In the matter of Cloud Nine Realtors Private Limited

1.1 This Application bearing C.P. (IB) No. 1411/MB/C-VI/2019 was filed on 26.02.2019 by Innovators Façade System Private Limited, the Operational Creditor (OC), under section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) for initiating Corporate Insolvency Resolution Process (CIRP) in respect of Cloud Nine Realtors Private Limited, the Corporate Debtor (CD). The OC is engaged in the business of designing, engineering, fabrication, assembly and erection of custom façade system and providing complete design build-services in building-construction and the CD is involved in the business of real estate and development. However, an amount of Rs. 1,72,45,221/- (One Crore Seventy-Two Lakh Forty-Five Thousand Two Hundred Twenty-One Rupees) is due from the CD to the OC. Hence, the OC prays that Corporate Insolvency Resolution Process (CIRP) may be initiated in respect of the CD under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC). 1.2 The OC undertook the external façade works of the CD's commercial project called “Napha”, based on the execution of a Work Order dated 19.05.2015, which was modified by two Work Order Amendments dated 01.03.2016 and 07.03.2017.

IN THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH-VI CP (IB) No. 1411/MB-VI/2019 2. Contentions of OC

2.1 According to the OC, an outstanding amount of Rs. 1,10,22,646/- (One Crore Ten Lakhs Twenty-Two Thousand Six Hundred Forty- Six Rupees) plus interest amounting to Rs. 62,22,575/- (Sixty-Two Lakhs Twenty-Two Thousand Five Hundred Seventy-Five Rupees) at the rate of 15% per annum fell due from the CD. 2.2 It is contended by the OC that in the agreement executed between the OC and the CD, it was stipulated that a retention amount at the rate of 5% of the gross amount of each Running Account Bill would be deducted by the CD from all approved payments. It was further stated that 50% of the retention amount would be released after the virtual completion of work, and the balance, after the completion of the defect liability period of 12 months from the date of virtual completion of the project. 2.3 The OC submits that out of the total amount as mentioned in the invoices, an amount of Rs. 10,73,01,610/- (Ten Crores Seventy- Three Lakhs One Thousand Six Hundred Ten Rupees) has been paid by the CD leaving the outstanding amount to be Rs. 1,72,45,221/-. 2.4 The OC submits that the project work was completed on 30.06.2017, and a completion certificate was issued. Even the default liability period of 12 months from the virtual completion of the project was completed, making the CD liable to pay the retention money as per the contractual terms and conditions.

IN THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH-VI CP (IB) No. 1411/MB-VI/2019 2.5 The OC contends that several letters/e-mails with tax invoices from August 2015 to January 2017 were sent to the CD, to release the payment due, but did not yield any result. 2.6 Hence, a demand notice under rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (AA Rules) was issued to the CD by the OC on 05.07.2018 for demanding the debt of Rs. 1,49,41,285/-. In its reply dated 30.08.2018 to OC’s demand notice, the CD, without admitting the OC's claim, expressed its willingness to resolve the issue amicably and asked the OC to withdraw the legal notice. Subsequently, the CD agreed to make a total payment of Rs. 1,31,09,213/- by issuing two cheques drawn on Axis Bank in favour of the OC, due to which the OC had withdrawn its first demand notice. However, out of two cheques issued by the CD, the first cheque dated 30.08.2018 for an amount of Rs. 80,04,534/- was successfully encashed while the second cheque dated 6.10.2018 for an amount of Rs. 51,04,679/-was not honoured but returned unpaid to the OC. 2.7 In the light of these events, the OC issued the second demand notice dated 07.01.2019 for demanding the amount of Rs. 1,72,45,221/- from the CD. However, the CD denied the claim on whimsical and vague grounds. 2.8 The OC submits that in the CD’s certified completion certificate dated 16.02.2018, there was no mention of dispute regarding the quality of work, and it fully confirmed to the satisfaction of the CD.

IN THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH-VI CP (IB) No. 1411/MB-VI/2019 2.9 In compliance with our order dated 30.09.2019, the OC served a fresh notice to the CD by e-mail as well as to the address provided in the MCA records. Despite this notice, the CD did not appear before the Tribunal, which indicates their disrespect to the judicial process, according to the OC. 2.10 The OC's banker i.e., Canara Bank, issued a letter dated 21.02.2019 to the OC, certifying that no payments were received in its account from the CD after 07.09.2018 till 21.02.2019. 2.11 The OC has proposed the name of Mr. Umesh Balaram Sonkar, a registered Insolvency Professional having Registration Number- IBBI/IPA-001/IP-P02619/2021-2022/14043 as the Interim Resolution Professional (IRP).

3. Contentions of CD

3.1 Since the CD was never present before us, there is absence of pleadings or arguments on its behalf and thus we proceeded with the matter as per law. 3.2 We observe that even after serving notices to the CD, it never appeared or filed any reply and the CD was set ex-parte. Even after this C.P. was de-reserved on 18.08.2023, for de-novo hearing, the CD remained absent to the proceedings. On account of CD’s conduct during the entire proceedings, the CD’s right to file reply was forfeited vide order dated 01.09.2023.

