Ads Resources Limited vs Shilpi Cable Technologies Limited

[Arising out of orders dated 17.07.2020 in I.A. No. 2387 of 2020 in Company Petition No. (IB) 64/PB/2017 passed by the Ld. Adjudicating Authority (National Company Law Tribunal), New Delhi, Principal Bench.]

IN THE MATTER OF:

ADS Resources Limited Unit 1403, 14th Floor Katherine House 53-55 Chatham Road South TST, Kowloon, Hong Kong Through its Authorised Representative Mr. Animesh Kumar, Authorised Vide Resolution of Board of Directors dated 10.06.2020. ..... Appellant.

Versus

Shilpi Cables Technologies Ltd. Through Liquidator Mr. Huzefa Fakhri Sitabkhan Think Capital Insolvency Professionals LLP 1007-1012, Dalamal Tower, Free Press Journal Road, 211, Nariman Point, Mumbai-400021 Huzefa.sitabkhan@gmail.com Sctl.lq@gmail.com ....... Respondent.

For Appellant: None For Respondents: Mr. Puneet Singh Bindra, Ms. Simran Jeet, Ms. Sonali Mehta, Ms. Smiti T. and Ms. Sanampreet Singh, Advocates. 2

JUDGMENT

(04th April, 2022)

Justice Anant Bijay Singh;

The Appellant has preferred this Appeal under Section 61 of the

Insolvency and Bankruptcy Code, 2016 (for short IBC) being aggrieved and

dissatisfied by the order dated 17.07.2020 in I.A. No. 2387 of 2020 in

Company Petition No. (IB) 64/PB/2017 passed by the Ld. Adjudicating

Authority (National Company Law Tribunal), New Delhi, Principal Bench

whereby and where under the I.A. No. 2387 of 2020 has been dismissed by

the Ld. Adjudicating Authority holding that the claim is not maintainable

against the Corporate Debtor.

2. The facts giving rise to this Appeal are as follows:

i) Vide Order dated 01.05.2019, the Hon'ble National Company Law

Tribunal directed that the Corporate Debtor, "M/s Shilpi Cables Technologies

Limited" to be liquidated and appointed Mr. Huzefa Fakri Sitab Khan,

Resolution Professional as Liquidator for the process of liquidation. In terms

of the said order, the Liquidator published a Public Announcement on

03.05.2019 in accordance with Rule 12 of IBBI (Liquidation Process)

Regulations, 2016 and in Form B of Schedule 2 of the said Regulation and

invited claims from the Shareholders.

ii) The Appellant - M/s ADS Resources Ltd. for its supplies of various

products like Planetary Stranding Line, Trolley wire drawing line etc., placed

orders to the supplier at Hong Kong. The Appellant entered into Two Purchase

Contracts being Contract No. ADSRL/ FOHKL/ 20160810 dated 19.08.2016

Company Appeal (AT) (Insolvency) No. 1070 of 2020 3

for supply of "Trolley Wire Drawing Line" and ADSRL/ FOHKL/ 20160909

dated 09.09.2016 for supply of "Planetary Stranding Line" with the

supplier/seller namely Fourgood Overseas (HK) Co. Ltd. based at Hong Kong.

Under the said contracts, the goods/machines were destined to ICD Rewari,

India and the shipment was to be completed within 3 months of receiving the

advance (Annexure -2 Colly, at page 39 to 50 of the Appeal).

iii) Therefore, in order to make payments to the supplier, the Appellant

raised Proforma Invoices against the Order placed by the Corporate Debtor.

The details of the invoices are as under:

Invoice No. Dated Amount (USD)

1 ADSRL/16-17/3003 (for 19.08.2016 710,000.00 supply of Trolley Wire Drawing Line)

2 ADSRL/16-17/4004 (for 09.09.2016 635,000.00 supply of Planetary Stranding Line)

TOTAL 13,45,000.00

iv) Further case is that the Appellant, for and on behalf of the Corporate

Debtor, made advance payments of USD 5,88,750 through Citibank NA Hong

Kong on 14.09.2016 and USD 4,35,000 & USD 1,80,000 on 19.09.2016 &

19.10.2016 respectively through DBS Bank (Hong Kong) Ltd. to the supplier's

designated account at Hong Kong. Therefore, the Appellant made the total

payment of USD 12,03,750 on behalf of the Corporate Debtor (Annexure- 3 at

page 51 to 57 of the Appeal).

