Harinder Bashista vs Luxmi Electricals & Engineering Works & ...

[Arising out of order dated 14th March, 2022 passed by Adjudicating Authority, National Company Law Tribunal, New Delhi, Bench-VI in CP(IB)-370(ND)/2020]

IN THE MATTER OF:

Harinder Bashista, S/o Late Sh. G.N. Bashista, R/o E-5, Lajpat Nagar-III, New Delhi .. Appellant

Versus

1. M/s Luxmi Electrical & Engineering Works, Through its Sole Proprietor Varinder Arora 1D/98, N.I.T., Faridabad, Haryana- 121001 .. Respondent No. 1

2. Yogesh Kumar Gupta, Interim Resolution Professional of SNG Techno Build Pvt. Ltd. Appointed vide order dated 14/03/2022 Residing at C-17B Basement, Kalkaji New Delhi- 110019 .. Respondent No. 2

Present:

Appellant: Mr. Sambit Nanda, Advocate

Respondents: Mr. Kushagra Bansal, Advocate for R-1 Mr. Rachit Ranjan, Mr. Hashim Malik, Advocates for R-2/IRP ORDER

[Date: 21.9.2023]

[Per. Dr. Alok Srivastava, Member (Technical)]

This appeal - Company Appeal (AT)(Insolvency) No. 368 of 2022-

has been filed by Shri Harinder Bashista, who is an Ex-Director and

shareholder/promotor of SNG Techno Build Private Limited. The

Appellant being a person aggrieved, has preferred the appeal under

Section 61 of Insolvency and Bankruptcy Code, 2016 (in short 'IBC')

assailing order dated 14.03.2022 in CP(IB)-370(ND)/2020 (in short

'Impugned order")

2. The facts of the case, as stated by the Appellant, are that a Work

Order relating to electrical works was issued on 25.07.2021 by the

Corporate Debtor- SNG Vardhman Techno Build Pvt. Ltd. in favour of

operational creditor M/s Luxmi Electrical & Engineering Works -

Respondent No. 1 (in short 'Luxmi Electrical') and the Scope of Work

related to electrical fittings and fixtures in the SNG Plaza located at

Greater Noida (UP). The Appellant has further stated that between 2012-

2015, work on the project was at a standstill even though the Work Order

gave a strict time period of Four months for completion of the work. He

has further stated that the Operational Creditor claimed to have received

an e-mail on 11.09.2015 from the Corporate Debtor to submit the final

Company Appeal (AT)(Insolvency) No. 368 of 2022 Page 2 of 13 Bill of the work done to make the required payment. Thereafter, the

Operational Creditor sent the final bill dated 24.03.2018 for an amount

of Rs. 14,84,805.80 but the Appellant has stated that it was sent to a

Third Party - Vardhman Estates & Developers Pvt. Ltd. which is not the

Corporate Debtor.

3. The Appellant has further stated that Demand Notice in Form-3

was sent to the Corporate Debtor vide letter dated 03.06.2019 but no

invoices were attached therewith and upon request of the Corporate

Debtor, the Operational Creditor supplied the relevant Invoices to the

Corporate Debtor. The Appellant has further stated that the Corporate

Debtor sent reply to the Demand Notice vide letter dated 26.07.2019

wherein it stated that the signatures on the documents, which are

considered for admission of the operational debt, are on behalf of Third

Party, namely SNG Developers Ltd but not of the Corporate Debtor and

also that the 'operational debt' is time barred since it relates to Work

Order dated 25.07.2011. He has further stated that the Operational

Creditor filed petition under Section 9 of IBC against the Corporate

Debtor, wherein during the consideration of the said petition, the

Operational Creditor filed an affidavit on 10.02.2020 to bring on record

1st, 2nd and 3rd RA bills, a certificate of payment issued by SNG

Developers Ltd dated 28.01.2012 and two e-mails dated 05.07.2012 and

11.09.2015 which were actually sent by Third Party and not the

Corporate Debtor. On the basis of the documents submitted, Section 9

Company Appeal (AT)(Insolvency) No. 368 of 2022 Page 3 of 13 Petition was admitted by the Adjudicating Authority and the Appellant,

being aggrieved by the Impugned Order dated 14.03.2022, has filed this

appeal.

4. Two questions that are pertinent to the adjudication of this appeal

are (i) whether the certificate of payment issued by SNG Developers Ltd.

dated 28.01.2012, e-mail dated 05.07.2012 received by Operational

Creditor purportedly sent by the Corporate Debtor and another e-mail

dated 11.09.2015 sent by SNG Developers Ltd which are claimed to be

sent by a Third Party, would amount to admission of 'Operational Debt'

by the Corporate Debtor? and (ii) whether the 'Operational Debt' is time

barred?

