Anuj Sharma vs Rustagi Projects Private Limited And ...

[Arising out of order dated 26.04.2023 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi, Court-III in CP (IB) No. 245(ND)/2021]

IN THE MATTER OF:

Mr. Anuj Sharma S/o Shri Kidar Nath Sharma R/o House No. M-12, Second Floor, West Patel Nagar, Delhi-110008. ...Appellant

Vs.

Rustagi Projects Pvt. Ltd. Having its Registered Office at Office No. 16, Khatau Building, 1st Floor, Alkesh Dinesh Mody Marg, Fort, Mumbai-400023, Maharashtra.

Soni E Vehicle Private Limited Through Interim Resolution Professional, Mr. Rajan Chakraborti. Off: 1/22, Second Floor, Asaf Ali Road, New Delhi- 110002. ...Respondents

Present:

For Appellant: Mr. Aditya Nayyar, Advocate.

For Respondents: Mr. Hamid Ahmad and Mr. Sunny Gangwar, Advocates for Respondent No.1.

Mr. Ranjan Chakraborti and Mr. Vinay Kumar, Advocates.

Cont'd.../ -2-

JUDGMENT

ASHOK BHUSHAN, J.

This Appeal by Suspended Director of the Corporate Debtor has been

filed challenging the order dated 26.04.2023 passed by the Adjudicating

Authority (National Company Law Tribunal), New Delhi, Court-III by which

order, Section 9 application filed by the Operational Creditor (Respondent

herein) has been admitted. Brief facts of the case necessary to be noticed for

deciding this Appeal are:

i. Corporate Debtor and Operational Creditor entered into

Distributorship Agreement dated 20.07.2016. The

Distributorship Agreement contained Terms of Payment and

Delivery. The Corporate Debtor was engaged in the

manufacturing, market training, sale, purchase, imports,

exports, distribution or otherwise dealing in all types of battery-

operated vehicle, batteries, its parts and accessories including

those manufactured / sold by other manufacturers / companies.

ii. The Operational Creditor issued various purchase orders and

made certain payment from time to time. Purchase Order

contained a condition that "Delivery should be done within 90

days, otherwise advance shall be returned along with interest

@18% p.a". Appellant - Operational Creditor made certain

advance payments.

Company Appeal (AT) Insolvency No. 550 of 2023 -3-

iii. The Operational Creditor sent emails dated 16.06.2018

demanding an amount of Rs.58,49,800/-. Further email was

sent on 26.07.2018 demanding amount of Rs.60,24,800/- which

included interest of Rs.7,80,000/-.

iv. Operational Creditor issued a demand notice under Section 8

dated 21.12.2020 claiming Principal Amount of Rs.56,63,061/-

with interest amount of Rs.66,03,801/- and expenses totalling to

Rs.1,34,69,435/-. Demand Notice was served on the Corporate

Debtor but no reply was filed.

v. An application under Section 9 was filed by the Operational

Creditor claiming total operational debt of Rs.1,34,69,435/-.

Adjudicating Authority issued notice on 09.08.2021. The

Corporate Debtor appeared on 10.01.2022 and prayed for two

weeks' time to file reply in the matter which was allowed. Again

on 14.02.2022, two weeks' time was allowed to file reply.

Thereafter, several dates were fixed, on which adjournment was

sought by the Corporate Debtor on ground that judgment of this

Tribunal in "M/s. Jumbo Paper Products Ltd. vs. Hansraj Agro

fresh Private Limited" is pending in the Hon'ble Supreme Court

for consideration, which adjournment was allowed.

vi. I.A. No. 1891 of 2022 was filed by the Corporate Debtor praying

for dismissal of the Company Petition filed by the Operational

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Creditor. I.A. No. 1891 of 2022 filed by the Corporate Debtor

came to be dismissed for non-prosecution on 21.10.2022.

vii. On 13.12.2022, learned counsel for the Operational Creditor

appeared but neither Corporate Debtor appeared not filed any

reply. Corporate Debtor was directed to proceed ex-parte.

viii. Matter was heard by the Adjudicating Authority on 29.03.2023

and order was reserved. Adjudicating Authority vide the

impugned order dated 26.04.2023 admitted Section 9

application. The Adjudicating Authority held in the order that

debt and default is proved and Corporate Debtor failed to repay

the amount. Hence, the application is admitted.

ix. The Corporate Debtor has filed an I.A. on 03.03.2023 for recall of

order dated 21.10.2022 and 13.12.2022 passed by the

Adjudicating Authority. Aggrieved by the order dated

26.04.2023, this appeal has been filed.

