Amanpreet Singh Bawa vs Kandla International Container ...

[Arising out of order dated 10th October, 2018 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi Bench, in Company Petition No. (IB)920(ND)2018]

IN THE MATTER OF:

Mr. Amanpreet Singh Bawa Director and shareholder of M/s Satkar Container Lines Pvt. Ltd. Son of Sh. Manmohan Singh Bawa, R/o H-14, First Floor, Kailash Colony, New Delhi - 110048. ....Appellant

Vs

1. Kandla International Container Terminal Pvt. Ltd., 8 Balaji Estate, Ground Floor, Guru Ravidas Marg, Kalkaji, New Delhi - 110019.

2. Satkar Container Lines Pvt. Ltd. Having its office at, CIN U74900MH1998PLC116838 B-72, 2nd Floor, Rohit House, Vishwakarma Colony, Tughlakabad, M. B. Road, New Delhi - 110044. ....Respondents

Present:

For Appellant: Mr. Ashim Vachher and Mr. Vaibhav Daba, Advocates.

For Respondents: Mr. Varun Singh, Mr. Gaurav Nair and Ms. Pranati Bhatnagar, Advocates for R-1. -2-

BANSI LAL BHAT, J.

Respondent - Operational Creditor's application under Section 9 of

the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'I&B

Code') for initiation of Corporate Insolvency Resolution Process against the

Corporate Debtor - 'M/s Satkar Container Lines Pvt. Ltd.' came to be

admitted by the Adjudicating Authority (National Company Law Tribunal),

New Delhi Bench, in terms of its order dated 10th October, 2018 with

slapping of moratorium and appointment of Interim Resolution Professional

as a necessary sequel thereto. Aggrieved thereof the Appellant 'Amanpreet

Singh Bawa', Director and Shareholder of the Corporate Debtor has filed the

present appeal assailing the order of admission of application under

Section 9 of the I&B Code on the grounds that the impugned order was

passed without service of notice upon the Corporate Debtor and that the

Corporate Debtor had raised dispute with the Operational Creditor as

regards the invoice on the basis of which initiation of Corporate Insolvency

Resolution was sought.

2. Heard learned counsel for the parties and perused the record.

Company Appeal (AT) (Insolvency) No. 686 of 2018 -3-

3. Initiation of Corporate Insolvency Resolution Process at the instance

of an Operational Creditor is provided for under the provision engrafted in

Section 9 of the I&B Code, whereunder an Operational Creditor may file an

application before the Adjudicating Authority for initiating a Corporate

Insolvency Resolution Process after complying with the statutory

requirements of Section 8. Dwelling on the scope of this provision in

"Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407", the

Hon'ble Apex Court observed as under:

"29. The scheme of Section 7 stands in contrast with the

scheme under Section 8 where an operational creditor is,

on the occurrence of a default, to first deliver a demand

notice of the unpaid debt to the operational debtor in the

manner provided in Section 8(1) of the Code. Under Section

8(2), the corporate debtor can, within a period of 10 days

of receipt of the demand notice or copy of the invoice

mentioned in sub-section (1), bring to the notice of the

operational creditor the existence of a dispute or the record

of the pendency of a suit or arbitration proceedings, which

is pre-existing--i.e. before such notice or invoice was

received by the corporate debtor. The moment there is

existence of such a dispute, the operational creditor gets

out of the clutches of the Code."

Company Appeal (AT) (Insolvency) No. 686 of 2018 -4-

In a later judgment titled in "Mobilox Innovations (P) Ltd. v. Kirusa

Software (P) Ltd., (2018) 1 SCC 353", the Hon'ble Apex Court further

observed as under:-

"51. It is clear, therefore, that once the operational

creditor has filed an application, which is otherwise

complete, the adjudicating authority must reject the

application under Section 9(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 evidence.

It is important to separate the grain from the chaff and to

reject a spurious defence which is mere bluster. However,

in doing so, the Court does not need to be satisfied that the

defence is likely to succeed. The Court does not at this

stage examine the merits of the dispute except to the

extent indicated above. So long as a dispute truly exists in

Company Appeal (AT) (Insolvency) No. 686 of 2018 -5-

fact and is not spurious, hypothetical or illusory, the

adjudicating authority has to reject the application."