Company Appeal (AT) (Insolvency) No. 1070 of 2020 4

v) The supplier has further raised a claim of USD 1,41,250 upon the

Appellant under the said contract by way of debit note and the Appellant is

under contractual obligation under the laws of Hong Kong to make the

payment of said debit note to avoid any possible litigation, whose cost is much

higher (Annexure -4 at page 58 of the Appeal). Therefore, the Corporate Debtor

is liable to pay USD 13,45,000 to the Appellant, for which above said invoices

have been raised against the Corporate Debtor.

vi) Further case of the Appellant is that the Corporate Debtor against the

said Proforma Invoices have paid the part payment of USD 1,99,941.13,

1,80,936.13 & 4,25,914.13 on 09.09.2016, 23.09.2016 & 04.10.2016

respectively, leaving a balance of USD 5,38,208.61.

vii) The Appellant maintains a running account of the Corporate Debtor. As

per the statement of account, principle amount of USD 5,38,208.61

(equivalent to INR 3,82,45,103.8 @ the conversion rate of 71.06 as on

17.01.2020) is outstanding and the Corporate Debtor is liable to pay the same

with an interest of 8% per annum which comes to USD 1,07,641.72 as on

01.06.2019. The total outstanding amount as on 01.06.2019 is USD

6,45,850.33 (equivalent to INR 4,58,94,124.4 @ the conversion rate of 71.06

as on 17.01.2020).

viii) Further case of the Appellant is that the Appellant in response to the

said advertisement issued by the Liquidator in respect to the Corporate

Debtor, submitted his claim in the prescribed manner vide E-mail dated

15.11.2019 whereby the claimant enclosed all the relevant documents

Company Appeal (AT) (Insolvency) No. 1070 of 2020 5

including Certificate of Incorporation, Ledger account from 01.04.2016 to

01.06.2019 and Invoices.

ix) The Liquidator did not reply to the aforesaid claim. Thereafter, the

Appellant via E-mail dated 27.11.2019 (Annexure-60 of the Appeal) sent a

reminder for the settlement of claim. However, no reply has been received from

the liquidator.

x) The Liquidator, vide E-mail dated 31.01.2020, required the Appellant to

submit documents which are detailed as under:

" 1. The claim documents (i.e. Form C, Affidavit and Board resolution) should bear company's seal. Request you to affix the seal and re-share the documents.

2. Please share a government-issued photo ID of Mr. Rohtash Kumar (authorized signatory).

3. The supporting documents against the claim amount provided alongwith the claim form are Proforma Invoices."

Thereafter, the Liquidator via E-mail dated 28.02.2020 (Annexure -7

Colly, at page 61 to 62 of the Appeal Paper Book) again required the Appellant

for providing the said documents for verification of the claim.

xi) The Appellant, vide E-mail dated 29.02.2020, sent the requisite

documents and information to the Liquidator. Thereafter, the Liquidator, vide

E-mail dated 04.03.2020, rejected the claim of the Appellant stating as under;

"Pursuant to the Public Announcement, we are in receipt of your claim against the Corporate Debtor. Basis the information, documents and clarifications received from you

Company Appeal (AT) (Insolvency) No. 1070 of 2020 6

and further to verification of the same, the undersigned would like to update you that your claim of USD 645,850.33 stands rejected based on the books of accounts of the Corporate Debtor and the supporting documents provided alongwith your claim."

Thereafter, the Appellant preferred the I.A. No. 2387 of 2020 in

Company Petition No. (IB) 64/PB/2017 before the Ld. Adjudicating Authority

and after hearing, the I.A. No. 2387 of 2020 was dismissed. Hence this Appeal.

Submissions on behalf of the Appellant

3. The Learned Counsel for the Appellant during the course of argument

and in his Written Submissions submitted that the Invoices have been

admitted by the Corporate Debtor (para 6, page 2 of the Reply filed by

Liquidator). However, a claim has been denied merely on the ground that only

part of the invoice amount was payable. The contract in reference stands

admitted which have not been dealt by Liquidator in rejection of the claim vide

email dated 04.03.2020.

4. It is further submitted that the Appellant for and on behalf of the

Corporate Debtor made advance payments of USD 5,88,750 through Citibank

NA Hong Kong on 14.09.2016, USD 4,35,000 on 19.09.2016 and USD

1,80,000 on 19.10.2016 through DBS Bank Hong Kong Ltd. in supplier's

designated account at Hong Kong. Therefore, the Appellant made a total

payment of USD 12,03,750 on behalf of the Corporate Debtor. The said

payments made on behalf of Corporate Debtor were well within the knowledge

of the Directors of the Corporate Debtor.

Company Appeal (AT) (Insolvency) No. 1070 of 2020 7

5. It is further submitted that the Appellant filed an Application bearing

I.A. No. 2387 of 2020 before the Hon'ble NCLT under Rule 11 of NCLT Rules,

2016 to direct the liquidator to accept, settle and pay the claim of USD

6,45,850.33 (equivalent to INR 4,58,94,124.4 @ the conversion rate of 71.06

as on 17.01.2020) to the Appellant. The said Application was rejected by the

Hon'ble NCLT vide order dated 17.07.2020.

