Imran Iqbal Khan & Anr vs Benteler Trading International Gmbh

1. Imran Iqbal Khan --- Appellant No.1 Director Western India Metal Processors Limited 132 B Mittal Towers Nariman Point, Mumbai Maharashtra 400 021

2. Mohammad Iqbal Khan --- Appellant No.2 Director Western India Metal Processors Limited 132 B Mittal Towers Nariman Point, Mumbai Maharashtra 400 021

Versus

1. Benteler Trading Petitioner/ Respondent No.1 International GmBH Operational Creditor Through Sandeep Nag Sales Director A-3 Chakan MIDC Area, Phase II Chakan Telegaon Road Khalumbre, Taluka: Khed Chakan, Pune, Maharashtra 410 501

2. Mr. Ramesh Bhosale, --- Respondent No.2 Liquidator of Western India Metal Processors Limited 1-21/22, Paragan Centre Pandurang Budhkar Marg, Worli, Mumbai - 400 013 2

For Appellants: Mr. Narender S. Yadav and Mr. Abhishek Yadav, Advocates

For Respondents: Mr. Lzafeer Ahmad, Advocate (Liquidator/RP) Mr. Ashwini Kumar Singh, Advocate (R-1)

ORDER

19.12.2019 Heard Advocate - Shri Narender S. Yadav for Appellants 1

and 2. The Appellants are Directors of "Western India Metal Processors

Limited" - Corporate Debtor. Respondent No.2 is Liquidator as the process

before Adjudicating Authority has reached that stage. Respondent No.1 is the

Operational Creditor who moved the Petition under Section 9 before the

Adjudicating Authority (National Company Law Tribunal, Mumbai Bench).

2. The Section 9 Application under Insolvency and Bankruptcy Code,

2016 (IBC - in short) was admitted by the Adjudicating Authority on 13th

March, 2019, which Order is impugned in this Appeal.

3. The Adjudicating Authority considered the case of the Respondent -

Operational Creditor that the Corporate Debtor had entered into a contract

with the Operational Creditor for supply of Hot Rolled Steel Coils, Mill Edge.

The Operational Creditor arranged to send the goods to the Corporate Debtor

which were shipped on 28.11.2015 and 30th November, 2015 from China and

unloaded at Mumbai. The Operational Creditor raised two invoices - both

dated 1st December, 2015. The due date for one was 27th March, 2016 and for

the other, it was 29th March, 2016. The Operational Creditor claimed that

Corporate Debtor had sent e-mail dated 29th March, 2016 to AGM and

Relationship Manager of State Bank of India acknowledging the import and

Company Appeal (AT) (Ins) No.510 of 2019 3

asking the bank to pay. It appears that the payment was not made and after

Operational Creditor sent reminders, Corporate Debtor confirmed receipt and

also expressed that the amounts would be paid in instalments. Still the

payment was not made and it led to execution of Debt Acknowledgement and

Settlement Agreement on 16th November, 2016 (Page -68). The Operational

Creditor claimed before the Adjudicating Authority that Notice under Section

8 dated 6th March, 2018 had been served on the Corporate Debtor but no

Reply was received and that hence the Section 9 Application was filed.

4. The Adjudicating Authority observed that the Demand Notice was not

replied by the Corporate Debtor and that when the Petition was listed and the

Corporate Debtor did not attend, it had asked the Operational Creditor to

intimate next date which was fixed for 7th March, 2019. It appears that in

spite of same, the Corporate Debtor did not attend and the Adjudicating

Authority proceeded to consider the Application and to admit the Application

and the Corporate Insolvency Resolution Process (CIRP - in short) was

initiated.

5. At the time of Appeal, the learned Counsel for the Appellants who have

taken up the Appeal for the Corporate Debtor submit that in the Debt

Acknowledgement and Settlement Agreement, there was Arbitration Clause

and Exclusion Clause also was there whereby dispute, if any, had to be taken

up before Arbitration as per the Agreement and that the parties had also

agreed that disputes, if any, would be subject to jurisdiction in Germany. The

learned Counsel for the Appellants further submits that the Section 8 Notice

was not served on the Corporate Debtor and although the Application under

Company Appeal (AT) (Ins) No.510 of 2019 4

Section 9 mentioned that the postal receipt and acknowledgement were being

annexed, actually the same were not annexed. The Counsel further states that

even the Section 9 Petition was not duly served on the Corporate Debtor and

thus the Corporate Debtor could not defend itself before the Adjudicating

Authority.

6. The learned Counsel for the Respondent referred to the Reply Affidavit

(Diary No.17149) and has pointed out the various efforts the Operational

Creditor took to communicate its Demand Notice under Section 8 and that

invoices were raised but in spite of that, there was default. Counsel submits

that documents have been filed to show that repeated efforts were made to

serve the Section 8 Notice and also the Petition under Section 9, which had

been filed before the Adjudicating Authority, was served on the Corporate

Debtor but still Corporate Debtor did not come and defend.

