In the matter of Shridhar Steels Private Limited

For the Petitioner: Adv. Sandeep Bajaj, Adv. Aakanksha Nehra, Adv. Anuj Jhaveri, Adv. Siddharth Shukla For the Corporate Debtor: Adv. Amay Jain

Per: Suchitra Kanuparthi, Member (Judicial) ORDER

1. Sampada Agro & Steel Traders (hereinafter called as ‘Petitioner’) has sought the Corporate Insolvency Resolution Process of Shridhar Steels Private Limited (hereinafter called as the ‘Corporate Debtor’) on the ground that the Corporate Debtor committed default to the extent of Rs. 64,91,569.90/- by invoking the provisions of Section 8 and 9 of the IN THE NATIONAL COMPANY LAW TRIBUNAL COURT NO. 5, MUMBAI BENCH CP (IB) -675/MB/2020 Insolvency & Bankruptcy Code (hereinafter called "Code") read with Rule 5 and 6 of Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Contentions of the Petitioner:

2. The Counsel for the Petitioner submits that the Petitioner is a registered partnership firm engaged in the business of growing of crops, market gardening and horticulture. The Corporate Debtor is a company registered under the provisions of the Companies Act, 1956 and is engaged in the business of casting metals including casting finished or semi-finished products producing a variety of goods. 3. The Counsel for the Petitioner further submits that the Petitioner and the Corporate Debtor have had a long-standing relationship of selling and purchasing goods from each other. So, a running account of the Corporate Debtor had always been maintained by the Petitioner. During the period from October, 2018 to November, 2018, the Petitioner had supplied sponge iron to the Corporate Debtor as per Purchase Orders dated 02.10.2018, 13.10.2018 and 15.11.2018. As a running account was being maintained by the Petitioner, the ledger account maintained by the Petitioner for the Corporate Debtor reflects an amount of Rs. 52,73,973/-which is outstanding out of the total amount of Rs. 55,07,477/-. The Corporate Debtor is also liable to pay an interest at the rate of 18% per annum on the outstanding amount of the pending invoices. Hence, a total amount of Rs. 64,91,569.90/- has not been paid towards the said invoices. The computation of total pending invoices is extracted below:

IN THE NATIONAL COMPANY LAW TRIBUNAL COURT NO. 5, MUMBAI BENCH CP (IB) -675/MB/2020

4. The goods under the above said invoices were duly delivered to the Corporate Debtor and the same was duly acknowledged by the Corporate Debtor. As per the agreed terms of the contract, the payment under each of the invoices had to be paid immediately on the date of the delivery. However, the Corporate Debtor failed to pay any amount to the Petitioner.

IN THE NATIONAL COMPANY LAW TRIBUNAL COURT NO. 5, MUMBAI BENCH CP (IB) -675/MB/2020

5. The Counsel for the Petitioner submits that the Petitioner has several times requested the Corporate Debtor for the payment of the outstanding amount against the pending invoices through the letters dated 10.06.2019, 15.10.2019 and 08.12.2019. The Corporate Debtor has responded to the said letters of the Petitioner vide its letters dated 15.06.2019, 18.10.2019 and 13.12.2019 citing financial crunches in making outstanding payment. The letter dated 13.12.2019 of the Corporate Debtor is extracted below:

