Duggal Associates Pvt. Ltd vs Roofs And Ceilings Pvt. Ltd

[Arising out of Impugned Order dated 11th December 2019 passed by the Hon'ble National Company Law Tribunal, New Delhi Bench, in CP (IB) No. 1581/ND/2019]

IN THE MATTER OF:

Anil Duggal Director Representing the suspended management of Duggal Associates Private Ltd. Having its registered office at: F-38/2, Near Maruti Service Station Okhla Industries Area, Phase - II New Delhi ...Appellant

Versus

Roofs & Ceilings Pvt. Ltd. 2nd Floor, Gandhi Chhaya Opp. Sarvoday Hospital LBS Marg, Ghatkopar (W) Mumbai - 400086 ...Respondent

Present:

For Appellant : Mr Rahul Sharma, Advocate For Respondent : Mr Jasdeep Singh Dhillon

[Per; V. P. Singh, Member (T)]

This Appeal emanates from the order passed by the Adjudicating

Authority/National Company Law Tribunal, New Delhi against the

Impugned Order dated 11th December 2019, passed in

CP/(IB)1581/ND/2019 under Section 9 of the Insolvency in Bankruptcy

Code 2016, whereby the petition was admitted in respect of the Corporate

Company Appeal (AT) (Insolvency) No. 189 of 2020 Page 1 of 10 Debtor, M/s Duggal Associates Private limited. Parties are represented by

their original status of the petition for the sake of convenience.

2. The brief facts as stated in the petition are as follows;

The Applicant contends that the Corporate Debtor approached the

operational creditor for the supply of material for roofing etc., carpet export

mart, BIDA Carpet City, Bhadohi, UP, and accordingly issued the purchase

order No. 37 dated 18th October 2016. Under the said purchase order, the

Applicant supplied the materials at the said site as per terms of the

purchase order, and further invoices were raised by the

Applicant/operational creditor.

3. The Applicant further contends that after the work, various invoices

totalling to ₹ 1,66,57,721.95 were raised and delivered to the corporate

debtor, which were duly received without any complaint or dispute

concerning the goods. The corporate debtor had issued a certificate to that

effect confirming the execution of job for an amount of ₹ 1,66,57,000; part

payment was also made and leaving a balance of ₹ 2,826,817. 95 only.

4. The Operational Creditor, on several occasions, requested the

corporate debtor to make the payment of the outstanding amount of

₹28,26,817.95 only towards the principal amount, along with interest to the

operational creditor.

5. The corporate debtor vide email dated 27th February 2018 has

admitted the delay and default in making payments and had stated that

they shall be clearing the dues at the earliest. However, despite the same the

Company Appeal (AT) (Insolvency) No. 189 of 2020 Page 2 of 10 corporate debtor failed, neglected and defaulted to make the payment of the

said outstanding amount along with interest.

6. The operational creditor issued a demand notice under Section 8(1)

the Insolvency and Bankruptcy Code against the corporate debtor, calling

upon the corporate data to pay an amount of ₹ 28,26,817.95 as principal

amount and ₹ 14,03,853.95 towards interest, aggregating to ₹ 42,30,671.90

within ten days from the date of receipt of the said demand notice.

7. The demand notice was sent at the registered address, but it was

returned with the postal remark „not found‟. But the envelope served at site

address at Bhadohi; UP was duly delivered. The corporate debtor was also

served with the demand notice u/s 8 on its email address as specified on the

MCA portal.

8. The Corporate Debtor despite the service of the demand notices

neither submitted reply to the demand notice nor has made any payment of

the said outstanding amount of ₹ 42,30,671.90 to the Operational Creditor.

9. The Operational Creditor filed an affidavit in compliance of section

9(3)(b) the „Code‟, stating that no notice of the dispute was raised by the

Corporate Debtor. The Applicant also submitted the copy of the statement in

compliance with the requirements of Section 9(3)(c) of the Insolvency and

Bankruptcy Code, 2016.

10. The Adjudicating Authority observed that "the Application is complete

and the Applicant is entitled to claim its dues, establishing the default in

Company Appeal (AT) (Insolvency) No. 189 of 2020 Page 3 of 10 payment of the operational debt beyond doubt, and fulfilment of the

requirement under Section 9(5) of the Code. Hence, the present Application

is admitted".

(quoted verbatim)

11. The Appellant has assailed the impugned order mainly on the ground

that the impugned order is an ex parte order and was communicated to the

Appellant on 09th January 2020 by the Insolvency Resolution Professional.

12. The Appellant contends that after getting information from the

Insolvency Professional, on inspection of the court records it revealed that

the court notice was received on 17th August 2019 by Mr Ashish Gupta, an

ex-employee of the company, who was then working with the company but

abandoned the employment on 03rd October 2019. The said Ashish Gupta

never communicated or informed the company or the management of the

said court notice. The company and its management were unaware of the

insolvency proceedings against the company.

13. It is stated that the company is not insolvent, and it was only on

account of the temporary cash crunch, and due to cash flow problems, the

dues of the Respondent could not be settled.

