Kedrion Biopharma Inc vs M/S. Wizaman Impex Pvt. Ltd

[Arising out of order dated 06.10.2020 in (IB) 841 (ND)/2020 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi Bench- V.]

IN THE MATTER OF:

KEDRION BIOPHARMA INC. 400 Kelby Street Fort Lee, NJ 07024 USA Through its Special Power of Attorney Holder Mr. Naveen Madan, Director Finance Having its residence at: A 1003, Delhi State NPEF CGHS Apartments, Plot No. 1, Sector 19, Dwarka, New Delhi - 110075 .... Appellant. (Operational Creditor)

Versus

M/S. WIZAMAN IMPEX PVT. LTD. 15, Chelmsford Country Club, Ghitorni-South Delhi, New Delhi - 110030 ALSO AT 301, JMD Regions Square, Main Mehrauli Gurgaon Road, Gurgaon, Haryana 122001. ....... Respondent. (Corporate Debtor)

Present: For Appellant: Mr. Nakul Dewan, Sr. Advocate with Ms. Suruchi Suri, Mr. Simran Jot Singh, Ms. Cheryl Fernandes, Mr. Vivek Shetty and Mr. Sambit Nanda, Advocates 2

For Respondent: Mr. Aditya Ghadge, Mr. AT Patra and Mr. Karan Khaitan, Advocates.

JUDGMENT

(15th December, 2021)

Justice Anant Bijay Singh;

This Appeal has been preferred by the Appellant aggrieved and

dissatisfied by the order dated 06.10.2020 passed by the Ld. Adjudicating

Authority (National Company Law Tribunal), New Delhi Bench- V in CP(IB)

841 (ND)/2020 whereby and where under the Application filed by the

Appellant herein (Operational Creditor) under Section 9 of the Insolvency and

Bankruptcy Code, 2016 (for short IBC) was dismissed as barred by limitation.

2. The facts giving rise in the instant Appeal are as under:

i) The Operational Creditor is a corporation registered and organised

under the laws of State of Delaware, USA and is engaged in the business of

manufacturing of Pharmaceutical products, particularly plasma products

such as Rhogam, an Anti-D immunoglobulin.

ii) The Corporate Debtor had represented to the Operational

Creditor/applicant that it had the necessary approvals and licences from the

concerned authorities in addition to the necessary expertise, facilities and

organisation for the distribution and sale of pharmaceutical products.

iii) Based on the assurances, the Operational Creditor entered into a

Distribution Agreement dated 21.03.2014 (hereinafter referred to as the

'Agreement') with the Corporate Debtor for the purposes of distribution and

sale of its pharmaceutical products only until the subsidiary/Indian affiliate

Company Appeal (AT) (Insolvency) No. 981 of 2020 3

of the Operational creditor namely Kedrion India Biopharmaceuticals Pvt. Ltd.

was capable of doing so.

iv) Further case is that during the course of its business operations, the

Operational Creditor raised several invoices upon the Corporate Debtor with

respect to the sale and distribution of its pharmaceutical products. However,

no amount has been received by the Operational Creditor against any of the

three invoices namely invoice no. 'DMI 4169626' dated 19.12.2013 amounting

to USD 25,800/-, invoice no. 'DMI 4174867' dated 25.04.2014 amounting to

USD 6,32,1001/- and invoice no. 'DMI 4202417' dated 23.05.2014

amounting to USD 604,055.401/-

v) Further case is that on 31.12.2015, it was confirmed and acknowledged

by the Corporate Debtor that the total outstanding amount on the said date

as reflected in the Operational Creditors records was USD 1,261,955.40/-. As

on 18.01.2016, it was further confirmed by the Corporate Debtor that the total

outstanding amount payable to the Operational Creditor/Applicant was USD

1,261,955.40/-.

vi) On 02.02.2017, the Corporate Debtor duly acknowledged and admitted

the outstanding dues due and payable to the Operational creditor as on

31.12.2016 being USD 901,9551/-.

vii) As mutually agreed between the parties, the Operational Creditor a

credit note dated 15.12.2017, amounting to USD 3,60,000/- in favour of the

Corporate debtor towards the potential losses incurred qua the management

of the Rhogam business in India and for the compensation for loss incurred

on account of the short shelf life products supplied to Directorate of Health

Company Appeal (AT) (Insolvency) No. 981 of 2020 4

Services, Maharashtra (DHS). This operational Credit note was issued by the

Operational Creditor in good faith, as an offset, as no loss has in fact been

incurred by the Corporate Debtor and further no claim has been filed by DHS

against the Corporate debtor before the arbitrator in the arbitration

proceedings bearing no. 21 of 2017 arising out of the disputes between the

Corporate Debtor and DHS with regard to the supply of short shelf life

products.