5. We heard the arguments of the Learned Counsels for both the

parties and went through the records with their able assistance.

6. The Learned Counsel for the Appellant has submitted in oral

argument that the Work Order dated 25.07.2011 was issued by

Corporate Debtor SNG Vardhman Techno Build Pvt. Ltd. in favour of

Operational Creditor Luxmi Electrical & Engineering Works whereas the

purported admission as claimed by Operational Creditor regarding the

'operational debt' which are given in the Certificate of Payment dated

28.01.2012 were issued by SNG Developers Ltd, which is a Third Party

and not Corporate Debtor i.e., SNG Techno Build Pvt. Ltd. (which was

formerly SNG Vardhman Techno Build Pvt. Ltd.). He has further argued

that similarly, e-mails dated 05.07.2012 and 11.09.2015 were also sent

Company Appeal (AT)(Insolvency) No. 368 of 2022 Page 4 of 13 by Third Party- SNG Developers Ltd which is not Corporate Debtor and

therefore, these cannot be considered as admission of the 'operational

debt' by the Corporate Debtor. He has further submitted that even

though the Work Order was issued on 25.07.2011 which had a time

period for completion of work of four months, the Operational Creditor

did not complete the work in time and submitted final bill by e-mail dated

24.03.2018 and therefore the said claim of 'Operational Debt' is

hopelessly time barred. Therefore, the said order of the admission of

Section 9 Application is bad in law and should be set aside.

7. The Learned Counsel for the Respondent No. 1 has claimed that in

the ledger account maintained by Corporate Debtor, an amount of Rs.

8,54,593/- has been shown in the balance sheet for the year ending

31.3.2016 of the Corporate Debtor having entries of Trade Payable to the

operational trade for the years ending on 31.03.2015 and 31.03.2016

which amounts to admission of the 'Operational Debt' on 31.03.2015 and

31.03.2016. Thus, from the last payment date of 4.1.2012 of Rs. 7 lakhs,

the admission through Trade Payable amount as on 31.03.2015 in the

balance sheet for Financial Year 2015-16 is within three years and the

final bill submitted vide e-mail dated 24.03.2018 is again within three

years of the previous admission through balance dated 31.03.2015. Even

otherwise, the admission in the ledger account dated 1.10.2012 shows

the debt due as Rs. 8,54,593/- and the acknowledgment by the Trade

Payable balance of the same amount as on 31.3.15 is within 3 years of

Company Appeal (AT)(Insolvency) No. 368 of 2022 Page 5 of 13 1.10.2012. He has argued that for the final bill of work, submitted vide

e-mail dated 24.03.2018 is acknowledgment of the operational debt

which is within 3 years of 31.3.2015. Thus, by virtue of admission made

by the Corporate Debtor, the said 'Operational Debt' is within the

required limitation. Further, the limitation of the operational debt gets

extended to 23.3.2021 and then Section 9 Application was filed within

this date i.e. on 15.11.2019.

8. On the issue of admission made by a Third Party, SNG Developers

Pvt. Ltd. through certification of payment dated 28.01.2012 through e-

mails dated 05.07.2012 and 11.09.2015, the learned Counsel for the

Respondent No. 1 has submitted that the Corporate Debtor Company,

SNG Vardhman Techno Build Pvt. Ltd. later became SNG Techno Build

Pvt. Ltd. It is clear from various communications that the management

of SNG Developers Pvt. Ltd. was coordinating the work of SNG Plaza and

therefore, any admission made by SNG Developers Pvt. Ltd should be

considered as valid admission of the operational debt by the Corporate

Debtor. In furtherance of this argument, he has pointed out that e- mail

dated 01.02.2012 was sent to raj.singh@sng.in which is the same e-mail

ID used by Raj Singh in e-mail dated 11.09.2015 on behalf of SNG

Developers Ltd. He has emphatically argued that the entire

correspondences and the bills relied to the same project namely SNG

Plaza at Gr. Noida and therefore the e-mail, even if sent on behalf of SNG

Developers Ltd should be considered as pertaining to the project and

Company Appeal (AT)(Insolvency) No. 368 of 2022 Page 6 of 13 work under question which is SNG Plaza and sent by the same person

using the same e-mail ID of raj.singh@sng.in. Thus he has claimed that

the argument that admission of 'Operational debt' as not being by

Corporate Debtor but by a Third Party, namely, SNG Developers Ltd is

just a flimsy argument put forward to avoid the liability of the operational

debt

9. The Learned Counsel for the IRP (Respondent No. 2) has submitted

that in accordance with the orders of this Tribunal, the Committee of

Creditors has not been constituted and IRP shall abide by the order of

this Tribunal in the Appeal.

