TMI Blog2021 (11) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... of Debts. The Application filed under Section 9 of I B Code is hereby rejected in the absence of submission of proof of Due and Default date of the unpaid dues by the Applicant - Application dismissed. - CP. (IB) No. 13/GB/2021 - - - Dated:- 23-11-2021 - Hon ble Shri H. V. Subba Rao, Member (J) And Hon ble Shri Prasanta Kumar Mohanty, Member (T) MR. ARUN KUMAR CMA PETITIONER PRESENT MR. BISWAJIT CHOUDHURY ADVOCATE RESPONDENTS IN VIDEO ORDER [Per Se : Shri Prasanta Kumar Mohanty Member (T)] 1. The Application has been filed by the Operational Creditor, Kishan Kumar Daga under Section 9 of the Insolvency and Bankruptcy Code, 2016 (herein after referred to as a Code ) seeking for initiation of Corporate Insolvency Resolution Process ( CIRP in short) in respect of the Corporate Debtor , namely, Siang Tea and Industries Private Limited (Unit-Donyi Polo Tea Estate). 2. The Petitioner namely Kishan Kumar Daga is having registered address at C/o Onkar Motors, Opp. Hotel Highway Palace, NH-37, Lalmati, Beltola, Guwahati-781029. 3. It is submitted that the Operational Creditor/Petitioner Kishan Kumar Daga, a proprietary concern, is Dealer of Coal since l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Petitioner A/c No. 510101006604828 maintained with Union Bank of India, Guwahati. 10. The Petitioner also submits that there are no instances of Material return by the Corporate Debtor and the Corporate Debtor has never, in the past, raised any such objections relating to the quality or any other issues for material supplied by the Petitioner. 11. The Petitioner submits that due to default on payment by Corporate Debtor, the Petitioner issued a demand notice in Form No. 3 and Form No. 4 through registered Post 29/01/2021 E-mail dated 03/02/2021, 09/03/2021 02/04/2021. The copy of the postal receipts, tracker report screen shot of E-mails are submitted. 12. The Petitioner has stated that he has submitted the bank statements of two Banks namely UCO BANK and UNION BANK OF INDIA in which the amount of ₹ 12,60,196.00 (Rupees Twelve Lakhs Sixty thousand One hundred and Ninety Six only) has been received from the CD prior to issue of Demand Notice. 13. The Petitioner further submits that the total amount of claim of the Petitioner as per Form 5 is as under: Sr. No. Particulars Amount INR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the initiation of insolvency proceedings against a solvent entity like the Respondent Company is against the scope and intent of the Insolvency and Bankruptcy Code, 2016. 18.ii The Respondent Company has submitted that the Insolvency Bankruptcy Code, 2016 was enacted with the objective of providing resolution of insolvency of an entity by continuation of its operations, maximizing its assets and balancing the interest of its stakeholders. The Respondent states that the Applicant by setting into motion the present proceedings is attempting to misuse the provisions under the IBC as a recovery mechanism. The Respondent states that the present proceedings are undeniably fraudulent and malicious as provided under Section 65 of the IBC. 18.iii The Respondent has stated that the Applicant has, with malafide intentions, not brought to the fore, certain material facts before the Hon ble Tribunal, for which the present Application deserves dismissal in limine. 18.iv The Respondent submits that the situation was even more parlous for agro businesses like tea estates, because it depends very heavily on manual labour. The fear of Covid in wave after wave has compelled tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid by the Respondent, or after which date, the debt would become payable with interest. In the absence of any contractual binding on the Respondent to make payment of any debt by a particular date, no default has been established by the material on record. b. In terms of Section 8(1) of the IBC Code, a creditor can issue a demand notice to the debtor only on the occurrence of a default . Since no default had occurred in the present case, the issuance of demand note by the Applicant was invalid and non-est. c. It is stated that further actions of the Applicant are also not valid in law because (a) the demand notice was illegal and non-est, and (b) there was no default even on the date of filing of the present complaint, or even till date. d. It is a well-established doctrine of law that when the law prescribes a thing to be done in a certain way, it has to be done only in that way and not in any other way [HN Risbud Inder Singh VS State of Delhi, AIR 1955 SC 196]. Since the demand notice was issued and the present Application filed when no default has been established by the material on record, the present application merits dismissal, in limine. e. In light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive Hundred Fourteen only) including the unpaid