TMI Blog2019 (4) TMI 736X X X X Extracts X X X X X X X X Extracts X X X X ..... i Sudhir Lohar and Ibrahimsab Mujawar For The Respondent : Shri S. Vivekananda ORDER MR RAJESWARA RAO VITTANALA, MEMBER (JUDICIAL) 1. C.P.No.259 of 2016 (TP No. 109 of 2017) is filed by M/s. Patil Electric Works Pvt. Ltd (Petitioner), u/s. 433(e)(f) of the Companies Act, 1956, before the Hon ble High Court of Karnataka, by inter alia, seeking to pass an order for the Winding Up of M/s. Kirloskar Electric Company Ltd. (Respondent) etc. 2. Brief facts of the case, as mentioned in the Company Petition, which are relevant to the issue, in question, are as follows: 1. M/s. Patil Electric Works Pvt. Ltd. (hereinafter referred as Petitioner) Company is incorporated under the Companies Act with CIN: U31103KA2003PTC032058, having its registered office and works at Spl Plot No. 7, 3rd Cross, 1st Gate, Industrial Estate, Gokul Road, Hubballi - 580030 (Karnataka India) and registered as a small Company registered with DIC, Rayapur Dharwad with MSME registration No.290091100632. 2. M/s. Kirloskar Electric Company Ltd. (herein after referred as Respondent) Company is duly incorporated under the provisions of the Companies Act, 1956 with CIN:L31100KA1946PLC0004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Rotors would be tested for all the requisite electrical parameters and after the results are satisfactory, the same would be delivered back to the facilities of Respondent Company. The finished products are thoroughly tested by the Respondent Company after receipt at the facility of Respondent Company and accepted only after due satisfaction for the correctness of all the requisite parameter. 5. For the services provided, the Petitioner Company would raise two invoices for a single job work carried out (1) For the material added and (2) For the labour charges. It was agreed that the payments would be made within 90 (Ninety) days. The Respondent Company had the practice of issuing Letter of Credit (LC) against their supplies from various banks. The same were discounted by Petitioner Company and the dues were thus realised. 6. It is stated that from the past two or three years, the practice of issuing LC s was discontinued, and instead the Respondent Company started issuing Post-dated Cheques (PDC). Of late, there was inordinate delay in issuing PDCs. The Cheques received by Petitioner Company were around 120 days from the date of invoice. Keeping in view the ongoing bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upees Thirty Eight Lakhs Eleven Thousand One hundred and Seventy Five only) as principal with interest calculated @ 18% P.A from the due date till 20.08.2016. 9. The Petitioner asserted that the above facts show that the Respondent Company is in a very bad financial position, and it is heavily indebted. It also came to know that the properties of the Respondent Company are also heavily encumbered. Therefore, the Respondent Company has no intention and/or is not in a position to pay to the Petitioner Company their legitimate dues. Though the Petitioner issued notice in compliance with the provisions of Section 434(1)(a) of the Companies Act, 1956, the Respondent Company failed to clear the outstanding amount in question. It is asserted that the Liability in question is certain, definite, crystallized and undisputed. The Respondent Company having failed and neglected to pay the due amounts is deemed to be commercially insolvent and hence requires to be wound up in accordance with the provisions of Section 433(e) and (f) of the Companies Act, 1956. 3. The Company Petition is opposed by the Respondent Company by filing statement of objections dated 21.10.2017, by inter alia, cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... default and the date on which the default occurred with workings for computation of default in tabular form; (e) particulars of security held, if any, the date of its creation, its estimated value as per the creditor. In the notice dated 06.05.2016 and notice dated 23.08.2016, the Applicant failed to provide these details. As per the requirement of the Companies (Transfer of Pending Proceedings) Rules, 2016, providing these details is mandatory for initiation of proceedings under Code, 2016. Except a statement, which is not admitted and seriously disputed by the Respondent, the Petitioner has not provided any documents, as per the requirement of Insolvency and Bankruptcy (Application to Adjudicating Authority/Rules, 2016. The Petitioner has failed to comply with mandatory provisions of the Code, 2016, Insolvency and Bankruptcy (Application to Adjudicating Authority/Rules, 2016 as well as Companies (Transfer of Pending proceedings) Rules, 2016. Therefore, the petition is liable to be summarily rejected. 4) Without prejudice to the above contentions, it is further submitted that there is no operational debt and as such the Petitioner is not an operational creditor. The Petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er has made a claim of ₹ 50,62,599/-. Astronomical increase in the claim between November, 2016 and July, 2017 itself shows non-existence of bona fides on the part of the Petitioner in pursuing the above petition. This claim is also not supported by any acceptable documents. Under these circumstances, the Petitioner cannot seek winding up of the Respondent and initiation of insolvency proceedings. Therefore, it is urged that the Tribunal should reject the petition under reply. 4. Heard Shri Sudhir Lohar and Shri Ibrahimsab Mujawar learned Counsels for Petitioner and Shri S. Vivekananda, learned Counsel for Respondent. We have carefully perused the pleadings of both the parties along with extant provisions of Code and the law on the issue. 5. Both the learned counsels have again reiterated their respective pleadings as briefly stated supra. Therefore, they are not repeated herein again. 6. The case is transferred to this Bench from Hon ble High Court of Karnataka, as per the Gazette of India Notification dated 07.12.2016. Accordingly, the case is taken on record of this Bench and issued notice to the parties vide Ref. No. NCLT/TP No. 109/17/HC/Cop No. 259/16 dated 19t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent. There are several discrepancies even with regard to its claim made as per the legal notice given by the Petitioner and they have casually prosecuting the case of winding up/Insolvency proceedings, which are serious in nature and which can be initiated only when there is strong prima facie is made out. The object of Code is to initiate CIRP subject to satisfying the conditions required as per law but in any case it is not meant for recovery proceedings. In view of several defects in the petition itself, the Tribunal has granted several adjournments liberally so as to give them opportunity to resolve the dispute in question. Even though the Respondent have expressed their willingness to resolve the issue rather than force the Tribunal to decide it in ease of doing business, the petitioner was adamant in resolving their issue. Therefore, we have examined the merits of the case so as find out whether it is fit case to admit or not. 10. As stated supra, as per first demand notice dated 06.05.2016 issued by the petitioner to the respondent, two outstanding amounts have been mentioned as ₹ 50,62,599.40 as per reconciliation statement of accounts dated 31.03.2016, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispute? If any one of the aforesaid conditions is lacking, the application would have to be rejected. 12. The Hon ble National Company Law Appellate Tribunal, New Delhi, in the recent order dated 15.2.2019, passed u/s. 7 of I B in the Company Appeal (AT) Insolvency) No. 151 of 2019, which reads as follows: ( 3 I am dismayed to notice that a limited enquiry has been converted into a full dressed trial. Pre-admission proceedings cannot be permitted to protract. This Appellate Tribunal has observed in a recent judgment that Corporate Insolvency Resolution Process is not a recovery proceeding and the Adjudicating Authority has to strictly adhere to the rules of procedure and the timelines set out in the I B Code. The Adjudicating Authority should be alive to the object sought to be achieved by the I B Code and ensure that all efforts to derail the process are frustrated ). 13. In view of the above facts and circumstances of the case and the law as cited above, we are of the considered view that the instant Company petition is not fit case to admit to initiate CIRP, and thus it is only liable to be dismissed. 14. In the result, CP No. 259 of 2016 (TP No. 109 of 2017) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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