TMI Blog2020 (10) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... s existing and probable assets. However, a perusal of its latest Audited Financial Statement shows that the Company has incurred losses including cash losses and the net worth of the Company is negative. Further, from its Independent Auditors report it is seen that a material uncertainty exists that may cast a doubt on its ability to continue as a going concern. Further, while admitting the debt owed to the Operational Creditor, Corporate Debtor submits that in order to resolve the issue it offered to settle the amounts due, after adjusting all the receivables within a period of two years, by selling the immovable assets standing in the name of the Corporate Debtor. Application admitted - moratorium declared - Post the case for report of IRP on 15th July 2020. - C.P. ( IB ) No. 324/BB/2019 - - - Dated:- 29-5-2020 - Rajeswara Rao Vittanala, Member (J) and Ashutosh Chandra, Member (T) For the Appellant : Chintan Chinnappa, Anandi Kumar For the Respondent : K.R. Krishamurthi and Abhinag S. ORDER Ashutosh Chandra, Member (T) 1. This Company Petition has been filed by M/s. Navalmar (UK) Limited (hereinafter referred to as 'Operational Creditor') un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red and Forty-Five decimal point Forty-Six) amounting to ₹ 11,93,42,982 at the exchange rate of 1 USD = ₹ 68.76 as on July 29, 2019), towards outstanding amounts of advances (unsecured loans) taken from the Operational Creditor, motorboat import and repair charges freight charges. (5) It is further stated that the audited financial statements of the Corporate Debtor for the year ending 31.03.2018 acknowledge the advances due to the Operational Creditor and reflect as Trade payables- Due to Related party (Principal, a company in which Director is interested' as ₹ 5,93,67,527/- (Rupees Five Crore Ninety Three Lakh Sixty Seven Thousand Five Hundred and Twenty Seven only). Various invoices and debit notes reflects the amounts payable for purchase of the motorboat, repair charge in relation to the motorboat and freight collection. Copy of the latest audited financial statements of the Corporate Debtor and the invoices and debit notes are annexed to the petition. (6) The Operational Creditor issued demand notice dated 12.06.2019, to the Corporate Debtor under Section 8 of the Insolvency and Bankruptcy Code, 2016. The said notice demands payment of all unpa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .46. Even in the Exhibit 5 at page 18 (internal Page 1 of 21), the liability is shown as only INR. 6,68,34,562 and at page 28 (internal page 11 of 21) in item No. 5.1 5.2 the liability is referred to the Operational Creditor with an explanation that the Director is interested. This is a sufficient notice to the Operational Creditor Company also. There is no admission on the part of the Corporate Debtor in any of its statutory filing acknowledging the debt of USD 17,35,645.46. (3) It is contended that the Petition is verified and presented by Mr. Andrea Colombo, who has got serious conflict of interest. This would cause serious prejudice to the interest of the Corporate Debtor as the authorised person could be the material witness for the Corporate Debtor Company in the facts and circumstances of the case. (4) It is further contended that the Operational Creditor made a false claim at item No. 13 to 15 at page 10 Exhibit 4 produced by the Operational Creditor. This document is attested by Mr. Andrea Colombo knowing fully well that, the claims at items No. 13 to 15 are false and non-existent. Hence, the Operational Creditor and its authorised representative Mr. Andrea Col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue between the Operational Creditor and the Corporate Debtor with regard to the amount due. Further, it is a well settled position in law that, the proceedings under IBC is not intended to be a substitute to a recovery forum, and whenever there exists a real dispute, the provisions of Insolvency and Bankruptcy Code, 2016 cannot be invoked. (9) It is contended that apart from Mr. Andrea Colombo, as mentioned earlier, one Mr. Fernando Poletti was also a Director of the Corporate Debtor Company from 18.03.2002 to 15.02.2019. He has resigned from the office of the Director on 15.02.2019. Copies of the Details of Directors and the Minutes of various Board meetings dated 09.04.2004, 18.03.2005, 12.08.2005 and 25.03.2008 are annexed to the objections. All decisions in respect of the affairs of the Corporate Debtor Company from 18.03.2002 to 15.02.2019 were taken by Mr. Andrea Colombo and Mr. Fernando Poletti. Therefore, Mr. Andrea Colombo being the erstwhile Director of the Corporate Debtor Company herein took a decision and signed the General Agency Agreement with the Operational