viii) As per the invoices mentioned here in above, the total consideration for

the sale of products received by the Corporate Debtor was Rs. 9,42,03,330/-

ix) Further case is that the Operational Creditor approached the Corporate

Debtor on several occasions to settle the aforesaid dues, however the same

was not availed, as the Corporate debtor has neither settled the dispute nor

cleared the admitted liability towards the outstanding dues payable to the

Operational Creditor.

x) The Operational Creditor was constrained to issue a demand notice

dated 25.07.2019 to the Corporate Debtor inter-alia demanding a sum of USD

901,000/- as the amount due towards the aforesaid operational debt. The

said demand notice was undelivered and returned with a remark "no person

found on this address", despite being delivered at the registered office address

of the Corporate Debtor on which parties had been corresponding in the past.

xi) On 07.08.2019, the Corporate Debtor was again served with a demand

notice of the said date at the new registered office address as per the MCA

records, inter-alia reiterating/urging the same facts as mentioned in the

aforesaid Demand Notice dated 25.07.2019 and also demanding the payment

Company Appeal (AT) (Insolvency) No. 981 of 2020 5

of the outstanding operational debt. The Corporate Debtor on 17.08.2019

replied to the said demand notice issued by the Operational creditor, whereby

the Corporate Debtor disputed the admitted and acknowledged dues payable

to the Operational Creditor basis the dispute pending between DHS and the

Corporate Debtor with regard to the supply of short shelf life products.

xii) Further case is that in light of the aforesaid factual position, the

Corporate Debtor has committed default as defined under Section 3(12) of the

IBC and the aforesaid outstanding amount absolutely qualifies as an

Operational Debt within the meaning of Section 3(11) read with Section 5(21)

of the IBC. The Corporate Debtor is liable to repay the said Operational Debt

as per the relevant provisions of IBC.

xiii) Thereafter, the Appellant herein (Operational Creditor) filed application

under Section 9 of the IBC and after hearing, the Ld. Adjudicating Authority

dismissed the said Application. Hence this Appeal.

Submissions on behalf of the Appellant

3. The Learned Sr. Counsel for the Appellant during the course of

arguments and his memo of Appeal as also Rejoinder along with Written

Submissions submitted that the Ld. Adjudicating Authority has failed to

appreciate that the Appellant herein raised several invoices against the

Respondent for supplies made under the distributorship agreement. However,

the Respondent failed to make any payment in respect of three invoices

(Annexure- A-4 at page 57 to 65 of the Appeal Paper Book):

Company Appeal (AT) (Insolvency) No. 981 of 2020 6

a) Invoice bearing no. DMI 4169626 dated 19th December 2013 for USD

25,800/-

b) Invoice bearing no. DMI 4174867 dated 26th December 2013 for USD

632,100/-

c) Invoice bearing no. DMI 4202417 dated 23rd January 2014 for USD

604,055.40/-

4. It is further submitted that the Ld. Adjudicating Authority has also

failed to appreciate that on 18th January 2016, the Respondent confirmed

that the total outstanding due to the Appellant as on 31st December 2015 was

USD 1,261,955.4/- (Annexure A-5 at page 66 to 67 of the Appeal Paper Book).

5. It is further submitted that on 2nd February 2017, the Respondent again

confirmed that the total outstanding due to the Appellant as on 31st December

2016 was USD 901,955.40/- (Annexure A-6 at page 68 of the Appeal Paper

Book).

6. It is further submitted that the reduction in the liability by USD

360,000/- was of an offset for the potential losses incurred by the Respondent

on account of demands/claims raised by Directorate of Health Services (DHS)

due to the alleged short shelf-life products sold to it.

7. It is further submitted that on 31 December 2017, based on an

agreement between the parties, the Appellant issued a credit memo to the

Respondent recording a credit of USD 360,000/- on account of possible

claims of DHS. This credit memo was acknowledged by the Respondent

(Annexure A-7 at page 69 of the Appeal Paper Book).

Company Appeal (AT) (Insolvency) No. 981 of 2020 7

8. It is further submitted that on 15th October 2018, the Respondent

proposed a payment of USD 85,526.11/- as a settlement for the amount due

to the Appellant and on 10 November 2018, the Respondent revised its

settlement offer to USD 99,786.41/- (Annexure A-12 at page 145 to 148 of the

Appeal Paper Book).

9. It is further submitted that the Appellant has not received any payment,

the Appellant first issued a demand notice dated 25.07.2019 which was

returned as "no person found on this address" ((Annexure A-8 at page 72 to

78 of the Appeal Paper Book) and thereafter issued a demand notice on

07.08.2019, under Section 8 of the IBC demanding a sum of USD 901,000/-

as the amount due towards the operational debt (Annexure A-9 at page 79 to

90 of the Appeal Paper Book).

