TMI Blog2018 (2) TMI 1954X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 9 of the I B, Code is liable to be admitted - Application admitted - moratorium declared. - CP (IB) NO. 704/KB/2017 - - - Dated:- 14-2-2018 - Jinan K.R., Judicial Member Ajay Gaggar and Ms. Rakhi Purnima Paul, Advs. for the Appellant. Ms. Ishani Sengupta, Adv. for the Respondent. ORDER 1. The petitioner has filed this application under Sec.9 of the Insolvency Bankruptcy Code, 2016 (hereinafter referred to as I B Code) 2016 read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to Adjudicating Authority Rules, 2016) for initiation of Corporate Insolvency Process against Corporate Debtor Ankit Metal Power Ltd. Brief facts of the case are the following: - 2. The applicant Operational Creditor is Gandhar Oil Refinery (lndia) Ltd., whose identification No. is U23200MH1992PLCO68905 and having its registered office at DLH Park, 18th Floor, S.V Road, Goregaon West Mumbai 400 062 in the state of Maharashtra. The Corporate debtor is M/s. Ankit Metal Power Ltd. whose identification No. Is L27101WB2002PLC094979 having its registered o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al to the corporate debtor, but he neglected to make the payment against stage-wise bills raised by the operational creditor. 10. The operational creditor has further stated that the corporate debtor did not pay the outstanding dues in spite of receiving demand notice dated 27/10/2017. A copy of the demand notice is annexed with the application as Annexure F. The petitioner has stated that total outstanding dues in the notice was ₹ 3,40,55,686 occurred between May 2015 to Dec 2015. A copy of the statement of account from Bank/Financial Institutions showing the due is annexed with the application and marked as Annexure M. 11. Even after receipt of the demand notice, the corporate debtor failed to make payment the outstanding dues. Thus, the petition was filed for initiation of corporate insolvency process against the corporate debtor. 12. The petitioner has annexed along with the petition copy of the agreement dated 10/6/2012 in support of its claim; reminders sent by operational creditor to the corporate debtor; statement of account Annexure M; demand notice issued under I B Code, 2016 on 27.10.2017 Annexure F; copy of various Purchase Order/Contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delivery of goods in good and proper condition but have also consumed the goods. 17. The Operational Creditor also filed the tabular statement being Annexure I, which contains the details of the principal amount ₹ 2,24,31,283.45/- along with interest Rs, 1,16,24,402.80, both totalling to ₹ 3,40,55,686/- (Rupees Three Crores Forty Lakhs Fifty five Thousands Six hundred eighty six only). 18. That the Operational Creditor has pointed out that the interest has been charged at the rate of 24% per annum which is the term mentioned in the invoice whereby any delay caused by the Corporate Debtor in making any payment of the invoice amount, shall attract the interest @ 24 % per annum. 19. The corporate debtor has filed reply contending in brief is the following: - 1. That there are pre-existing disputes between the Operational Creditor and the Corporate Debtor within the meaning of Section 5(6) of the Insolvency and Bankruptcy Code, 2016. 2. The Corporate Debtor is a listed company which is engaged in the business of iron and steel and owns an Integrated Steel Plant with a capacity of production of Sponge Iron, Steel Melting Shop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Creditor as well its subsidiary through email dated June 4, 2015. Copy of the email is annexed at Page 25 of the application of the Operational Creditor, and a copy of the inspection report is added at Page 34 of the reply of the Corporate Debtor. 6. Since the material received was of inferior quality and not by the specifications, after prolonged discussions, it was agreed between the Operational Creditor, i.e. the 100% holding company of Gangadhar Global Singapore Pvt. Limited and the Corporate Debtor that the consignment sold by the subsidiary company would be accepted at a lower rate than the value for which it was sold, i.e. $40 per metric ton instead of $70 per metric ton as stipulated in the contract dated 10th April 2015. Therefore, the Operational Creditor took upon itself the liability of its subsidiary and such liability stood assigned to the Operational Creditor. While such discussions and negotiations were going on between the parties, the coal was stored at a dumping yard at Haldia Port for which the Corporate Debtor was liable to pay rental charges every month which had to be borne by them for nearly five months. Upon the agreement being arrived at, as m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, the Operational Creditor has admitted, acknowledged and accepted its liability on account of the defective supply by its subsidiary company and thus has adjusted the debt due by its subsidiary to the Corporate Debtor in its own account and therefore is bound to account for its liability to the Corporate Debtor for the remaining quantity of coal and ₹ 34,50,000/- on account of rental charges borne by the Corporate Debtor. 