2. We have heard Shri Aditya Nayyar, learned counsel for the

Appellant and Shri Hamid Ahmad, learned counsel appearing for Respondent

No.1 - Operational Creditor.

3. Learned counsel for the Appellant submits that the Adjudicating

Authority has adjourned the matter twice taking note of the fact that

judgment of this Tribunal in "Jumbo Paper Products Ltd." is pending

consideration before the Hon'ble Supreme Court. The Adjudicating Authority

Company Appeal (AT) Insolvency No. 550 of 2023 -5-

ought to have awaited orders of the Hon'ble Supreme Court. It is submitted

that according to own case of the Operational Creditor the Principal Amount

due was only Rs.56,63,061/- and interest amount was of Rs.66,03,801/-.

The amount of interest was not liable to be added and threshold of Rs.1 crore

was not fulfilled whereas application was filed after 24.03.2020, hence, it

deserves to be dismissed on this ground. The Corporate Debtor had filed an

application on the ground that it does not fulfil the threshold, which

application was unfortunately dismissed for non-prosecution since the

counsel for the Corporate Debtor could not appear on 21.10.2022. Appellant

has also filed an application for recall of the order dated 21.10.2022 as well

as order dated 13.12.2022, where the Adjudicating Authority directed to

proceed ex-parte to the Corporate Debtor, which application remained

pending and could not be listed. It is submitted that submission of the

Respondent that no vehicles were supplied is incorrect. It is submitted that

Purchase Orders did not contain any clause for payment of interest and

Purchase Orders annexed with Section 9 application were false. In the

application which is filed by the Corporate Debtor being I.A. No. 1891 of 2022

ground of Section 10A was also taken since the demand notice was issued on

24.12.2020 and application was barred by 10A.

4. Learned counsel appearing for the Respondent No.1 submits that

the reliance of the Appellant on the judgment of this Tribunal in "M/s. Jumbo

Paper Products Ltd. vs. Hansraj Agro fresh Private Limited" has no application

in the facts of the present case. There cannot be any dispute that after

24.03.2020 every application filed under Section 9 has to fulfil the threshold

Company Appeal (AT) Insolvency No. 550 of 2023 -6-

of Rs.1 Crore. In the present case, by the demand notice and Section 9

application the operational debt claimed by the Appellant was more than Rs.1

Crore. The Purchase Order included condition that if the goods are not

supplied within 90 days, the advance shall be refunded with 18% interest p.a.

It is submitted that the debt includes both Principal and Interest, which

position of law has been settled by this Tribunal by its judgment in "Company

Appeal (AT) (Ins.) No. 690 of 2022, Prashant Agarwal vs. Vikash

Parasrampuria & Anr.". It is submitted that the Operational Creditor sent

various emails in 2018 itself demanding back the amount, which emails

contain both claim for Principal Amount as well as the Interest. Various

WhatsApp Chats were also annexed along with Section 9 application to

indicate that the Operational Creditor has been demanding the refund from

time to time. It is submitted that the Appellant has been dragging the

proceedings before the Adjudicating Authority and out of 15 dates which were

fixed before the Adjudicating Authority, the Appellant appeared only on few

dates and despite taking time from the Adjudicating Authority on several

occasions no reply was filed by the Corporate Debtor. The Corporate Debtor

to avoid the payment to the Operational Creditor has been dragging the

proceeding. The Adjudicating Authority has rightly proceeded ex-parte

against the Corporate Debtor since neither he filed reply nor he appeared on

the date fixed. It is submitted that the application filed by the Corporate

Debtor to recall the order dated 21.10.2022 and 13.12.2022 were without any

basis. The Corporate Debtor was not entitled for any indulgence in view of

Company Appeal (AT) Insolvency No. 550 of 2023 -7-

the conduct of the Corporate Debtor during the entire proceeding which

remained pending for two years.

5. We have considered the submissions of learned counsel for the

parties and perused the record.

