP is being preferred. (d) In support of the default, various documents including the minutes of the Joint Lenders Forum, held by Banks under consortium has also been annexed along with the application. In the circumstances, the above application for the initiation of CIRP as against itself is being sought for by the Corporate Debtor under the provis .....

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initiation of CIRP after notice was ordered to be sent to the Financial Creditors as listed by the Corporate Debtor in its application as a lead banker and on behalf of the consortium of lenders, predominantly on the ground of fraud alleged to have been perpetrated by the promoters of the Corporate Debtor to the detriment of the corporate debtor and the financial creditors as well, being the lenders who have advanced huge sums to the Corporate Debtor. 9. Delving further on the aspect of virtuall .....

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te Debtor in order to resolve the insolvency or in the case of its failure to its inevitable liquidation. But it is also required to be considered by this Tribunal as to which of the IRP will be perceived to sub-serve the interest of all the stakeholders better, even though all the Insolvency Professionals are considered to be independent professionals, in view of the alleged perception or apprehension which the other stakeholders might have, if the person named by the Corporate Debtor itself is .....

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is to shift the control of assets and management from the hands of promoters or the prevalent management to that of the creditors who will be in a position to take a call as to whether the restructuring or resolution plan can be put in place or the Corporate Debtor needs to go through the liquidation process. The provisions of IBC permeate with the above objective as the Committee of Creditors, under Section 22 of IBC, 2016, is given a right to appoint a Resolution Professional of its choice by .....

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n a professional agency, to continue the business of the corporate body as a going concern until a resolution plan is drawn up, in which event the management is handed over under the plan so that the corporate body is able to pay its debts and get back on its feet. All this is to be done within a period of 6 months with a maximum extension of another 90 days or else the chopper comes down and the liquidation process begins. 10. It is further pertinent to note that under the provisions of IBC, 20 .....

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as IRP under the provisions of IBC, 2016. However, in relation to an Operational Creditor, while approaching this Tribunal under Sections 8 & 9 of IBC, 2016, there is no such compulsion and, thus, it is left to the discretion of the Operational Creditor to either name or not to name an IRP in the application. In the absence of any IRP being named, Section 16 of IBC, 2016 enjoins this Tribunal to make a reference to Insolvency & Bankruptcy Board of India (IBBI) for the recommendation of .....

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visions of Sections 7, 9 and 10 is stated to be the date of admission of the application. Even though the Corporate Debtor has named in its application the name of an IRP to be appointed, however, because of the vehement objections from financial creditors, namely State Bank of India as well as other operational creditors before us in the interest of justice, the corporate debtor, without prejudice has withdrawn the names and had left the choice to this Tribunal or to IBBI as the case may be, ev .....

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n the opposition by the other applicants under provisions of section 9 of IBC, 2016, it pleaded its inability to do so as it was stated that a minimum period of 14 days will be required to come to any conclusion in this regard by the consortium of bankers. Be that as it may, in view of the facts and circumstances of the case this Tribunal felt it necessary to elucidate its stand prior to proceeding further with a view to avoid any ambiguity. 11. Based on the above, we proceed to deal with the in .....

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reditor's in relation unpaid liability or even if produced, the same being not in consonance with provisions of Section 9 of IBC, 2016 which certificate is required to be obtained and produced before this Tribunal under the provisions of Section 9(3)(c) of IBC, 2016. For easy reference, the said section 9 of IBC is reproduced in full: Sec. 9. (1) After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment under sub-section (1) of section 8, .....

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the invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor; (b) an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt; (c) a copy of the certificate from the financial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt by the corporate debtor; and (d) such other information as may be specifi .....

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e is no repayment of the unpaid operational debt; (c) the invoice or notice for payment to the corporate debtor has been delivered by the operational creditor; (d) no notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility; and (e) there is no disciplinary proceeding pending against any resolution professional proposed under sub-section (4), if any. (ii) reject the application and communicate such decision to the operational cre .....

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Authority, shall before rejecting an application under sub-clause (a) of clause (ii) give a notice to the applicant to rectify the defect in his application within seven days of the date of receipt of such notice from the adjudicating Authority. (6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5) of this section. 13. It is evident from the above provision that an Operational Creditor as a pre-condition to maintain an .....

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sed in Smart Timing Steel Ltd. v. National Steel & Agro Industries Ltd. in Company Appeal (AT) (Insovency) No. 28 of 2017 dated 19.05.2017. Coming to the instant cases on hand, in relation to the production of Certificate from the Bankers, the following position emerge: 14. CP (IB)-181 (ND)/2017 : (a) Based on the submissions of the applicant/Operational Creditor in the above application that the banker, namely, HDFC Bank Limited, in which the Operational Creditor is maintaining the account .....

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n, certificate has not been issued. It is the duty of the HDFC Bank to issue certificate as per the provisions of Section 9(3)(c) of IBC, 2016. Therefore, HDFC Bank Ltd, Stephen House, 4, BBD Bag (East), Kalkatta-700 001 is directed to issue certificate on payment of reasonable charges, if any. List the matter for arguments on 17th August, 2017. A copy of the order be given dasti. (b) It is evident from the above order passed by the Hon'ble Principal Bench that the bankers had been specifica .....

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TAX is maintaining a HDFC Bank Current Account number 00082560017424. Cheque* 954275 has been credited to the above mentioned a/c on 03/10/2015. Details are given below: Txn Date : 03/10/2015 Amount : 5,25,627.00 Cheque No.: 954275 The above certificate is being issued on receipt of specific request from the customer without any risk or responsibility on the part of the Bank or any of its officials. For HDFC Bank Ltd. Authorized Signatory HDFC Bank Ltd Stephen House Branch Date : August 16, 201 .....