6. It is further submitted that the impugned order has been passed which

is residuary in nature and the Ld. Tribunal did not sit in Appeal against the

Order of Liquidator under Section 42 of the IBC, the Order of Liquidator is

appealable. It is settled law that the Appellate Court is equipped in law to

appreciate the evidence but the Court under residuary power has no power to

appreciate the evidence and documents filed by the parties. Based on these

submissions the impugned order is fit to be set aside and the Appeal be

allowed.

Submissions on behalf of the Respondent

7. The Learned Counsel for the Respondent during the course of argument

and in his Reply Affidavit along with Written Submissions submitted that the

claim form was filed by the Appellant almost 6 months after the Respondent

was directed to be liquidated, that too pursuant to receipt of the notice

demanding the refund / repayment of the monies advanced by the Respondent

to the Appellant for purchase of the machines.

8. It is further submitted that the documents sought by the Liquidator,

provided by the Appellant, including the correspondence dated March 02,

Company Appeal (AT) (Insolvency) No. 1070 of 2020 8

2020, the Liquidator by his email dated March 04, 2020 rejected the claim of

the Appellant based on the books of accounts and the supported documents

furnished to him by the Appellant.

9. It is further submitted that being aggrieved by the Appellant filed an

Application i.e. I.A. No. 2387 of 2020 in Company Petition No.

(IB)/64/PB/2017 for seeking directions to accept, pay and settle the claim of

USD 645,850.33 to the Appellant (being the 40% of invoice value, i.e. USD

538.208.61 along with 8% interest, i.e. USD 107,641.72).

10. It is further submitted that instead of filing Appeal of the aforesaid claim

the Appellant had filed Application which was rightly dismissed by the Ld.

NCLT vide order dated 17.07.2020.

11. It is further submitted that the Appellant had neither filed any claims

pursuant to the commencement of the Corporate Insolvency Resolution

Process or under the liquidation process, until such time as S3G's demand

notice was received by the Appellant. It was only pursuant to such receipt that

the Appellant filed its claim form (Form 'C') as the Operational Creditor of the

Respondent.

12. It is further submitted that the Appellant ought to have raised its

grievance for payment of the balance amount, if that was the case, within

those three months where the machines were to be delivered, and if not within

those three months then at least within three years from the date of the

Proformas. However, the same was only done after receipt of the demand

notice dated October 05, 2019 from S3G.

Company Appeal (AT) (Insolvency) No. 1070 of 2020 9

13. It is further submitted that the claim was belated not only after the

passage of over six months from such time that the liquidation of the

Respondent was directed but also only after the receipt of the demand notice

from S3G. This is a clear indication that the same was done as an afterthought

to evade its liability to return / refund the monies advanced by the Respondent

to the Appellant for purchase of the machines which were never delivered to

the Respondent. Based on these submissions no merit in the Appeal, the

Appeal is fit to be dismissed.

FINDINGS

14. After hearing the parties and having gone through the pleadings made

on behalf of the parties, we are of the considered view that the following facts

are admitted in the instant Appeal.

 The Appellant has preferred the I.A. No. 2387 of 2020 in Company

Petition No. (IB) 64/PB/2017 against the rejection of the claim by the

Liquidator. The said I.A. was dismissed by the Adjudicating Authority

on 17.07.2020. The Appellant did not prefer the separate Appeal against

the order of the Liquidator and filed I.A. No. 2387 of 2020 which

according to us is not maintainable.

 It is also an admitted fact that the Appellant did not file any claim during

the Corporate Insolvency Resolution Process only after receipt of S3G

demand notice, the Appellant filed its claim form (Form 'C') as the

Operational Creditor of the Respondent. The Insolvency and

Bankruptcy Code stipulates a time bound Resolution Process. Keeping

Company Appeal (AT) (Insolvency) No. 1070 of 2020 10

in view the ratio of the Judgment passed by Hon'ble Supreme Court in

the case of "Ebix Singapore (P) Ltd. Vs. Educomp Solutions Ltd.

(CoC), (2022) 2 SCC 401", we are of the view that in the absence of

filing of the claim within the stipulated time, the Appellant now cannot

seek realisation of the claim amounts at this belated stage.

ORDER

15. Taking all these facts and circumstances of the case, we are of the

considered view that there is no illegality in the impugned order, therefore,

the impugned order dated I.A. No. 2387 of 2020 in Company Petition No. (IB)

64/PB/2017 passed by the Ld. Adjudicating Authority (National Company

Law Tribunal), New Delhi, Principal Bench is hereby affirmed. There is no

merit in the instant Appeal, the Appeal is hereby dismissed. No order as to

costs.

16. Registry to upload the Judgment on the website of this Appellate

Tribunal and send the copy of this Judgment to the Ld. Adjudicating Authority

(National Company Law Tribunal), New Delhi, Principal Bench, forthwith.

[Justice Anant Bijay Singh] Member (Judicial)

[Ms. Shreesha Merla] Member (Technical)

New Delhi 04th April, 2022 R. Nath.

Company Appeal (AT) (Insolvency) No. 1070 of 2020