14. The Appellant has admitted that the Respondents raised various

invoices totalling to ₹ 1,66,57,000/- against the company and has

admittedly paid to the Respondent an amount of ₹ 1,38,30,182/-. As regard

to the remaining balance of ₹ 28,26,817.95, there were quality issues

regarding the materials and the Respondent was aware of the same. The

Company Appeal (AT) (Insolvency) No. 189 of 2020 Page 4 of 10 company had issued a debit note of the ₹ 10,94,204/- on the Respondent on

account of the quality issue. The parties have been in extensive

correspondence regarding the quality issue. But the payment remains

outstanding due to the temporary cash crunch.

15. The Appellant further contends that the Corporate Debtor has always

been ready to settle the debt and not shying away from the liability of the

company and has already paid an amount of ₹ 1,38,30,182/- to the

Respondent.

16. We have heard the arguments of the learned counsel for the parties

and perused the records.

17. The Appellant admits that the court notices were received by its

employee Ashish Gupta on 17th August 2019, and said that employee left

the organisation on of 3rd October 2019. Therefore, the said employee was in

active employment of the Appellant when he received the Court notice.

Therefore, it is apparent that the order to proceed the case ex-parte against

the Corporate Debtor was legally justified. It is also apparent that the

Corporate Debtor intentionally avoided presenting in Court despite service of

Court notice.

18. That apart from the service of the notice issued by the National

Company Law Tribunal, the Appellant has admitted that he has defaulted in

payment of the outstanding amount due to cash crunch and was willing to

pay the same. The Appellant has not disputed the completion certificate

Company Appeal (AT) (Insolvency) No. 189 of 2020 Page 5 of 10 dated 05th January 2018. Scanned copy of the certificate regarding

completion of job work is as under:

The above document depicts that after successful execution of the job

work the Corporate Debtor issued certificate of „good quality‟. Thus, it is

Company Appeal (AT) (Insolvency) No. 189 of 2020 Page 6 of 10 apparent that there was no existing dispute regarding the quality of the job

work completed by the Corporate Debtor.

19. It is pertinent to mention that after completion of the work, the

Operational Creditor sent an email to the Corporate Debtor requesting to

send the balance confirmation for the year 2017-18 and for making the

outstanding payment. In reply to the said mail, the Corporate Debtor issued

an email dated 20th June 2018, whereby the Corporate Debtor confirmed the

outstanding balance of ₹ 28,26,818/- regarding payment against the

material supplied by the Operational Creditor Roofs & Ceilings (I) Pvt. Ltd.

Scanned copy of the mail dated 19th April 2018 and reply mail dated 20th

June 2018 is as under:

It is also on record that the Corporate Debtor sent an email dated 27th

February 2018, whereby the Corporate Debtor gave an undertaking that on

Company Appeal (AT) (Insolvency) No. 189 of 2020 Page 7 of 10 the working process to clear out dues at the earliest. Scanned copy of the

mail as under:

All these correspondence or before issuance of demand notice dated

28th May 2018 which duly served on the registered office of the Corporate

Company Appeal (AT) (Insolvency) No. 189 of 2020 Page 8 of 10 Debtor by email dated 14th June 2018. It is pertinent to mention that the

demand notice sent through registered AD was received by the Corporate

Debtor on 02nd June 2018, which is clear from the tracking report filed

along with the written submissions of the Operational Creditor.

20. In the circumstances, it is clear that the Corporate Debtor failed to

make the payment despite service of the demand notice issued under Form

3 of the Insolvency and Bankruptcy (Application to Adjudicating Authority

Rules, 2016). The Corporate Debtor neither made the payment nor sent any

notice of dispute and the alleged outstanding amount of more than

₹1,00,000/- (Rupees one lac). There is sufficient evidence on record to prove

the amount due and payable against the Corporate Debtor in the

circumstances.

21. In the circumstances stated above, we are of the considered opinion

that the service of the demand notice on the corporate debtor was proper.

Despite service of notice under Section 8(1) of the I & B Code, 2016 the

Corporate Debtor neither made the payment not raised any dispute of the

outstanding amount. The Appellant has admitted that the Court notice was

received by its employee Ashish Gupta on 17th August 2019, but he left the

organisation on 03rd October 2019. Since the said employee was in active

employment of the Appellant/Corporate Debtor when he received the notice,

thus it is clear that the order to proceed the case ex-parte is fully justified.

22. The Appellant has also admitted that he has defaulted in payment of

the outstanding amount due to cash crunch and was willing to pay the

Company Appeal (AT) (Insolvency) No. 189 of 2020 Page 9 of 10 same. The Appellant has also not disputed the completion certificate dated

05th January 2018, which clearly shows that the work was completed to its

satisfaction. Based on the above discussion, we are of the considered

opinion that there is no justification for interference in the impugned order,

and the appeal deserves to be dismissed.

23. Thus, in the circumstances as aforesaid, we do not find any

justification for the interference with the Impugned Order and Appeal is

liable to be dismissed. Accordingly, Appeal dismissed. No order as to costs.

[Justice Venugopal M.] Member (Judicial)

[V. P. Singh] Member (Technical) NEW DELHI 02nd March, 2020

pks/nn

Company Appeal (AT) (Insolvency) No. 189 of 2020 Page 10 of 10