4. The undisputed facts leading to initiation of Corporate Insolvency

Resolution Process may briefly be noticed. The Corporate Debtor, claiming

to be a part of a group of companies engaged in the business of logistics and

freight forwarding, availed of the services of Operational Creditor engaged in

business of providing storage and handling activities for containers. This

happened in year 2017-18. On the basis of invoices raised and account

maintained by the Operational Creditor and after adjustment of security

deposit, the Operational Creditor demanded payment of Rs.24,91,063/- as

its outstanding dues for the services offered to the Corporate Debtor, which

not having been clear despite service of demand notice upon the Corporate

Debtor, the Operational Creditor had recourse to provisions of Section 9 of

I&B Code by filing application in the prescribed format before the

Adjudicating Authority, which came to be admitted in terms of the

impugned order dated 10th October, 2018 as the Corporate Debtor did not

appear before the Adjudicating Authority in response to the notice served

through process of the bench and was set ex-parte.

5. Learned counsel for Appellant, while advancing arguments, did not

dispute the factum of demand notice having been served upon the Corporate

Debtor under Section 8(1) of the I&B Code, which was not responded to by

the Corporate Debtor. Thus, the Corporate Debtor failed to bring to the

Company Appeal (AT) (Insolvency) No. 686 of 2018 -6-

notice of the Operational Creditor existence of a dispute in conformity with

the provision engrafted in Section 8(2) of the I&B Code. As regards, service

of notice by the Adjudicating Authority at the pre-admission stage, the plea

raised is that the notice served through the mode of email by the

Adjudicating Authority went unnoticed as the mail landed in the 'Junk

Folder' of the registered email of the Corporate Debtor. This plea is unsound

both in design as also in technique. It is indeed indisputable that service

through the mode of email is a legally recognized mode of service. Once it is

admitted that the mail was served on the registered email of the Corporate

Debtor, the Adjudicating Authority cannot be held to have failed to properly

serve the notice. It was for the Corporate Debtor to be careful about his

mail, more particularly as the Operational Creditor had served demand

notice upon it. Therefore, it is futile to contend that there was not proper

service of notice upon the Corporate Debtor.

6. Having held that the Corporate Debtor was duly served and it failed to

show existence of a dispute in regard to the invoices raised by the

Operational Creditor for services rendered by it and the account maintained

on the basis of which outstanding liability was worked out, it would be

appropriate to refer to the factum of Appellant being specifically asked by

this bench as to what would have been the response of the Corporate Debtor

to the demand notice or notice served upon it by the Adjudicating Authority.

The relevant portion of the minutes of proceedings/ interim order recorded

on 10th December, 2018 reads as under:-

Company Appeal (AT) (Insolvency) No. 686 of 2018 -7-

"ORDER

10.12.2018- Learned counsel for the Appellant submits that no notice of

admission of the application under Section 9 of the Insolvency and

Bankruptcy Code, 2016 was served on the 'Corporate Debtor'. Otherwise, the

'Corporate Debtor' would have settled the claim."

In the face of this assertion before the bench, it should not lie in the

mouth of Corporate Debtor or the Appellant that there was a valid dispute

as regards the invoices upon which the edifice of initiation of Corporate

Insolvency Resolution Process was based. The fact that learned counsel for

Appellant claimed that the Corporate Debtor would have settled the claim if

notice had been served upon it postulates that the Operational Creditor's

assertion in regard to debt and default was not disputed and the Corporate

Debtor was intended to comply with the notice of demand. Even on merit,

with reference to page nos. 55, 65 and 67 of the paper book, be it seen that

the Operational Creditor not being a party to the settlement agreement and

the correspondence referred being irrelevant as regards the debt in respect

whereof default is alleged and established by the Operational Creditor, the

argument raised is unsustainable.

7. For what has been discussed hereinabove, we are of the considered

opinion that the appeal lacks merit. We find no legal infirmity or factual

Company Appeal (AT) (Insolvency) No. 686 of 2018 -8-

frailty in the impugned order. The appeal is accordingly dismissed.

However, there shall be no orders as to costs.

[Justice Bansi Lal Bhat] Member (Judicial)

[Balvinder Singh] Member (Technical)

NEW DELHI

2nd May, 2019

AM

Company Appeal (AT) (Insolvency) No. 686 of 2018