7. As regards the argument that there is Arbitration Clause and the

parties had agreed to surrender to jurisdiction at Germany, in our view when

the office of Corporate Debtor is situated in the jurisdiction of India,

considering the provisions of Insolvency and Bankruptcy Code, 2016 (IBC in

short), these arguments cannot be accepted. The jurisdiction of Indian Courts

cannot be taken away by an Agreement between the parties considering the

nature of IBC where the intention is to bring about resolution of the Company

in trouble and not liquidation which is the last resort. To recover debt, the

parties may agree for particular jurisdiction which would be subject matter of

adjudication in an appropriate proceeding. However, resolution process is not

a process for settling disputes or a recovery proceeding but an effort to save

Company Appeal (AT) (Ins) No.510 of 2019 5

the company if it is still able to pay its debts. Similarly, Arbitration Clause

does not stop invoking of Jurisdiction under IBC.

8. As regards service of Section 8 Notice, copy of the Section 8 Notice is at

Page 74. This Notice dated 6th March, 2018 has been referred by the

Respondent in its Reply. Respondent has pointed out that before this Notice,

on 24th January, 2018, a Section 8 Notice was personally served on the

Appellant No.1 - Imran Khan (copy of the Notice is at Annexure R-2 -

Page - 16/17). The Counsel for Operational Creditor has pointed out

acknowledgement of the Appellant No.1 at Page - 26. The learned Counsel for

the Appellant submits that this Notice was not part of record before the

Adjudicating Authority. It is also stated that the acknowledgement (copy of

which is at Page - 26) shows that it is on a plain paper with the signature of

the Appellant No.1. When before the Adjudicating Authority, the Corporate

Debtor did not attend or participate and in this Appeal, has taken a stand

that no Notice as such was served on the Appellant, if the Operational Creditor

has filed this copy of Notice dated 24th January, 2018 (Annexure R-2) with the

acknowledgement to show that the Corporate Debtor did have Notice sent by

Operational Creditor, we do not find force in the argument that this document

is filed for the first time in the Appeal and so should be ignored. The signature

on the acknowledgement although on plain paper is not disputed before us.

The Counsel for the Respondent states that the acknowledgement sheet is in

continuation of the notice which was served. The "Acknowledge of Receipt" is

of same date of 24th January, 2018.

Company Appeal (AT) (Ins) No.510 of 2019 6

9. The learned Counsel for the Respondent points out that as per Para - 8

of the Reply filed in this Appeal, the Notice dated 6th March, 2018 which was

relied on for the purpose of Section 9 proceeding, was also sent as an

attachment in the e-mail (copy of which has been filed at Annexure R-3 of the

Reply Page 27). Counsel points out that it was sent to the Appellant No.1. If

the e-mail is perused, it refers to the attachment as "Western DN and

Annexures_20180306.pdf". According to the Counsel, it shows that Demand

Notice to the Corporate Debtor - Western India Metal Processors Limited was

attached. Counsel states that not only the Operational Creditor sent copy of

the Notice through courier UPS Saver (copy of which is at Annexure - R4 -

Page 28) and acknowledgement is at Page 30 of the Reply which shows that

the Notice was sent on 8th March, 2018 and served at the registered office of

the Corporate Debtor on 10th March, 2018 and received by one Vijay from the

office of Corporate Debtor.

10. The learned Counsel for the Respondent has further shown that even

Section 9 Petition when it was filed, copy of the Petition was served through

Clerk of Advocate of the Operational Creditor and there is also

acknowledgement with stamp of the Corporate Debtor receiving the copy of

Petition on 24th August, 2018. This is pointed out from Annexure - R-5 Page

Nos.- 31 and 32. Counsel for Respondent further states that when the

Adjudicating Authority directed to inform the date of next hearing fixed on 7th

March, 2019, even that was duly executed and Affidavit in this regard is filed

at Annexure - R6. Counsel states that these documents were before the

Adjudicating Authority. Appellant in the Appeal has not denied receipt of this

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intimation for the hearing of 7th March, 2019 and in the Appeal Para - 7(xi),

accepted that such Notice of listing was received but it is claimed that

"inadvertently, due to the fault of the employees", the Appellants (for

Corporate Debtor) did not participate.

11. From the above, we find that the Corporate Debtor was served with

invoices as well as Section 8 Notice and was served with regard to the Petition

filed and in spite of that, the Appellant failed to participate and raise any

dispute. The debt was due and in default. Even today, there is no material to

show that there is any pre-existing dispute. We do not find any substance in

the Appeal.

The Appeal is dismissed. No orders as to costs.

[Justice A.I.S. Cheema] Member (Judicial)

[Kanthi Narahari] Member (Technical)

/rs/md

Company Appeal (AT) (Ins) No.510 of 2019