10. The first issue for our consideration is whether the SNG Developers

Ltd., which has sent certain e-mails and admitted to certain payments is

a proxy of the Corporate Debtor. We consider the contention of the

Appellant that SNG Techno Build Pvt. Ltd. (which is the Corporate Debtor

and was earlier known as SNG Vardhman Techno Build Pvt. Ltd.) and

SNG Developers Ltd. are two separate Corporate entities and therefore,

whether any admission or communication sent by SNG Developers Ltd.

can be considered as being sent by Corporate Debtor SNG Techno Build

Pvt. Ltd.

11. With regard to the first issue we note the fact that the Work Order

No. SNG/GM(C)/Plaza/WO/11/460 dated 25.07.2011 was issued by

SNG Vardhman Techno Build Pvt. Ltd., which later on became SNG

Techno Build Pvt. Ltd. We further note that e-mail dated 01.02.2012

Company Appeal (AT)(Insolvency) No. 368 of 2022 Page 7 of 13 (attached at pg. 138-139 of the Appeal Paper Book) was sent by Grover

addressed to raj.singh@sng.in along with many other addressees

enclosing Minutes of Meeting held on 25.01.2012 relating to the progress

of work in SNG Plaza. The list of members present in the meeting includes

representatives of SNG, PMC (K K Consultant & Engineers), Vishesh

Metal Industries, Airtech Airconditioning, Abett Consulting Engineers

and Luxmi Electricals and thus the complete work relating to SNG Plaza

Project and the progress of the work was reviewed in the meeting. Further

we note that an e-mail dated 02.02.2012 sent by Varinder Arora of the

Operational Creditor addressed to raj.singh@sng.in and three others

(attached at Pg. 140-141 of the Appeal Paper Book) relates to an issue of

payment to be made to Luxmi Electricals. Both these e-mails clearly show

that SNG Plaza was an integrated Project of the SNG Group and various

contractors/sub-contractors were taking care of different aspects of the

Project. It is also quite clear that SNG Developers Ltd. which was

represented by raj.singh@sng.in was coordinating various aspects of the

Project. Further, all the e-mails and communications sent by SNG Group

Company SNG Developers clearly mention the Work Order No.

SNG/GM(C)PLAZA/wo/11/460

12. The various e-mails relating to the same project SNG Plaza, for

instance e-mail dated 12.06.2012 (attached at Pg. 148-149 of the Appeal

Paper Book) from Varinder Arora of Luxmi Electricals & Engineering

Works sent to hardeep.vardhman@gmail.com and

Company Appeal (AT)(Insolvency) No. 368 of 2022 Page 8 of 13 Suresh.vardhman@gmail.com wherein Account Statement of the work

done by Luxmi Electricals was sent to SNG Vardhman Techno Build Pvt.

Ltd. We find that e-mail was addressed to raj.singh@sng.in . It is also

evident from the e-mail dated 11.09.2015 sent by raj.singh@sng.in

addressed to Varinder Arora that the progress of work relating to SNG

Plaza was being reviewed and coordinated by R.N.P. Singh (e-mail ID

raj.singh@sng.in ) who was Sr. General Manager(C) of SNG Developers

Ltd. Thus it is amply clear from the various communications and e-mails

between the contractors/sub-contractors with the group companies of

SNG Group that the use of the e-mail address or Letter head of SNG

Developers Ltd was being used in loose sense and it would not be proper

to draw any inference from such e-mails that SNG Developers Ltd did not

possess any authority to communicate on behalf of the Corporate Debtor

SNG Techno Build Pvt. Ltd. It is also significant that in every such e-mail

or Minutes of Meeting the work of SNG Plaza has been clearly mentioned,

and significantly, in the e-mail dated 11.09.2015 which calls upon Luxmi

Electricals to submit the final bill of the work, the work relates to the

Work Order No. SNG/GM(C)/Plaza/WO/11/460 dated 25.07.2011,

which is the Work Order given by the Corporate Debtor SNG Techno

Build Pvt. Ltd. to the Luxmi Electricals. Further, the invoices in relation

to the R.A. Bills all relate to the same Work Order and the name of the

site is clearly mentioned as "Electrical Works at SNG Plaza at Gr. Noida".

We, therefore, come to the safe and inescapable conclusion that the Work

Company Appeal (AT)(Insolvency) No. 368 of 2022 Page 9 of 13 Order dated 25.07.2011 is the genesis of the RA bills and the related

operational debt.

13. In so far as issue of limitation of the 'Operational Debt' is

concerned, we note that the Work Order was issued on 25.07.2011.