Creditor Company in the year 2003. Under said Agreement the Corporate Debtor herein was appointed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayable to the Operational Creditor: The Amounts reflected at item No. 1 to 12 herein above cannot be considered as acknowledgement of debt for the purpose of initiating insolvency proceeding but only for the purpose of complying with the provisions of taxing statutes. (12) It is contended that on 25.09.2015, the Operational Creditor has provided a confirmation to the Corporate Debtor, clearly indicating that, the Corporate Debtor is due a sum of INR. 5,43,24,255.00 as on 31.03.2015, towards freight charges collected from the customers on behalf of the Operational Creditor. The financials of the Corporate Debtor Company as on 31.12.2015, was also duly furnished to the Corporate Debtor. Further, the Corporate Debtor, on being mindful of the long-standing relationship with the Operational Creditor, in order to resolve the issue amicably in good faith, offered to settle the amounts due, after adjusting all the receivables (Customs duty on Cranes paid by the Corporate Debtor on behalf of the Operational Creditor), within a period of two years, by selling the immovable assets standing in the name of the Corporate Debtor (i.e. residential flats No. 203 301 in Galina Apartmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable for making the freight payment for loading the Cargo on their ships, loading in Indian ports. (18) The Corporate Debtor has acted as a facilitator for collecting the freight on behalf of the Operational Creditor, by raising the invoices. Therefore, the invoices and debits notes produced by the Operational Creditor before this Adjudicating Authority are false, fabricated and fictitious. Further, it is also false to state that the Corporate Debtor is liable to the Operational Creditor in a sum as claimed in the Petition. (19) It is further contended that the Operational Creditor Company has made the false claim on the basis of false and fabricated accounts maintained by it and has raised a demand on the following freights, which had been already remitted by the Corporate Debtor. (20) As regards Sl. No. 13 14 of part C, Exhibit 4: the claim of Operational Creditor USD. 2,97,597.50 towards Freight charges earned for Cargo on Board MV. VELASQUEZ has already been remitted to the Operational Creditor by the Corporate Debtor. The actual freight amount as per the invoices raised by Corporate Debtor of USD. 2,94,597.50 has been remitted by the Corporate Debtor on 28. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation of any false and fabricated debit notes even in the reply given by the Corporate Debtor dated 01.07.2019 in response to the notice issued by the Operational Creditor dated 12.06.2019 under the Code. (2) It is contended that in Re: Para 3(J) The claims made by the Operational Creditor by way of invoices produced are valid claims and are within the limitation period. As per Section 18(i) of the Limitation Act- Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgement was so signed. It is well settled that the amounts reflected in the accounts are acknowledgement of debt for the purposes of Section 18 of the Limitation Act. (3) It is contended that in Re: Para 5 and 6: As regards the amounts outstanding, the issue has been dealt with in detail previously. It is clear from paragraph 7(x) of the Statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, the Corporate Debtor has benefited from the use of cranes without even paying the lease rental for these cranes. The Corporate Debtor has provided no basis for its claim of customs duties against the Operational Creditor. In addition, any claim for these amounts is further barred by the Limitation Act. (5) It is contended that in Re: Para 7 (viii) (A): The Corporate Debtor has admitted to an amount of USD 61,119.45. The Corporate Debtor has admitted to these amounts being due even in its reply dated 01.07.2019 in response to the notice issued by the Operational Creditor dated 12.06.2019 under the Code. Accordingly, the Corporate Debtor has admitted to these amounts being due and payable. (6) As stated before, there is no basis for the adjustment of the amount of ₹ 3,38,29,915 on account of customs duty incurred by the Corporate Debtor for its own benefit. (7) It is contended that in Re: Para 7(x) and (xi): The statements made by the Corporate Debtor make it abundantly clear that it is not able to pay its legitimate dues. It will have to liquidate its immovable assets in order to make payments. As stated before, this is a fit case for application of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) It is contended that Section 5 of Foreign Exchange Management Act, 1999 provides that, any person may sell or draw foreign