6. Part IV of the application which is 'Particulars of Operational Debt'

provides as follows:

PARTICULARS OF OPERATIONAL DEBT

1. TOTAL The total amount of debt payable by the AMOUNT OF Corporate Debtor to Operational DEBT Creditor is Rs.56,63,061 (Fifty Six Lakh sixty three thousand and Sixty One) and the total amount of Interest due and payable on unpaid Operational Debt as on 25th December, 2020 is 66,03,801/ (Rupees Sixty Six Lakhs Three Thousand Eight Hundred And One/-) (Including GST 18%) and such further Interest @ 18 as would be due for the payment after 25th December, 2020 till the date of realization of the unpaid Operational Debt and expenses incurred towards the advertisement Rs.7,02,573/-

legal charges of Rs.5,00,000/-.

Hence, the Aggregate of total amount of unpaid Operational Debt due and payable by the Corporate Debtor to the

Company Appeal (AT) Insolvency No. 550 of 2023 -8-

Operational Creditor as on 25th December, 2020 is Rs 1,34,69,435/-

(Rupees One Crore Thirty Four Lakhs Sixty Nine Thousand Four Thirty Five Only).

7. In Part IV at Serial No.2 'amount claimed to be in default and the

date on which the default occurred' is mentioned as follows:

2. AMOUNT The total amount of debt payable by the CLAIMED TO Corporate Debtor to Operational BE IN Creditor is Rs.56,63,061 (Fifty Six DEFAULT Lakh sixty three thousand and AND THE Sixty One) and the total amount of DATE ON Interest due and payable on unpaid WHICH THE Operational Debt as on 25th December, DEFAULT 2020 is 66,03,801/ (Rupees Sixty Six OCCURRED Lakhs Three Thousand Eight Hundred And One/-) (Including GST (ATTACH @ 9% and CGST @ 9%) and such THE WORKINGS further Interest @ 18 as would be due

FOR for the payment after 25th December, 2020 till the date of realization of the COMPUTATI unpaid Operational Debt and expenses ON OF incurred towards the advertisement AMOUNT Rs.7,02,573/- legal charges of AND DAYS Rs.5,00,000/-.

OF DEFAULT IN TABULAR Hence, the Aggregate of total amount of FORM) unpaid Operational Debt due and payable by the Corporate Debtor to the

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Operational Creditor as on 25th December, 2020 is Rs 1,34,69,435/-

(Rupees One Crore Thirty Four Lakhs Sixty Nine Thousand Four Thirty Five Only).

The computation of amount of default and date of default has been attached herewith as ANNEXURE XIII.

Date of Default:- 26/7/2018 and its continues one

8. The claim of the Operational Creditor as reflected from Part IV of

the application indicate that total claim is more than Rs.1 Crore which include

the Principal Amount of Rs.56,63,061/- and interest. The Operational

Creditor has brought on record the Purchase Orders dated 05.05.2017,

06.05.2017, 14.08.2017 and 12.11.2016. We may refer to Purchase Order

dated 06.05.2017 where following terms and conditions have been mentioned:

"TERMS & CONDITIONS:

1) Delivery should be done with in 90 days, otherwise advance shall be returned along with interest @ 18% p.a.

2) Transportation cost extra at actual.

3) All bills should be sent t0 Rustagi projects Pvt Ltd.

Kalyan address only."

9. We may also notice the emails which have been sent by the

Operational Creditor to the Corporate Debtor demanding the payment. The

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emails which have been sent by the Operational Creditor, which have been

brought on the record along with the Reply filed in this Appeal, indicate that

the claim contains Principal Amount as well as interest as was due on the

date when email was sent. It is useful to extract one of the emails dated

26.07.2018 sent to the Corporate Debtor, which is to the following effect:

"Re: Demand of Rupees 60,74,800 till date or E- Loaders of Equivalant amount in lieu thereof:

From: Rajesh Yadav (rajesh@rustagi.info) To: anuj.sh99@gmail.com Cc jai.bagga@gmail.com; vikrampugalia@rediffmail.com; sgupta34@yahoo.co.in; sonilvehicle@gmail.com; info@sonivehicle.com; sonicustomercare@ gmail.com Date: Thursday, July 26,2018,03:18 PM GMT+5:30

Dear Sir

Given below is the detail of amounts outstanding against your account in our books till today.

We request you to take immediate steps to return / refund our amount with Interest or you can send us the E-loaders of equivalent amount till 31st July' 2018 and oblige.

Initially Paid to you : 50,00,000/- Interest Till 31/07/2018 : 7,80,000/- Returned 88 Batteries Refund : 2,94,800/- Total Till date:- :60,74,800

Kindly make the Payment on priority.