10. It is further submitted that the Respondent, by a letter dated

17.08.2019, refused to make any payment to the Appellant on the ground of

an existing dispute with respect to the liability (Annexure A/10 at page 91 to

101 of the Appeal Paper Book). However, the Respondent acknowledged that

it had made several settlement offers, accepting that there was an amount

due from the Respondent to the Appellant. The relevant portion of the letter

dated 17.08.2019 at page 101 of the Appeal Paper Book is hereunder:

" 8. In the conspectus of the above, our clients have instructed us to suggest to you clients through you for a negotiated settlement of existing dispute (pre-exiting on the date of your demand notice) with regard to the amount payable in order to avoid unnecessary litigation expenses of the parties. If however, in spite of the above, your clients choose to venture into any ill-advised litigation, including Company Appeal (AT) (Insolvency) No. 981 of 2020 8

any proceeding under the Insolvency & Bankruptcy Code, our clients shall contest the same, at the entire risk and costs of your clients."

11. It is further submitted that as the Respondent defaulted to make any

payments, the Appellant filed Application under Section 9 of the IBC before

the Ld. Adjudicating Authority on 30.06.2020 (Annexure A/11 at page 102 to

133 of the Appeal Paper Book).

12. It is further submitted that the Ld. Adjudicating Authority while passing

the impugned order was correct in holding the date of default in the present

case as 23 May 2014 (the date on which the last invoice fell due) and the

Application under Section 9 of the IBC having being filed on 30 June 2020,

however, the Ld. Adjudicating Authority have erred in dismissing the section

9 of the IBC Application as they have failed to consider the fact that the

Respondent have acknowledged debt in form of the confirmation letter and the

credit memo which clearly extended the period of limitation for another 3

years.

13. It is further submitted that the Ld. Adjudicating Authority failed to

consider that the limitation period was extended by the acknowledgments

made by the Respondent on 18.01.2016, 02.02.2017, 15.12.2017, 15.10.2018

and lastly on 10.11.2018. Therefore, the limitation period for filing the

Application under Section 9 of the IBC was ending on 09.11.2021 and this

Application was filed much before the period i.e. on 30.06.2020.

14. On the basis of these submissions the Learned Sr. Counsel for the

Appellant relied on judgment in Bishal Jaiswal Vs. Asset Reconstruction

Company Appeal (AT) (Insolvency) No. 981 of 2020 9

Company (India) Limited and Anr. dated 25th September 2020 (2020 SCC

OnLine NCLAT 681) wherein paragraphs 27, 28 and 29 are hereunder:

" 27. Firstly we have considered whether Section 18 of Limitation Act, 1963 is applicable to Insolvency Cases?

28. We have carefully gone through the Judgment of Hon'ble Supreme Court in the case of Babulal Vardharji Gurjar (Supra). Hon'ble Supreme Court has held as under:-

"Therefore, on the admitted fact situation of the present case, where only the date of default as 08.07.2011 has been stated for the purpose of maintaining the application under Section 7 of the Code, and not even a foundation is laid in the application for suggesting any acknowledgment of any other date of default, in our view, the submissions sought to be developed on behalf of the respondent No. 2 at the later stage cannot be permitted. It remains trite that the question of limitation is essentially a mixed question of law and facts and when a party seeks application of any particular provision for extension or enlargement of the period of limitation, the relevant facts are required to be pleaded and requisite evidence is required to be adduced. Indisputably, in the present case, the Respondent No. 2 never came out with any pleading other than stating the date of default as 08.07.2011 in the application. That being the position, no case for extension of period of Limitation is available to be examined. In other words, even if Section 18 of the Limitation Act and principles thereof were applicable, the same would not apply to the application under consideration in the present case, looking to the very averment regarding default therein and for want of Company Appeal (AT) (Insolvency) No. 981 of 2020 10

any other averment in regard to acknowledgement. In this view of the matter, reliance on the decision in Mahaveer Cold Storage Pvt. Ltd. does not advance the cause of the Respondent No. 2."

29. With the aforesaid we are unable to convince with the argument of Learned Counsel for the Corporate Debtor that Section 18 of Limitation Act, 1963 is not applicable to Insolvency Cases."

15. It is further submitted that the Ld. Adjudicating Authority in the present

matter passed the impugned order which is not accordance with law, so, based

on these submissions the impugned order is fit to be set aside and the Appeal

be allowed.

Submissions on behalf of the Respondent

16. The Learned Counsel for the Respondent during the course of argument

and his reply Affidavit along with Written Submissions submitted that the Ld.

Adjudicating Authority has correctly dismissed the Application filed by the

Appellant under Section 9 of the IBC as barred by limitation, on the basis of

pleadings and documents placed before it.

