Fabtech Technologies ... vs Buildmighty Techno Private Limited

1

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI Comp. App. (AT) (Ins) No. 1180 of 2023 IN THE MATTER OF: Fabtech Technologies International Ltd. ...Appellant(s) Versus Buildmighty Techno Pvt. Ltd. ...Respondent(s) Present: For Appellant : Mr. Pulkit Kapoor, Advocate. For Respondents : None

JUDGMENT

Per: Justice Rakesh Kumar Jain:

This appeal is directed against the order dated 10.07.2023 by which an

application filed under Section 7 of the Insolvency and Bankruptcy Code,

2016 by the Appellant bearing CP (IB) No. 1303/MB-V/2022 against

Buildmighty Techno Pvt. Ltd. (Corporate Debtor) for the resolution of an

amount of Rs. 5,96,33,275/- alongwith interest calculated till 11.05.2022,

has been dismissed.

2. Brief facts of this care are that the Corporate Debtor which was initially

incorporated as Fabtech Sterling Technologies Pvt. Ltd. but w.e.f. 27.11.2014

its name was changed to FTS Buildtech Pvt. Ltd. and ultimately w.e.f.

09.08.2021 again changed its name as Buildmightly Techno Pvt. Ltd., availed

financial assistance from the Financial Creditor, namely, Fabtech

Technologies International Limited at several intervals since calendar year

2012 which was duly accepted and acknowledged by the CD.

3. The Financial Creditor filed the application under Section 7 in which

the date of default is mentioned in part IV as 12.05.2022 and had also filed

Comp. App. (AT) (Ins) No. 1180 of 2023 2

the NeSL report dated 11.05.2022 in which the amount of Rs. 5,96,33,275/-

is shown as outstanding. It also filed the Bank Statement from 01.09.2019 to

30.09.2019 and 01.04.2020 to 07.04.2020. There was no written agreement

between the parties but the CD agreed to pay outstanding amounts to the

Appellant as and when called upon by the Appellant. It is further alleged that

the CD was honouring the repayments till financial year 2018 -19 but stopped

making the repayments. It is alleged that the Appellant issued a demand

notice on 09.04.2022 for repayment of long outstanding unsecured loan by

providing 30 days' time to the CD and when it failed to repay the same, filed

the present application under Section 7 of the Code. The CD/Respondent did

not file the reply to the application. However, during the pendency of the

application, on 16.05.2023, the Respondent through Amjad Adam Arbani

accepted that the company is liable and they have not paid the

Appellant/Petitioner. On the same date, the matter was reserved for orders.

The order dated 16.05.2023 is reproduced as under:-

"Ms. Simran Kasat Ld. Counsel appearing for the Petitioner and Mr. Amjad Adam Arbani, Representative / one of the Director of the Corporate Debtor are present through virtual hearing. On the last date of hearing, the Corporate Debtor was given two weeks 'time to file its reply with a stipulation that if it fails to file its reply, its right to file reply shall stand forfeited. No reply has been filed till date. Heard the oral submissions of Mr. Amjad Adam Arbani. During the course of the hearing, Mr. Amjad Adam Arbani accepted that the company is liable and stated that they have not paid the Petitioner. Heard both the parties, the matter is reserved for orders."

4. The Appellant also filed the additional affidavit dated 15.05.2023 vide

diary no. 270913805182022 before the order was reserved. The appellant

with the additional affidavit enclosed the updated record of NeSL and demand

notice dated 09.04.2022, however, the Tribunal dismissed the application on

Comp. App. (AT) (Ins) No. 1180 of 2023 3

the ground that in the absence of loan agreement it is not possible to

determine the date on which the default took place. It is also observed that

the Financial Creditor has failed to demonstrate as to how and when the loan

was repayable by the CD. The Tribunal has further observed that no demand

notice was shown to have been served by the Appellant asking for the

repayment of dues from the CD and further observed that the event of default

would take place only when the loan was not paid after it becomes due and

since no due date of the alleged loan has been mentioned, therefore, it was

imperative on the part of the Financial Creditor to have issued a notice for

recalling the loan. On this premise that the Appellant has failed to prove the

factum of default, the petition was dismissed.

