In the matter of Birla Precision Technologies Ltd.
- CitationIA. No. 847 of 2022 in C.P. 1260-IB-MB-2021
Ratio decidendi
The rule this decision rests on
Where a Section 9 application covers multiple invoices, the due date of each invoice, and not the date of the petition or of the demand notice, governs both the limitation bar under Section 10A of the Code and the computation of the minimum default threshold; for invoices without a stated payment term, the due date is the invoice date, treated as immediate. Invoices whose due dates fall within the period covered by Section 10A are excluded from the default amount on which the application rests, so that the claim cannot be pursued through a Section 9 application in respect of them. The eligibility of each invoice must be assessed separately, and the sum of the remaining invoices falling outside the Section 10A period, less any part-payments made, must independently meet the minimum threshold of Rs. 1 crore for an application under Section 9 to be maintained; where it does not, the application is liable to be dismissed.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
For the Corporate Debtor: Adv Umang Mehta a/w Adv Taher Habshee i/b Dhruve Liladhar & Co.
Per: Kuldip Kumar Kareer, Member (Judicial) ORDER 1. This Company Petition has been filed by OM Industries (hereinafter called “Petitioner”/ “Operational Creditor”) seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Birla Precision Technologies Ltd. (hereinafter called “Respondent”/“Corporate Debtor”) alleging that the Corporate Debtor has committed a default to an extent of Rs. 1,55,57,967.00/-. This Petition has been filed by invoking the provisions of Section 8 and 9 of the Insolvency & Bankruptcy Code (hereinafter called "Code") read with Rule 5 and 6 of Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016. FACTS OF THE CASE 2. The Operational Creditor is a Partnership Firm carrying out the business of manufacturing and supplying resin coated sand. The Operational Creditor had supplied resign coated sand with respect to purchase orders issued by Corporate Debtor being purchase order no. 00P118PO0100202 dated 13.10.2018, 00P120P00100152 dated 12.09.2020; and 00P120P0O0100216 dated 29.09.2020. The Operational Creditor raised total 62 invoices during the period from 07.11.2020 to 30.07.2021.
3. The Operational Creditor vide email dated 30.07.2021 had requested the Corporate Debtor to make the outstanding payment of Rs. 1,64,09,447/-. In this regard, the Corporate Debtor on 30.07.2021 made payment of Rs. 2,71,400/- to the Operational Creditor.
4. The Operational Creditor further addressed a letter dated 11.08.2021 calling upon the Corporate Debtor for balance confirmation as on C.P. 1260/IB/MB/2021 & IA. No. 847 of 2022
31.07.2021. subsequently, the Corporate Debtor made another payment of Rs. 2,49,240/- to the Operational Creditor on 13.08.2021.
5. The Operational Creditor sent a Demand Notice under Form 3 dated 18.09.2021, demanding the Corporate Debtor to make the pending payment of operational debt of Rs. 1,55,57,967.00/- within 10 days.
6. Since the Corporate Debtor did not make the payment of Operational Debt within the prescribed time frame, this necessitated the filing of the application under section 9 of the Code. REPLY FILED BY THE RESPONDENT 7. At the outset, the Respondent denied all the contentions, averments, and statements made in the present petition.
8. It has been submitted that most of the invoices and their defaults fall between the period starting from 25.03.2020 upto 25.03.2021 because of which the present application is not maintainable, being barred under Section 10A of the Code. The balance amount which falls outside the period under Section 10A is Rs. 78,61,160/- out of which a sum of Rs. 2,71,400/-was paid on 30.07.2021. In this manner, the balance outstanding, which is not covered the period falling under Section 10A falls below the threshold of Rs. 1,00,00,000/-. Therefore, the application deserves to be dismissed.
9. The Respondent has further submitted that the Petitioner has supplied defective goods to the Respondent. The Respondent through various the letters had addressed the grievances of defective goods and asked the Operational Creditor to collect and replace the goods as per quality standards originally agreed. In this regard, the Respondent had also issued debit notes against many Invoices towards the rejection of defective goods on the account their inferior quality.
C.P. 1260/IB/MB/2021 & IA. No. 847 of 2022
10. The Respondent has further submitted that there is a pre-existing dispute in the instant case, as the issues of deficiency of goods and debit notes were raised to the Petitioner well before the issuance of Demand Notice dated 18.09.2021 which had not been resolved till date.
REJOINDER FILED BY THE PETITIONER 11. With regard to the contention that majority of defaults fall within the period under Section 10A, the Operational Creditor has submitted that it was a continuous default as accepted by the Respondent while making the part payment of the defaults. Therefore, the contention raised with regard to Section 10A of the Code is not tenable.