IN THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH-VI CP (IB) No. 1411/MB-VI/2019 4. Analysis & Findings

4.1 We observe that the OC issued a demand notice dated 05.07.2018 under Section 8 of the IBC and both parties engaged in negotiations and agreed to a settlement, outlining a clear payment schedule. It was mutually agreed upon by the OC and the CD that the CD would make a total payment of Rs. 1,31,09,213/- against the amounts claimed by the OC, subject to deduction of TDS. The CD issued cheques as part of the settlement agreement. The OC, in its response, acknowledged the CD's willingness to settle and confirmed its acceptance of the settlement. It was mutually agreed that, upon payment of the full and final settlement amount the OC would have no further claims or dues against the CD and the OC was expected to withdraw its legal notice. However, the settlement failed, and it has come to our notice that the OC filed this Application after issuing a second demand notice for the same outstanding debt. 4.2 The date of default mentioned by the OC in Part IV of the Application is 30.08.2018, i.e., the date on which the OC received the last payment received from the CD and that the present Application was filed on 26.02.2019, which is within 3 years from the date of default, and is hence, maintainable to be adjudicated by us under Section 238A of the IBC r/w Article 137 of the Limitation Act, 1963. 4.3 Pre-existing dispute as regards operational debt is crucial in deciding admissibility of an application under Section 9 of the IBC. In the instant

IN THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH-VI CP (IB) No. 1411/MB-VI/2019 case, the CD did not offer any explanation to the payments due to the OC, the debt and default as claimed in this application. 4.4 We find that despite several opportunities granted by this Adjudicating Authority to the CD to file its reply and argue its case on merits, it chose not to avail of the opportunities. In view of that the above, the CD was set ex-parte by this Bench on 16.09.2021. Considering all the above the above, we find that the matter is fit for admission under section 9(5)(i) of the IBC. ORDER

This Application bearing C.P. (IB) No. 1411/NCLT/MB-VI/2019 under Section 9 of the IBC, filed by Innovators Façade System Private Limited, the OC, for initiating CIRP in respect of Cloud Nine Realtors Private Limited, the CD is Admitted.

We further declare moratorium u/s 14 of the IBC, with consequential directions as follows:

I. We prohibit- a) the institution of suits or continuation of pending suits or proceedings against the CD including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;

b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;

IN THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH-VI CP (IB) No. 1411/MB-VI/2019 c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);

d) the recovery of any property by an owner or lessor where such property is occupied by or in possession of the CD.

II. That the supply of essential goods or services to the CD, if continuing, shall not be terminated or suspended or interrupted during the moratorium period.

III. That the order of moratorium shall have effect from the date of this order till the completion of the CIRP or until this Tribunal approves resolution plan under sub-section (1) of section 31 of the IBC or passes an order of liquidation of the CD under section 33 of the IBC, as the case may be.

IV. That public announcement of the CIRP shall be made in accordance with the provisions of the IBC, the Rules and Regulations made thereunder.

V. That this Bench hereby appoints Mr. Umesh Balaram Sonkar, a registered Insolvency Professional having Registration Number- IBBI/IPA-001/IP-P02619/2021-2022/14043 and his email-rosonkar1603@gmail.com, as the Interim Resolution

IN THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH-VI CP (IB) No. 1411/MB-VI/2019 Professional (IRP), having valid Authorisation for Assignment up to 06.06.2024, to carry out the functions under the IBC. The fee payable to IRP/RP shall be in accordance with the Regulations/Circulars issued by the IBBI.

VI. During the CIRP Period, the management of the CD shall vest in the IRP or the RP, as the case may be, in terms of section 17 of the IBC. The officers and managers of the CD shall provide all documents in their possession and furnish every information in their knowledge to the IRP within a period of one week from the date of receipt of this Order, in default of which coercive steps will follow under the provisions of the IBC read with Rule 11 of the National Company Law Tribunal Rules, 2016 (NCLT Rules). The CD or any of its directors or officers shall not commit any offence under Chapter VII of Part II of the IBC.

VII. In exercise of the powers under Rule 11 of the NCLT Rules, 2016, we order the OC to deposit a sum of Rs.5,00,000/- (Five Lakh Rupees) with the IRP to meet the initial CIRP cost, if demanded by the IRP to fund initial expenses on issuing public notice and inviting claims, etc. The amount so deposited shall be interim finance and paid back to the OC on priority upon the funds available with IRP/RP. The expenses, incurred by IRP out of this fund, are subject to approval by the Committee of Creditors (CoC).

IN THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH-VI CP (IB) No. 1411/MB-VI/2019 VIII. A copy of this Order be sent to the Registrar of Companies, Maharashtra, Mumbai, for updating the Master Data of the CD.

IX. The Registry is directed to immediately communicate this order to the OC, the CD and the IRP by way of e-mail and WhatsApp, not later than two days from the date of this Order.

X. C.P. (IB) No.1411/MB-VI/2019 to come up on 05.01.2024 for filing the periodical report.

XI. Compliance report of the order by Designated Registrar is to be submitted today.

Sd/- Sd/- SMT MADHU SINHA K. R. SAJI KUMAR MEMBER (TECHNICAL) MEMBER (JUDICIAL)

//Deepa//