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Bank for non-compliance of the order dated 02.08.2017. It is to be noted that the action of the above said Bank in relation to the certificate to be issued, in terms of the statutory as well as judicial mandate, regarding unpaid liability, has given rise to the Corporate Debtor in taking a plea that the Operational Creditor has not complied with the provisions of Section 9(3)(c) of the IBC, 2016. The above attitude of HDFC Bank in issuing a certificate of its own choice rather than complying wi .....

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ncial institution/Banker, maintaining the Bank account of the Operational Creditor confirming that there is no payment of unpaid Operational debt by the Corporate Debtor and as such the Operational Creditor has obtained only a Certificate from the Chartered Accountant who maintains the books of accounts of the Operational Creditor and that in lieu of Bank statement, the same may be taken as Certificate in compliance with Section 9(3)(c) of IBC 2016. 16. However, both in the case of CP(IB)-180(ND .....

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the said applications any further and in the circumstances, the said applications/petitions stand rejected under Section 9 (5) of IBC, 2016 despite sufficient time having been granted by this Tribunal for compliance. However, the order of dismissal of the said applications/petitions will not preclude the respective applicant/petitioners therein from raising any claim before appropriate person or authority or Court or any other judicial Forum for enforcing their claim. 17. CP(IB)-160(PB)/2017: ( .....

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1070081 (b) It is seen that the Banker's Certificate issued by SBI dated 02.8.2017 is in relation to the unpaid amount as claimed by the Operational Creditor in the application as against the Corporate Debtor and which amount is alleged to be the amount in default and for which the applicant claims to have initiated CIRP before this Tribunal and hence prima facie crosses the initial hurdle as sought to be raised by the Corporate Debtor in relation to its maintainability. (c) Turning to the R .....

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prises, Facilitation Council and in view of the suppression of the same, the application should be dismissed as the concealment of facts Qua between the parties. (d) In relation to objection (ii) in paragraph (c) as above, the applicant submits that there is an inconsistency in the pleadings of the Corporate Debtor in as much as on the one hand, it is contended that no goods had been supplied, but on the other hand, it is stated that the quality of material was of inferior quality. Thus, it is c .....

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l, it is submitted by the Operational Creditor that the same has been withdrawn prior to approaching this Tribunal and in the circumstances, the Operational Creditor has not hidden anything from this Tribunal as alleged by the Corporate Debtor. (f) In relation to the format of notice as contended in objection (i) paragraph (c) as above which is required to be adopted as prescribed under the AAA Rules, it is submitted by the Operational Creditor that the Form which was adopted by the operational .....

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n the contention of the Corporate Debtor as rightly contended by the Operational Creditor as there seems to be a paradox in the contention of the Corporate Debtor which clearly exposes that the dispute which is shown before this Tribunal is moonshine and not bonafide and it cannot be categorized as a dispute within the meaning of Section 5(6) of IBC, 2016. In the circumstances, the application in CP (IB)-160 (PB)/2017 is deserved to be taken into consideration and is hence admitted. (h) However, .....

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No. (IB)-160(PB)/2017, the application filed by the Corporate Debtor for CIRP and for appointment of IRP named by the Corporate Debtor becomes superfluous and this Tribunal has also made its stand clear in paragraph 9 and 10 of this order as to the reasons for this Tribunal not appointing the IRP named by the Corporate Debtor, not once but twice and also fairly conceded by the Learned Counsel for the Corporate Debtor in the teeth of opposition from both the financial creditors who are before th .....

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his Tribunal, to carry the CIRP to its logical conclusion as contemplated under IBC, 2016. However, in view of triggering the CIRP before this Tribunal by Operational Creditor their voices are also taken into consideration. However, the application of the Corporate Debtor only reinforces the decision of this Tribunal in initiating the CIRP as contemplated under IBC, 2016. 19. Based on the above discussions while dismissing C.P. No. (IB)-180(ND)/2017 and CP. No. (IB)-181(ND)/2017 this Tribunal ad .....

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he casual and whimsical attitude of bankers in issuing the certificate as mandated under Section 9(3)(c) of IBC, 2016 and the differing stance adopted by each banker in issuing the same demonstrating their lack of understanding and coherence as to why the issue of such a certificate becomes absolutely essential in a proceeding relating to initiation of CIRP, While in CP No. (IB) 181(ND)/2017 it is seen that despite request of the Operational Creditor, its bankers as evident from the affidavit fi .....

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refusal of the bankers in the first two instance to comply with the provisions of IBC, 2016 has resulted in the rejection of the said applications prima facie in the teeth of provisions of Section 9(3)(c) and judicial precedents of the Hon'ble Appellate Tribunal holding it as mandatory, has also led to an anomalous situation in the present instance as this Tribunal despite the Corporate Debtor expressly admitting the liability in the application filed under Section 10 by it in relation to o .....

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ided under the provisions of IBC, 2016, firstly in relation to the compliance as provided for, failing which this Tribunal under Section 9(5) of IBC, 2016, is required to reject the application. Further, in view of the fixed time frame fixed for disposal also which casts an onus on this Tribunal to decide expeditiously and under the circumstances, the Certificate from the banker as contemplated enables this Tribunal to be prime-facie satisfied that the amount of debt remains unpaid to the accoun .....

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