exchange to or from an authorised person if such sale or drawl is a current account transaction. Therefore, even in respect of the transactions between the Operational Creditor and the Corporate Debtor, the drawl of foreign exchange would be limited to effect the transaction on the current account. The Corporate Debtor is only obliged to transfer the amount lying in its books, to the credit of the Operational Creditor, by drawing foreign exchange equivalent to the amount lying in its account as credit. The Corporate Debtor has no liability over and above the amount collected from the importers in INR to the Operational Creditor. The amount of foreign exchange drawn should be in conformity with the contractual obligations. The obligations of the Corporate Debtor were limited to collecting the money from the importers, and remit the same to the Operational Creditor. The Corporate Debtor cannot make any payments over and above the amount actually collected and reflected in its books of accounts to the credit of the Operational Creditor. Any payments made exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd, there exists a clear undisputed debt and a default in discharging the same. From a perusal of the facts brought before us, it appears that the Corporate Debtor does not have a valid or bona fide pre-existing dispute. Its main contention is only that the amounts claimed by the Operational Creditor and its Financial Statements do not match. This is untenable as there is no plausible ground taken to deny or dispute its liability altogether. It is not for this Adjudicating Authority to ascertain, investigate or fix the exact amount of liability. As long as there is a default of Operational Debt and the said default is more than a sum of Rs. One Lakh, subject to the Form-5 being complete, the debt and default have to be taken into consideration by this Tribunal. 11. The Operational Creditor has filed an Affidavit stating that the Corporate Debtor has given no notice relating to any dispute regarding the unpaid operational debt until the Demand Notice dated 12.06.2019, nor is there any document to establish that there was a dispute in relation to the operational debt prior to the Demand Notice. Apparently no dispute on account of falsification or fabrication of Invoices etc. was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards the settlement of Yacht import bills, within a period of TWO (2) years, by selling the immovable assets standing in the name of the company (i.e., residential flats No. 203 301 in Galina Apartments, Indiranagar, Bangalore and commercial flats No. 5A, 5B, 5C 5D in Sea View Towers, Chennai), after evicting the current occupants. 14. Further we have also perused the Report dated 16.09.2019 by the National e-Governance Services Limited where the Operational Creditor has reported the default of the Corporate Debtor. 15. At various places in its statement of objections, the Corporate Debtor has admitted receiving USD 2,54,000, the remaining import bills of USD 61,119.45 and outstanding freight payables of USD 13,38,807.80. It is also seen that although the Corporate Debtor agreed to repay a sum of ₹ 5,97,445,758/- as admitted in the Reply to Demand Notice dated 01.07.2019, the same has not been done till date. In this regard we have perused the Bank Statement of the Operational Creditor for the period 31.05.2019 to 07.06.2019 showing that the Operational Creditor has not received any amount after the Demand Notice was issued. On a perusal of the latest Audited Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Professional, namely Mr. Ritesh Prakash Adatiya, with Registration No. IBBI/IPA-001/IP-P01334/2018-19/12013, who has also filed written Consent in Form-2 dated 24.07.2019, to the effect that he is eligible to be appointed as IRP. It is settled position of law that once debt and default in question is proved, and there being no dispute raised by the Corporate Debtor, in an Application/Petition filed U/s 9 of Code, it is mandatory for the Adjudicating Authority to initiate CIRP, appoint IRP, impose moratorium etc. Therefore, we are convinced that there is a debt and default in question, which is not in dispute and thus the Petition is fit to be admitted, by initiating CIRP in respect of Corporate Debtor 19. In view of the above facts and circumstances of the case and the law on the issue, by exercising powers conferred on the Adjudicating Authority, U/s 9(5)(i) of the Code, the Company Petition bearing C.P.(IB) No. 324/BB/2019 is hereby admitted by initiating Corporate Insolvency Resolution Process (CIRP) in respect of the Respondent/Corporate Debtor with the following consequential directions: (1) Mr. Ritesh Prakash Adatiya, bearing Registration No. IBBI/IPA-001/IP ..... 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