Ashok Kumar Atmaram Sharma vs Shri Balaji Paper Pack Private Limited

Comp. App. (AT) (Ins) No. 1599 of 2024 & I.A. No. 5826 of 2024

IN THE MATTER OF: Ashok Kumar Atmaram Sharma ...Appellant

Versus

Shri. Balaji Paper Pack Pvt. Ltd & Anr ...Respondents

Present: For Appellant : Mr. Siddharth S. Chapalgaonkar, Ms. Sneha Botwe, Adv.

For Respondents : Mr. Rajendra K. Golani, Adv. for R1 Mr. Vishwas V Shah, RP/IRP

ORDER

(Hybrid Mode)

Per: Justice Rakesh Kumar Jain; (Oral)

22.05.2025 : This appeal arises from the order dated 01.08.2024 by

which CP (IB) No. 3194/MB/2019 filed by the Respondent (Shri Balaji Paper

Pack Pvt. Ltd.) as an operational creditor has been admitted and Vinod

Tarachand Agrawal has been appointed as the IRP.

2. The brief facts of this case are that the Operational Creditor filed the

aforesaid application against Laxmi Crockery Pune Pvt. Ltd. (CD) before the

NCLT, Mumbai for the resolution of an amount of Rs.65,20,061/-. The

Respondent claimed Rs. 45,34,589/- towards principal and Rs. 19,85,472/-

towards the interest. The principal amount has been calculated on the basis

of 13 invoices. The details of the said invoices are as under:-

3. The Respondent, before filing the application under Section 9, served

demand notice to the CD on 23.07.2019. The CD filed reply to the demand

notice on 08.08.2019 and denied all the contents of the notice.

4. Ultimately, the Tribunal vide its impugned order dated 02.07.2020

dismissed the application by making the following observations:-

5. Aggrieved against the order of dismissal dated 02.07.2020, the

operational creditor filed an appeal under Section 61 of the Code bearing CA

(AT) (Ins) No. 792 of 2022. The Appellant agitated that it is entitled to the

entire amount of the 13 invoices whereas this court came to the conclusion

that the Appellant is only entitled to the amount of 2 invoices which were

within the period of limitation. In this regard, the observations made by this

Court are as under:-

(b) Whether the claim is barred by limitation & (c) maintains the pecuniary jurisdiction to entertain the claim? Now we deal with both the issues together:

(i) The Learned Counsel for the Respondent vehemently contended that claim is barred by limitation since the application filed after 3 years from the date of default. The Adjudicating Authority extracted the invoices raised by the Appellant in a tabular column.

From the perusal of the invoices, the Appellant raised 13 invoices amounting to Rs. 45,34,589/- towards principal due. The Adjudicating Authority taken a stand that out of 13 invoices claimed by the Appellant 11 invoices are time barred i.e. the last invoice dated 23.08.2016 and the Application under Section 9 was filed on 26.08.2019, therefore, it is beyond 3 years as per Section 137 of the Limitation Act. However, the (2) invoices both dated 31.08.2016 are within the period of limitation, since the application filed on 26.08.2019. Having taken into consideration the 2 invoices which are within the period of limitation, the Adjudicating Authority failed to consider that the amount even for the 2 invoices satisfies the minimum threshold prescribed under Section 4 of the I&B Code, 2016 (pre-amended). As per Section 4 of the I&B Code, 2016 the minimum threshold was Rs.1,00,000/- and the amount for the 2 invoices both dated 31.08.2016 was Rs.3,64,100/-, thus, it exceeds the minimum threshold as prescribed under the law prior to the amendment. The Adjudicating Authority miserably failed to take into consideration the pecuniary jurisdiction under which the application ought to have been admitted. Thus, the observation of the Adjudicating Authority is factually incorrect with regard to the non- maintainability of the application.

Thus, the issues are answered against the Respondent.

10. The Adjudicating Authority having noticed that the claim of the Appellant is more than Rs.1,00,000/- and is within the threshold limit, however, was of the view that the claim made by the Respondent is more than the claim made by the Appellant. The said observation is without any basis. Further the Adjudicating Authority was of the view that though the Corporate Debtor raised the claim after the issuance of demand notice, however, it observed that the goods were delivered by the Corporate Debtor to the Appellant before issuance of demand notice and raising of invoices was delayed by the Corporate Debtor, is in our view absurd and without any basis.

11. Viewed in that perspective, this Tribunal comes to an irresistible and inescapable conclusion that the order passed by the Adjudicating Authority is per-se illegal and the same is hereby set aside.

Conclusion:

12. Resultantly, the Company Appeal is allowed with a direction to the Adjudicating Authority to admit the application and initiate Corporate Insolvency Resolution Process (CIRP) proceeding against the Respondent / Corporate Debtor. No orders as to cost.