12. The Operational Creditor has submitted the Respondent has never raised any objections disputing the invoices and deficiency of goods. The Operational Creditor has submitted that Respondent has also never sent any letter demanding the replacement and re-delivery of goods with standard quality. The Operational Creditor has submitted that the Respondent has relied upon the forged and fabricated documents and therefore, no proof of service was produced by the Respondent.
13. With the above averments, the Operational Creditor has prayed for the admission of the present application. FINDINGS 14. We have heard the Ld. Counsels for both the parties and perused the documents available on record.
15. The present application has been filed seeking to initiate the Corporate Insolvency Resolution Professional (CIRP) against the Corporate Debtor for the default committed of Rs. 1,55,57,967.00/-.
C.P. 1260/IB/MB/2021 & IA. No. 847 of 2022
16. It is an undisputed fact that the Applicant had supplied resign coated sand with respect to purchase orders issued by Corporate Debtor being purchase order no. 00P118PO0100202 dated 13.10.2018; 00P120P00100152 dated 12.09.2020; and 00P120P0O0100216 dated 29.09.2020. In this regard, the Applicant had raised total 62 invoices during the period starting from 07.11.2020 to 30.07.2021. The Corporate Debtor made part payments of Rs. 2,71,400/- and 2,49,240/- on 30.07.2021 and 13.08.2021 respectively. The Petitioner sent a Demand Notice under Form 3 dated 18.09.2021 to the Corporate Debtor, demanding the pending payment of operational debt of Rs. 1,55,57,967.00/-. Thereafter, the Petitioner filed the present petition.
17. Having heard the Counsel for the Parties and after going through the record, we find that the Applicant issued 62 invoices during the period starting from 07.11.2020 to 30.07.2021. As per the invoices, there is no indication regarding the time span within which the amount of the invoice is to be paid. Therefore, the due date of each invoice can be treated as immediate. It is well settled that for the purposes of limitation as well as Section 10A of the Code due date or date of default of each invoices has to be taken into account. The details of the all 62 invoices are as follows: Sr.No. Date of Invoice Credit Due date Invoice Invoice No. Period amount 1 07.11.2020 277 IMMID 08.11.2020 129,467.00 2 10.11.2020 279 IMMID 10.11.2020 233,640.00 3 29.11.2020 293 IMMID 29.11.2020 259,600.00 4 03.12.2020 298 IMMID 03.12.2020 259,600.00 5 05.12.2020 303 IMMID 05.12.2020 233,640.00 6 09.12.2020 306 IMMID 09.12.2020 233,640.00 7 13.12.2020 310 IMMID 13.12.2020 259,600.00 8 16.12.2020 313 IMMID 16.12.2020 220,660.00 9 20.12.2020 316 IMMID 20.12.2020 246,620.00 10 25.12.2020 318 IMMID 25.12.2020 259,600.00 11 27.12.2020 319 IMMID 27.12.2020 246,620.00
C.P. 1260/IB/MB/2021 & IA. No. 847 of 2022
12 29.12.2020 320 IMMID 29.12.2020 207,680.00 13 02.01.2021 322 IMMID 02.01.2021 259,600.00 14 06.01.2021 324 30 06.02.2021 259,600.00 15 10.01.2021 326 IMMID 10.01.2021 246,620.00 16 13.01.2021 328 30 13.02.2021 233,640.00 17 15.01.2021 330 30 15.02.2021 246,620.00 18 17.01.2021 333 IMMID 17.01.2021 259,600.00 19 23.01.2021 335 IMMID 23.01.2021 246,620.00 20 26.01.2021 336 IMMID 26.01.2021 246,620.00 21 29.01.2021 337 IMMID 29.01.2021 246,620.00 22 30.01.2021 338 30 29.02.2021 233,640.00 23 04.02.2021 341 30 04.03.2021 246,620.00 24 07.02.2021 342 30 07.03.2021 259,600.00 25 11.02.2021 344 30 11.02.2021 246,620.00 26 14.02.2021 346 30 14.03.2021 233,640.00 27 17.02.2021 347 30 17.03.2021 246,620.00 28 19.02.2021 349 IMMID 19.02.2021 246,620.00 29 21.02.2021 350 30 21.03.2021 233,640.00 30 25.02.2021 351 30 25.03.2021 246,620.00 31 02.03.2021 355 30 02.04.2021 298,540.00 32 05.03.2021 358 30 05.04.2021 233,640.00 33 09.03.2021 361 30 09.04.2021 259,600.00 34 12.03.2021 362 30 12.04.2021 259,600.00 35 14.03.2021 365 IMMID 14.03.2021 246,620.00 36 17.03.2021 368 30 17.04.2021 246,620.00 37 21.03.2021 369 IMMID 21.03.2021 246,620.00 38 25.03.2021 370 30 25.04.2021 246,620.00 39 27.03.2021 372 IMMID 27.03.2021 246,620.00 40 30.03.2021 373 30 30.04.2021 233,640.00 41 04.04.2021 4 IMMID 04.04.2021 259,600.00 42 09.04.2021 7 IMMID 09.04.2021 324,500.00 43 17.04.2021 10 IMMID 17.04.2021 259,600.00 44 28.04.2021 11 IMMID 28.04.2021 259,600.00 45 30.04.2021 12 IMMID 30.04.2021 346,625.00