Company Appeal (AT) Insolvency No. 550 of 2023 -11-

Regards Rajesh Y Rustagi Projects Pvt Ltd."

10. Learned counsel for the Appellant before us has submitted that the

Purchase Orders which was issued does not contain any condition for

payment of interest. Copy of the Purchase Orders were part of the Section 9

application which clearly contain the condition of interest. Furthermore, in

the email which was sent by the Operational Creditor in the year 2018, the

amount of interest was also included. The Corporate Debtor did not file any

reply to the Section 9 application although twice the time was taken for filing

reply. On 10.01.2022, the Adjudicating Authority granted two weeks' time to

file reply by following order:

"ORDER

Counsels for both sides are present. Counsel appearing on behalf of the Corporate Debtor seeks two weeks' time to file reply in the matter. The time prayed for is granted.

List the matter on 14.2.2022."

11. Further on 14.02.2022, another order was passed granting two

weeks' time to the Appellant to file reply. Order dated 14.02.2022 is as follows:

"ORDER

Mr. Hamid Ahamd Mir, Counsel for the Petitioner/ Operational Creditor is present. Mr. Mohit Arora, Counsel for the Corporate Debtor has also appeared and submits that he is yet to file Vakalatnama in the

Company Appeal (AT) Insolvency No. 550 of 2023 -12-

matter. He is directed to do the needful within two days' time.

In addition, Counsel for the Corporate Debtor is also directed to file reply on behalf of his client within two weeks with a copy to be made available to Counsel for the petitioner. Counsel for the Operational Creditor to file rejoinder, if any, within a week.

List on 10.3.2022."

12. The Corporate Debtor chose not to file reply and filed an I.A. for

dismissing the application under Section 9. I.A. which was filed by the

Appellant was dismissed for non-prosecution. We may also look into the

grounds taken in the I.A. for dismissing the Company Petition. In the I.A. the

ground taken was that the interest component cannot be added in the

Operational Debt. Further Section 10A of the Code was relied referring to

Demand Notice dated 21.12.2020.

13. Learned counsel for the Operational Creditor has rightly relied on

judgment of this Tribunal in "Company Appeal (AT) (Ins.) No. 690 of 2022,

Prashant Agarwal vs. Vikash Parasrampuria & Anr.", where three

Member Bench of this Tribunal held that the total amount for maintainability

of claim will include both principal debt amount as well as interest on delayed

payment which is stipulated in the invoice has to be added. We may refer to

Para 9 (vi) of the judgment, which is to the following effect:

"9(vi) It is, therefore, clear from these facts that the total amount for maintainability of claim will include both principal debt amount as

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well as interest on delayed payment which was clearly stipulated in the invoice itself. It is noted that the total principal debt amount of Rs. 97,87,220/- along with interest the total debt makes total outstanding as Rs.

1,60,87,838/-. Thus, the total debt outstanding of OC is above Rs. 1 crore as per requirement of Section 4 IBC read with notification No. S.O I205 (E) dated 24.3.2020 (Supra), and meets the criteria of Rs.1 crore as per Section 4 of IBC and Application is therefore maintainable in present case.

We concur with the orders of Adjudicating Authority on this issue also."

14. The above judgment of "Prashant Agarwal" clearly supports the

submission of learned counsel for the Respondent that for calculating the

amount for maintainability of the claim, for threshold purpose, both Principal

Amount and Interest has to be calculated when the interest is stipulated

between the parties.

15. The ground taken in the I.A. under 10A is clearly misconstrued

since the default is being claimed by the Operational Creditor w.e.f.

26.07.2018 which was much before the 10A period. The mere fact that the

Demand Notice was dated 21.12.2020 shall not has any effect on the

maintainability of the application under Section 9 when default is committed

on 26.07.2018 and admitted thereafter.

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16. In the facts of the present case, we are satisfied that the

Adjudicating Authority did not commit any error in admitting Section 9

application which clearly fulfils the threshold. The Corporate Debtor despite

having been allowed time, failed to file reply and did not appear on the date

when matter was fixed for hearing. The Adjudicating Authority rightly

proceeded ex-parte against the Corporate Debtor when he chose not to file

reply and failed to appear on the date fixed. No error has been committed by

the Adjudicating Authority in admitting Section 9 application. There is no

merit in the Appeal. Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Naresh Salecha] Member (Technical) NEW DELHI

04th July, 2023

Archana

Company Appeal (AT) Insolvency No. 550 of 2023