6. After the remand, the matter was taken up by the Tribunal but at that

stage the Appellant filed an application i.e. I.A No. 3752 of 2023 in which he averred that the Appellant is ready and willing to pay the amount of two

invoices which comes to Rs. 3,64,100 and has also prayed that on the

payment of the said amount of two invoices, the matter may be disposed of.

The relevant averments made in the said application are as under:-

7. This application was hotly contested by the Operational Creditor by

filing a reply to it in which it was averred in para 9 that the Respondent is entitled to the total amount of Rs. 65,20,061/- and not to Rs. 3,64,100/- as

alleged by the Appellant. The averment made in para 9 is as under;-

9. That, in response to what has been stated in Para. No. 5 of Debtor's IA, the Respondent i.e. Operational Creditor states that by the Applicant company herein offering to pay an amount of 3,64,100/- (Rupees Three Lakhs, Sixty-Four Thousand, One Hundred Only) to the Respondent company herein, the sum total of two (2) out of the 13 (thirteen) outstanding invoices, the Applicant company i.e. Corporate Debtor is trying to clandestinely absolve itself from the payment of outstanding. liability amounting to Rs.65,20,061/- (Rs. Sixty-Five Lakhs, Twenty Thousand and Sixty-One only) plus interest which continues to accrue till the date the payment is actually received from the Applicant company herein to the Respondent company herein, which according to the Respondent company i.e.. Operational Creditor is payable by the Applicant i.e. Corporate Debtor and this debt is well within the period of limitation.

8. The Tribunal, however, by the impugned order admitted the application

filed under Section 9 on the ground that the Appellant has not reported any

settlement.

9. Aggrieved against the impugned order, the appellant has filed this

appeal which was first listed on 13.08.2024 in this Court and on that date

the following order was passed:-

"Learned Counsel for the Appellant submits that against the rejection of Section 9 Application of the Operational Creditor, an Appeal was filed, which Appeal was disposed of on 20.12.2022, where this Tribunal returned the finding that at least two invoices were within the period.

2. Learned Counsel for the Appellant has referred to the Paragraph 9(b)(i), where following has been stated by this Tribunal:

"9. Now we deal with issue (a) regarding existence of dispute:

(b) Whether the claim is barred by limitation & (c) maintains the pecuniary jurisdiction to entertain the claim? Now we deal with both the issues together:

(i) The Learned Counsel for the Respondent vehemently contended that claim is barred by limitation since the application filed after 3 years from the date of default. The Adjudicating Authority extracted the invoices raised by the Appellant in a tabular column. From the perusal of the invoices, the Appellant raised 13 invoices amounting to Rs.

45,34,589/- towards principal due. The Adjudicating Authority taken a stand that out of 13 invoices claimed by the Appellant 11 invoices are time barred i.e. the last invoice dated 23.08.2016 and the Application under Section 9 was filed on 26.08.2019, therefore, it is beyond 3 years as per Section 137 of the Limitation Act. However, the (2) invoices both dated 31.08.2016 are within the period of limitation, since the application filed on 26.08.2019. Having taken into consideration the 2 invoices which are within the period of limitation, the Adjudicating Authority failed to consider that the amount even for the 2 invoices satisfies the minimum threshold prescribed under Section 4 of the I&B Code, 2016 (pre-amended). As per Section 4 of the I&B Code, 2016 the minimum threshold was Rs.1,00,000/- and the amount for the 2 invoices both dated 31.08.2016 was Rs.3,64,100/-, thus, it exceeds the minimum threshold as prescribed under the law prior to the amendment. The Adjudicating Authority miserably failed to take into consideration the pecuniary jurisdiction under which the application ought to have been admitted. Thus, the observation of the Adjudicating Authority is factually incorrect with regard to the non-maintainability of the application."

3. This Tribunal by the Order dated 20.12.2022, directed the Adjudicating Authority to admit the Section 9 Application of the Operational Creditor. Subsequent to the Order, an I.A. was filed by the Corporate Debtor being I.A. No. 3752/2023 where the Appellant offered to pay the entire amount covered by two invoices along with the interest i.e., amount of Rs.3,64,000/- due for the two invoices dated 31.08.2016 along with the interest accrued.

4. However, the Operational Creditor did not accept the offer and the Adjudicating Authority by the Impugned Order has admitted Section 9 Application and dismissed the I.A. No. 3752/(MB)/2023. Aggrieved by the Order this Appeal has been filed.

5. Learned Counsel for the Appellant submits that finding that only two invoices were due and Corporate Debtor has offered to pay the entire amount, Adjudicating Authority ought not to have admitted.

6. Learned Counsel for the Respondent refuting the submissions, submits that entire amount of Rs.45,34,589/- was required to be paid by the Corporate Debtor, hence the Settlement was rightly not accepted by the Operational Creditor.