C.P. 1260/IB/MB/2021 & IA. No. 847 of 2022
46 06.05.2021 14 IMMID 06.05.2021 346,625.00 47 09.05.2021 17 IMMID 09.05.2021 249,570.00 48 15.05.2021 20 IMMID 15.05.2021 249,570.00 49 25.05.2021 22 IMMID 25.05.2021 284,970.00 50 29.05.2021 24 IMMID 29.05.2021 271,400.00 51 01.06.2021 26 IMMID 01.06.2021 271,400.00 52 03.06.2021 27 IMMID 03.06.2021 271,400.00 53 07.06.2021 32 IMMID 07.06.2021 271,400.00 54 10.06.2021 33 IMMID 10.06.2021 271,400.00 55 13.06.2021 35 IMMID 13.06.2021 271,400.00 56 23.06.2021 37 IMMID 23.06.2021 271,400.00 57 26.06.2021 43 IMMID 26.06.2021 244,260.00 58 30.06.2021 45 IMMID 30.06.2021 271,400.00 59 08.07.2021 49 IMMID 08.07.2021 271,400.00 60 15.07.2021 54 IMMID 15.07.2021 271,400.00 61 18.07.2021 58 IMMID 18.07.2021 271,400.00 62 30.07.2021 60 IMMID 30/07/2021 271,400.00 Total Outstanding Debt 1,55,57,967/-
From the given table, it is evident that the due date for 31 invoices issued between 07.11.2020 and 21.03.2021, the aggregate of which amounts to Rs. 74,76,147.00/-, falls within the Section 10A period. Therefore, this Bench is of the considered view that out of 62 invoices, aforesaid 31 invoices are covered under Section 10A period regarding which the claim cannot be ever filed by the Operational Creditor.
18. As regards, the remaining 31 invoices, which are not covered under Section 10A period, the total outstanding amount of such invoices comes to Rs. 83,53,220.00/-, which falls below the minimum threshold of Rs. 1 Crore. The Corporate Debtor is stated to have paid a sum of Rs. 2,71,400/-and Rs. 2,49,240/- on 30.07.2021 and 13.08.2021 respectively, which should further be deducted from the total outstanding amount of Rs. 83,53,220.00/-. In this regard, reference can be made to M/s Next
C.P. 1260/IB/MB/2021 & IA. No. 847 of 2022
Education India Private Limited vs M/s K12 Techno Services Private Limited (Civil Appeal No. 1775 of 2021) whereby the Hon’ble Supreme Court has held that in a case where several invoices are issued and some of the invoices are time barred, then the court must consider the remaining invoices which are within the limitation and whether they cross the minimum threshold limit of Rs. 1 Crore or not. Accordingly, it is evident that eligibility of each invoice needs to be considered separately in order to determine the threshold limit of Rs. 1 Crore. In the instant case, if the due date of all the invoices are accessed separately and the invoices which fall within the period of 10A are excluded, the claimed amount of the remaining invoices do not meet the threshold limit requirement. Therefore, in the light of the law laid down by the Hon’ble Apex Court and considering the facts and circumstances of the present case, this Bench is of the view that the present petition under Section 9 of the Code is liable to be dismissed as the claimed amount falls below the threshold amount of Rs. 1 Crore.
19. Accordingly, CP no. 1260 of 2021 is dismissed and disposed of and IA. No. 847 of 2022 filed by the Operational Creditor shall be dismissed to have been rendered infructuous. This order, however, will not preclude the Operational Creditor from proceeding against the Corporate for the recovery of the outstanding due at any other forum as per law as the debt is not extinguished with the passing of this order.
Sd/- Sd/- ANURADHA SANJAY BHATIA KULDIP KUMAR KAREER MEMBER (TECHNICAL) MEMBER (JUDICIAL)
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