Thereafter certain payments were made by the Corporate Debtor in

connection with the Running Account Bills and admittedly the last

payment of Rs. 7 lakhs was made on 04.1.2012. The pending payment

amounting to Rs. 8,54,593/- appears in the ledger statement issued by

Corporate Debtor for the period 01.4.2011 to 30.09.2012. The same

amount is also reflected in the balance sheet of the Company for the year

ending 31.03.2015 and 31.03.2016 (attached at Pg. 155-177 of the

Appeal Paper Book). These details included in the 'Notes forming part of

the Financial Statement' for the years ending 31.03.2015 and

31.03.2016 show the amount as 'Trade Payable' of Rs. 8,54,593/- due to

the Operational Creditor. The same amount of Rs. 8,54,593/- appears in

the ledger account of the Operational Creditor as mentioned by the

Corporate Debtor (Pg. 349 of the Appeal Paper Book). It is thus clear that

the dues payable between 01.10.2012 and 31.03.2015, remain at Rs.

8,54,593/- as no payments were made during this period. Thus, the

operational debt gets limitation of three years from 1.10.2012, i.e., upto

30.09.2015. Within this period there is admission in Balance Sheet for

the year ending 31.3.2016 wherein the due operational debt upto

31.3.2015 is included as Rs. 8,54,593/-.

Company Appeal (AT)(Insolvency) No. 368 of 2022 Page 10 of 13

14. We also find an e-mail dated 11.09.2015 sent by R N P Singh to

Varinder (Pg. 204 of the Appeal Paper Book) which states that "the

management likes to close all the contracts which are abandoned since

long. You are requested to submit the final bill of the work. You may

intimate a suitable date for taking joint measurement so that management

can depute its representative to be present at the time of final

measurement". This e-mail was sent on behalf of SNG Developers Ltd but

the same work given vide Work Order No.

SNG/GM(C)/Plaza/WO/11/460 dated 25.7.2011. The final bill of work

was submitted by the Operational Creditor vide Invoice dated 24.03.2018

(attached at Pg. 206 of Appeal Paper Book) which is within three years of

31.3.2015 when the debt was last admitted. We note that the work

seemed to have been abandoned or stopped and upon a request by the

Corporate Debtor vide e-mail dated 11.09.2015, the final bill was sought

from the Operational Creditor. After the e-mail dated 11.09.2015, the

final bill was submitted by the Operational Creditor on 24.03.2018. This

final bill was granted approval by the Corporate Debtor vide e-mail dated

09.04.2018 (at Pg. 213 of the Appeal Paper Book) which is again

admission of the operational debt by the Corporate Debtor. None of these

facts have been controverted by the Corporate Debtor.

15. The Learned Counsel for Appellant has placed reliance on the

judgment of Hon'ble Supreme court in the matter of Reliance Asset

Company Appeal (AT)(Insolvency) No. 368 of 2022 Page 11 of 13 Reconstruction Company Ltd. vs. Hotel Poonja International Private

Limited [(2021) 7 Supreme Court Cases 352], wherein it is held that

reliance ought not to be placed on the balance-sheet which was not

signed before the expiry of the prescribed period of limitation. It is noted

that in the present case, the issue about the date of signing of the

balance-sheet has not been raised by the Appellant. Moreover, the entry

for year ending 31st March, 2015 in the section of 'Traded Payables' in

favour of the operational creditor is corroborated by the balance of

rs.8,54,593/- in the Ledger account Statement dated 1.10.2012. Therefore, the judgment of Hon'ble Supreme Court in the Reliance Asset

Reconstruction Company Ltd. case will not be applicable in the present

case.

16. The Learned Counsel for Appellant has also referred to the

judgment of Hon'ble Supreme Court in the matter of Tech Sharp

Engineers Pvt. Ltd. vs. Sanghvi Movers Limited [(2023) 2 Supreme

court Cases 531], wherein it is held that while the claim may not be

barred by limitation, but if the remedy for realization of the claim is

barred by limitation, then the application for insolvency resolution may

not be admitted. In the present case, the remedy for realization of the

claim is through section 9 application and the Respondents have been

able to make a case regarding the claim, section 9 application being

within the limitation period and the operational debt is due and payable. Company Appeal (AT)(Insolvency) No. 368 of 2022 Page 12 of 13

17. We further note that the limitation of operational debt due was

upto 23.3.2021 (i.e. 3 years from the issue of Final Bill on 24.3.18). The

Section 9 Application was filed within three years of the extended

limitation of 23.3.2021. In such a situation, it is clear that the Section 9

Application was filed within limitation.

18. In view of the detailed discussion in the aforementioned

paragraphs, we are of the view that the Impugned Order does not suffer

from any error and we do not find any reason to interfere with it. The

appeal is found to be devoid of merit and therefore dismissed. No order

as to costs.

[Justice Rakesh Kumar] Member(Judicial)

[Dr. Alok Srivastava] Member(Technical)

New Delhi 21st September, 2023 Akc

Company Appeal (AT)(Insolvency) No. 368 of 2022 Page 13 of 13