accumulated interest at the rate of 15% p.a. from the date of default up to 25/10/2021 and the interest is accruing further on day-to-day basis. The Operational Creditor has had a business relationship with the CD since 2009 and the standard payment due date for the supply of coal is 15 days from the date of the Invoice. In the case of default, the interest @ 15% p.a. is charged after the 15 days of invoice issue date. The default date of CD was 31/08/2019 accordingly FORM-3 demand notice dated 25/01/2021 issued to the CD u/s 8(1) if IBC 2016 read with Rule 5 of IB (application to the adjudicating Authority) Rules 2016. It is humbly submitted that before the issue of demand Notice and thereafter also the CD does not raise any dispute regarding the GST Invoices along with E Waybills or the debt due amount. 21. On the other hand the Respondent now respectfully opposes the admission of the application for the following reasons, without prejudice to one another: (a) That necessary pre-conditions for proceedings by an Operational Creditor under the IBC are that (i) a valid debt, due and payable by the Corporate Debtor to the Operatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been made only in the demand notice dated 25.01.2021 issued u/s 8 of IBC. Thus, there could be no occurrence of default before issue of the 25.01.2021 notice. For the record, however, it is submitted that even if the applicant had given a deadline for payment unilaterally, non-payment within that deadline would still not be a default in the absence of a mutually agreed period for payment, and, in the present case, there was no such mutual agreement. Thus, there was neither a mutually agreed time period for making the payment, nor had the applicant sought payment within any unilaterally specified time period before the applicant issued the demand notice on 25/01/2021. Therefore, there could be no occurrence of default, and the present application is infructuous and not admissible under the IBC. (d) It is stated that, while there was no specified time period within which the payments had to be made, payments were being made to the applicant from time to time in a rolling manner, including during the period in which the applicant claims in the application to have supplied the goods. In para 4 of the application, the applicant admitted that he had received ₹ 12,60,196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1.2021 was infructuous being in violation of the provisions of section 8 under which it was issued, and (ii) because no application under section 9 is permitted by IBC to be ever filed for any default occurring between 25th March 2020 and 25th March 2021. Vide Government of India ordinance notified on 5.6.2020, the IBC was amended to provide that (a) no proceedings could be initiated under section 7, 9 and 10 of IBC in the period of 6 months from 25th March 2020, (b) no application was to be ever permitted u/s 7, 9 and 10 of IBC where a default had occurred during the period of those 6 months, and (c) this period of 6 months could be extended by Government of India (GOI) by another 6 months. The period of 6 months from 25th March 2020 was later extended by GOI twice - vide notification dated 24.9.2020 till 25th December 2020, and then vide notification dated 22.12.2020 till 25th March 2021. Thus, though proceedings could be initiated after 25th March 2021 under sections 7, 9 and 10 for a default that occurred before 25th March 2020 or after 2021, no such proceedings can ever be initiated for a default that occurred in the intervening one-year period from 25th March to 25th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing on 22.06.2021, 19.07.2021, 03.08.2021 and 16.09.2021. ORDER 23. Heard both the sides at length and it is observed that- (1) Both the OC and the CD have entered into business from the year 2009-2010.The Respondent Company is manufacturing and trading of Tea and the OC has supplied coal to the CD (2) The Applicant has claimed ₹ 1,51,77,515.00 from the CD which includes interest of ₹ 31,98,774.00 on the basis of 47 Invoices enclosed The date of default mentioned by the Applicant is 21/08/2019 only on the basis of the date of last invoice raised. (3) The CD has submitted that it is a going concern having 750-800 employees including seasonal workers but the situation was precarious during COVID Period/Waves for all industries even more for it as agri business, tea estates which are depending heavily on manual labour. The CD has been paying the dues to the Applicant as and when funds available as there is no contract or agreed time period within which the Respondent was required to make a payment (4) The Respondent has further submitted that the Applicant has also issued Demand Notice during the Covid Pandemic Period when the GOI /RBI has notified tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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