7. Submissions raised by the Counsel for the Parties needs consideration. 8. Issue Notice.

9. Let Reply be filed within three weeks. Rejoinder may be filed within further three weeks.

10. Subject to the Appellant depositing the amount of Rs.3,64,000/- with interest of 15% from 31.08.2016 till date within four weeks from today in the interest bearing Fixed Deposit receipt in the name of Registrar National Company Law Appellate Tribunal, further proceedings in pursuance of the Impugned Order dated 01.08.2024 shall remain stayed. List this Appeal on 24th September, 2024.

10. Since, the proceedings in pursuance of the impugned order, has been

stayed by this court, therefore, the IRP, appointed by the impugned order,

has not proceeded any further after the stay but in the meantime, as stated

by Respondent No. 2 that he has served intimation, made the publication,

appointed a Legal Counsel with a lump sum fee of Rs. 75,000/-. He has

submitted that if the matter is to be settled at Rs. 3,64,100 as argued by the

Appellant which is the amount actually due in respect of two invoices then at

least the CD should pay the expenses incurred by him which according to

him comes to Rs. 2,11,940/-. It is submitted that the amount spent by the

IRP is Rs. 93,940/- on the aforesaid heads and he has charged Rs. 1,00,000

as a fees with GST 18%. According to him the total amount comes to Rs.

2,11,940/-.

11. Counsel for the Appellant has submitted that since the dispute is only

about two invoices and he is ready and willing to pay the said amount and

had in fact deposited Rs. 3,64,000/- with @ 15% interest on 13.08.2024 till

that date before this Court, therefore, the matter can be disposed of by issuing

a direction that aforesaid amount may be paid to the Respondent alongwith

interest which has accrued after the deposit of this amount. He has also

submitted that the amount to be paid to the IRP may also be ordered by this

court.

12. On the other hand, Counsel for the Respondent has submitted that

since the demand notice was given on 23.07.2019, therefore, all the 13

invoices were within the period of limitation.

13. We have heard Counsel for the parties and perused the record with

their able assistance.

14. Initially, the Respondent filed the application under Section 9 in respect

of 13 invoices and claimed Rs. 45,34,589/- towards principal and Rs.

19,85,472 towards the interest but the Tribunal has found that except for two

invoices rest of the invoices were beyond the period of limitation, therefore,

dismissed the application, however, in appeal filed by the Operational

Creditor, this Court was of the view that that even if two invoices are within

the period of limitation yet it crosses Rs. 1 lakh, therefore, the application is

maintainable, resultantly, this court had directed the Tribunal to admit the

application.

15. Before the application could have been admitted, the Appellant filed I.A

No. 3752 of 2023 and offered to make the payment of two invoices alongwith

interest accrued upon it, however, this application was contested by the Respondent on the pretext that the Respondent is entitled to entire amount

as the Respondent was still of the view that the Respondent is entitled to all

the 13 invoices amount but the Tribunal admitted the application by passing

a very sketchy order without giving any reason perhaps relying upon the order

passed by this court to admit the application without going into fact that the

Appellant is ready and willing to pay the amount which was actually involved

in this case.

16. The Appellant showed his bonafide at the time of issuance of notice in

appeal as he offered to deposit the said amount of Rs. 3,64,100 with 15%

interest which had accrued upon it till that date. On that premise, this Court

stayed the proceedings arising from the order of admission, as a result

thereof, the IRP had not constituted any CoC.

17. The contention of the OC/Respondent that it is entitled to the entire

amount of 13 invoices is totally misplaced because this issue has also been

decided by this Court that except for two invoices out of 13 invoices, 11

invoices have been found to be time barred which means that the debt may

be there but remedy is over in so far as the provisions of the Code is concerned

because an application under Section 7, 9 or 10 can be filed only within a

period of three years as prescribed under Section 137 of the Act.

18. When the appeal was filed by the appellant against the order of

dismissal and the said appeal was allowed only to the extent of two invoices,

the remedy available to the Respondent was to challenge the order passed by

this Court further by way of an appeal but this procedure was not followed,

therefore, the order passed by this court in appeal on 20.12.2022 become

final and has to be followed in its letter and sprit.

19. The contention of the Respondent that it is entitled to recover the entire

amount is thus repelled as not maintainable.

20. Although, it is well settled that the proceedings under the Code are not

recovery proceeding but keeping in view the fact that the amount which has

been claimed by the Respondent, to which it is entitled to is only Rs.

3,64,100/- with interest, whatever accrued upon it and the Appellant is ready

to pay the same to avoid the CD to be pushed into CIRP, we find that the

amount which has been deposited by the Appellant in this Court be paid to

the Respondent alongwith interest upto date, which shall be calculated by the

Respondent and will be given by the Appellant within two weeks. The

Appellant shall also pay Rs. 2,11,940/- to the IRP towards his expenses

incurred by him during the CIRP proceedings and towards his fee. The said

amount shall also be paid by the Appellant within two weeks.

21. With these observations, the present appeal is allowed and the

impugned order is hereby set aside which means that the order of admission

passed under Section 9 is set aside and the IRP has been discharged. No

costs.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

[Mr. Indevar Pandey] Member (Technical)

Sc/RR