5. In the appeal, notice was issued on 26.09.2023 but despite delivery of

notice, the Respondent did not appear, therefore, it was proceeded against ex-

parte on 04.03.2024 and the matter was listed for ex-parte argument on

16.04.2024.

6. During the course of hearing, the Appellant submitted that it is the

holding company of the Respondent (CD) and admitted that Mr. Amjad Adam

Arbani is the Key Managerial Personal of the companies. He was asked to file

an affidavit as to why the holding company is trying to pushits 100% owned

subsidiary company into CIRP because in that situation there would be

various claims by other financial creditors and operational creditors for which

it was submitted by the Appellant that the application under Section 7 has

been filed for the purpose of resolution of their own amount which has not

been paid. However, the Appellant filed the additional affidavit in terms of the

order passed by this Court. In the said affidavit dated 13.11.2024 which was

Comp. App. (AT) (Ins) No. 1180 of 2023 4

taken on record, the Appellant has averred that he has attached list of

creditors of the Appellant as well as respondent company.

7. Counsel for the appellant has submitted that the CD is 82% subsidiary

of the Appellant but the subsidiary is separate legal entity from holding

company and in this regard, he has relied upon a decision of the Hon'ble Delhi

High Court in the case of S.A.R.E. Public Company Ltd. vs. Avon Infracon Pvt.

Ltd. & Ors.. He has further submitted that the Tribunal has failed to consider

the report of NeSL in which it has been categorically mentioned that the date

of default is 10.05.2022 and the amount of default is 59633276.00. He has

further submitted that the notice of demand dated 09.04.2022 has also not

been considered though it had already been filed with additional affidavit

dated 15.05.2023 and was already on record when the judgement was

reserved on 16.05.2023.

8. We have heard Counsel for the appellant and perused the record with

their able assistance.

9. The Tribunal has dismissed the application of the Appellant solely on

the ground that since there was no agreement between the parties regarding

the loan and there were no terms and conditions for repayment of loan,

therefore, the default is not established. In this regard, the argument of the

Appellant is that it was an unsecured loan which was given from time to time.

The Respondent was servicing the loan till 2018 but thereafter stopped the

same. The loan was recalled by the Appellant by way of demand dated

09.04.2022 and the factum of default has been made part of the information

utility, namely, NeSL. The affidavit dated 15.05.2023 which was filed before

the judgment was reserved on 16.05.2023 is reproduced as under:-

Comp. App. (AT) (Ins) No. 1180 of 2023 5

Comp. App. (AT) (Ins) No. 1180 of 2023 6

10. The notice dated 09.04.2022 which was issued for recalling the amount

from the Respondent is also reproduced as under:-

11. Similarly, the record of the financial information from NeSL is also

reproduced as under:-

Comp. App. (AT) (Ins) No. 1180 of 2023 7

Comp. App. (AT) (Ins) No. 1180 of 2023 8

12. It has also been brought on record that the Respondent had admitted

its debt when the statement was suffered by it through Amjad Adam Arbani

on 16.05.2023 which has already been reproduced hereinabove.

13. Thus, from the aforesaid facts and circumstances, it is clear that there

was a debt which has been admitted and established with the record of NeSL

and default i.e. after the notice was issued on 09.04.2022 by which 30 days

time was given to the Respondent to pay i.e. up to 09.05.2022 and these facts

were brought to the notice of the Tribunal by way of an additional affidavit

dated 15.05.2023. All these facts indicates that the Tribunal has committed

an error in not considering the affidavit dated 15.05.2023 which the Appellant

had placed on record with demand notice as well as the record of the NeSL

about the amount in default.

14. Thus, in view of the aforesaid facts and circumstances, since the debt

and default both have been admitted and proved, the application filed under

Section 7 could not have been dismissed. As a result of the aforesaid

discussion, the present appeal is thus allowed and the impugned order is

hereby set aside. No costs.

I.As, if any, pending are hereby closed.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Naresh Salecha] Member (Technical)

New Delhi 14th May, 2025 Sheetal

Comp. App. (AT) (Ins) No. 1180 of 2023