6. The Petitioner thereafter issued the Demand Notice dated

IN THE NATIONAL COMPANY LAW TRIBUNAL COURT NO. 5, MUMBAI BENCH CP (IB) -675/MB/2020 14.02.2020 under Section 8 of the Code to the Corporate Debtor. The Corporate Debtor issued a Reply vide email dated 17.02.2020 acknowledging their liability to pay the amounts due with respect to the said invoices, however, the Corporate Debtor sought more time to pay the same. Hence, the Petitioner proceeded to file the present Petition. Contentions of the Corporate Debtor: 7. The Counsel for the Corporate Debtor submits that there remains an outstanding amount of Rs. 52,73,973/- as per the details available in the books of accounts maintained by the Corporate Debtor. It is submitted that despite the hardships faced by the Corporate Debtor, the Corporate Debtor made a few payment to the Petitioner showing its bona fide intent to make the full payment as and when the funds will be available with the Corporate Debtor. 8. The Counsel for the Corporate Debtor further submits that the modus operandi of the Corporate Debtor is always been at par when compared with its contemporaries and the Corporate Debtor has always maintained a genuine reputation in the market by regularly paying off its suppliers at the peak of its business. It is only for past few years, the Corporate Debtor has been finically hit and have not been able to generate sufficient revenue to pay off its dues. The Corporate Debtor have notified the same to the Petitioner from time to time about its financial constrains that being burdened up on the Corporate Debtor. Even the Petitioner was well aware of the operational and financial inadequacy of the Corporate Debtor to pay off its dues. 9. The Counsel for the Corporate Debtor also submits that the Petitioner was made aware of the fact that the Corporate Debtor is in constant negotiations with its bankers to restart its unit so that the outstanding balance would be repaid at the earliest by the Corporate Debtor to the Petitioner. Therefore, the Counsel for the Corporate Debtor pleads suitable time to complete the negotiations with its Bank and enable the Corporate Debtor to restart its unit enabling the Corporate Debtor to IN THE NATIONAL COMPANY LAW TRIBUNAL COURT NO. 5, MUMBAI BENCH CP (IB) -675/MB/2020 repay the outstanding dues of the Petitioner.

Findings:

10. The Bench notes that the present Petition is a clear case of the debt and default. The Corporate Debtor herein had been purchasing different types of sponge iron from the Petitioner as per the purchase order dated 02.10.2018, 12.20.2018 and 15.11.2018 issued by the Corporate Debtor. The Corporate Debtor through its Letter dated 17.02.2020 acknowledged its debt and default. Also, the Corporate Debtor, through its Reply to the Petition, acknowledged the debt due to the Petitioner. However, the Corporate Debtor repeatedly requested the Bench, during the hearing as well as through its Reply, to grant some time so as to enable the Corporate Debtor to complete the negotiations with its Bank to restart its Unit, otherwise the Corporate Debtor would suffer irreparable injury if the present Petition is admitted against it. 11. The Section 8 Demand Notice dated 14.02.2020 issued by the Petitioner has been replied by the Corporate Debtor through Email on 17.02.2020 where they have admitted the liability. The relevant extract of the said Email dated 17.02.2020 is reproduced hereinbelow:

IN THE NATIONAL COMPANY LAW TRIBUNAL COURT NO. 5, MUMBAI BENCH CP (IB) -675/MB/2020

12. The Bench also notes that the Corporate Debtor demonstrated the Ledger Account received for the outstanding liabilities due and payable with the Petitioner. The Ledger Account is as below:

IN THE NATIONAL COMPANY LAW TRIBUNAL COURT NO. 5, MUMBAI BENCH CP (IB) -675/MB/2020

13. With the mere reading of the above mentioned facts, it has become crystal clear to the Bench that the Corporate Debtor has clearly defaulted in paying its dues to the Petitioner. The Bench has no hesitation in concluding that the Corporate Debtor has committed a default and therefore, it is a fit case for admission. 14. This Bench, on perusal of the documents filed by the Petitioner, is of the view that the Corporate Debtor defaulted in paying the total outstanding dues to the Petitioner. Therefore, the Petition under Section 8 & 9 of the code is taken as complete, accordingly this Bench hereby admits this Petition, prohibiting all of the following of item-(I), namely:

(I) (a) The institution of suits or continuation of pending suits or proceedings against the Corporate Debtor 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; (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 (SARFAESI Act); (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the Corporate Debtor.

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

IN THE NATIONAL COMPANY LAW TRIBUNAL COURT NO. 5, MUMBAI BENCH CP (IB) -675/MB/2020 (III) That the provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.

(IV) That the order of moratorium shall have effect from the date of pronouncement of this order till the completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of Corporate Debtor under Section 33, as the case may be.

(V) That the public announcement of the corporate insolvency resolution process shall be made immediately as specified under Section 13 of the Code.

(VI) That this Bench hereby appoints, Mr. Ajay Murarilal Agrawal; having Registration No. IBBI/IPA-001/IP-P-01674/2019-2020/12584; having email id ajayagrawal86@yahoo.co.in as an Interim Resolution Professional to carry the functions as mentioned under Insolvency & Bankruptcy Code. 15. The Registry is hereby directed to communicate this order to both the parties and the Interim Resolution Professional immediately.

Sd/- Sd/- Chandra Bhan Singh Suchitra Kanuparthi Member (Technical) Member (Judicial)