10. In fact, the Operational Creditor has written off the entire sum which it had claimed from the Corporate Debtor in its books of account as on 31st March 2017 accepting its liability as aforesaid and the amount due from the Corporate Debtor to the Operational Creditor has been shown as nil. The invoices based on which the Operational Creditor had issued the insolvency notice has been written off in the books of the Operational Creditor. 11. Copy of the ledger of the Operational Creditor is annexed at pages 96 to 97 of the insolvency application. This is the accounts of the Operational Creditor itself, which has been relied upon in the insolvency application and its notice. 12. In the circumstances, it is clear that the Corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be set off from the due against Gandhar Singapore Private Ltd. to Ankit Metal Private Ltd. tantamount to approximately ₹ 3 to ₹ 4 crores. 23. It is further stated that operational creditor has adjusted certain part of alleged dues against Corporate Debtors' accounts as kept by Gandhar Singapore Private Ltd. The same shows that both are under the controlling and financial interest of the same company. Copy of the statement of accounts maintained by Gandhar Singapore Private Ltd. is annexed with the Reply as R-3 by the Corporate Debtor. 24. It is further stated in the reply that the impugned notice under Form 3 of the Code is not as per law, thus it will be presumed that that no notice under Form 4 has been served. 25. Corporate Debtor has further denied and disputed the debt payable against him and has alleged that invoices which have been received contain a false claim to pressurize the Corporate Debtor. It is further alleged that due to defective materials, Corporate Debtor has suffered substantial financial loss to the business. 26. It also appears from the record that after receiving the second demand notice, the Corporate Debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng company. Legally holding and subsidiary companies are separate entities therefore if there was any existing dispute with subsidiary company then it will have no effect on the Holding company and it can't be treated as existing dispute with holding company. 31. In case of Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. [2017] 85 taxmann.com 292/144 SCL 37, Hon'ble Supreme Court has laid down the law that once the Operational Creditor has filed an application, which is otherwise complete, the Adjudicating Authority must reject the application under section 5(2)(d), if notice of dispute has been received by the Operational Creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the Operational Creditor, the existence of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the Adjudicating Authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the dispute is not a patently feeble legal argument or an assertion of fact unsupported by eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xure I duly annexed to the application. 35. According to the learned Counsel for the operational creditor, though the operational creditor is not liable for any claim being raised by the Corporate Debtor against any other entity even it is a subsidiary company of the operational creditor in this case after due instructions from the subsidiary company the claim amount of the Corporate debtor has been given a due credit off. I find some fore in the argument advanced on the side of the Operational Creditor. No doubt the operational creditor has no contractual liabilities to adjust any claim of the subsidiary company. Moreover, only because it adjusted the claim from the amount due to it from the corporate debtor doesn't indicate that operational creditor adjusted the above said claim because the operational creditor is legally bound by the transaction between the subsidiary company of the operational creditor and the corporate debtor. 36. Therefore, the demand of ₹ 90,31,549.80 as raised by the Corporate Debtor against the subsidiary company towards supply of sub-standard goods and for which the Corporate Debtor has also raised a demand notice and has not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the only legitimate claim so demanded by the Corporate Debtor of ₹ 90,31,549.80 has been duly accounted for, and the necessary credit has been given to the Corporate Debtor. The corporate debtor in its reply to the demand notice has not in any manner claimed any further amount from the operational creditor save and except the debit not of ₹ 90,31,549.80/- which has been duly accepted by the subsidiary company and adjusted against the dues of the operational creditor while claiming its legitimate dues. No supporting evidence produced to prove that before the receipt of the demand notice the corporate debtor raised any dispute regarding the amount claimed by the operational creditor. No documents in support of claim of ₹ 1,87,15,745.20 as demanded by the corporate debtor in its reply also produced in this case. No evidence also available to prove existence of any agreement for adjustment of the amount found due to the operational creditor. 41. From the above said discussion I can come to a right conclusion that the corporate debtor failed to establish existence of a dispute falls within the purview of section 5(6) of the I B, Code. So also the corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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