17. It is further submitted that neither in the demand notice dated

07.08.2019 (Annexure A/9) nor in the Application under Section 9 of the IBC

(Annexure A/11), the Appellant has pleaded that the date of default has got

extended due to any acknowledgement.

18. It is further submitted that additional documents sought to be produced

in the Appeal being electronic documents are not admissible without

Company Appeal (AT) (Insolvency) No. 981 of 2020 11

complying with the requirement to produce certificate under Section 65B (4)

of the Evidence Act.

19. The Learned Counsel for the Respondent relied on the Judgment of the

Hon'ble Supreme Court in the case of "Babulal Vardharji Gurjar" reported

in 2020 SCC Online 647, paragraphs 91 to 94 wherein Hon'ble Supreme

Court held that benefit of Section 18 of the Limitation Act is not available in

the case of an application under Section 9 of the IBC.

20. It is further submitted that the Appellant in its Application before the

Ld. Adjudicating Authority has mentioned the date of default, which is more

than three years prior to 30.06.2020. Therefore, based on these submissions

there is no merit in the instant Appeal, the Appeal is fit to be dismissed.

FINDINGS

21. After hearing the parties and having gone through the pleadings made

on behalf of the parties, we are of the considered view that the following facts

are admitted in the instant Appeal.

 The Ld. Adjudicating Authority has dismissed the Application filed by

the Appellant herein under Section 9 of the IBC on the basis of question

of limitation.

 The Appellant has filed the I.A. No. 2685 of 2020 seeking leave of this

Appellate Tribunal to place on record certain additional documents, in

para 3 it has been stated that the form of email correspondences ranging

from 03.11.2017 till 11.01.2019 exchanged between the Appellant and

Company Appeal (AT) (Insolvency) No. 981 of 2020 12

the Respondent with respect to the settlement of the outstanding

amount due and payable to the Appellant.

 The order dated 06.10.2020 dismissing the Application under Section 9

of the IBC by the Ld. Adjudicating Authority, the Appellant checked its

internal records and it transpired that the aforesaid emails

correspondences were available in its databased. It is quite evident from

the said emails correspondences that the Respondent was engaging in

settlement discussions with the Appellant towards the outstanding dues

owed to it which were otherwise agreed by the Respondent.

 The Said emails communications were made available to the Appellant

only after the receipt of the order dated 06.10.2020, hence the same

could not be placed on record before the Ld. Adjudicating Authority.

 The Appellant validly made out a case although, the Respondent in para

5 of the Reply Affidavit opposed the prayer of the Appellant for placing

on record the certain additional documents by way of affidavit which

was never placed before the Ld. Adjudicating Authority.

 The submissions made on behalf of the Respondent does not sustain in

the eyes of law as the Appellant filed I.A. No. 2685 of 2020 which has

been filed along with the instant Appeal, in paragraphs 3, 4 and 5 made

out a case for permitting to place on record the additional

evidence/document, therefore permission is accorded to them.

 From the perusal of the additional evidence which is by way of email

correspondence between the Appellant and Respondent. The

Respondent vide letter dated 18.01.2016 confirmed and acknowledged

Company Appeal (AT) (Insolvency) No. 981 of 2020 13

the outstanding amount as on 31.12.2015 due and payable to the

Appellant was USD 1,261,955.40/- (Annexure A/5 at page 67 to 68 of

the Appeal Paper Book).

 On 02.02.2017, the Respondent again vide letter dated 02.02.2017

confirmed and acknowledged the outstanding amount as on 31.12.2016

due and payable to the Appellant was USD 901,955.40/- (Annexure A/6

at page 69 of the Appeal Paper Book).

 The Respondent on 15.10.2018 proposed a payment of USD

85,526.11/- as a settlement for the amount due to the Appellant and

on 10.11.2018, the Respondent revised its settlement offer to USD

99,786.41/- (Annexure A-12 at page 145 to 148 of the Appeal Paper

Book).

 Taking all these emails and considering, it transpires that the

Respondent had admitted his liability and ready to make payments and

revised settlement offer to the tune of USD 99,786.41/- was offered by

the Respondent to the Appellant. So, in view of the Bishal Jaiswal

(Supra) case the acknowledgement by the Respondent is within time.

 We are of the considered opinion that the Ld. Adjudicating Authority

eared in holding that the Appellant claim is time barred.

ORDER

22. In view of the above, we are of the considered view that the order dated

06.10.2020 passed by the Ld. Adjudicating Authority (National Company Law

Tribunal), New Delhi Bench- V in CP(IB) 841 (ND)/2020 is hereby set aside

and the Application under Section 9 of the IBC filed by the Appellant before

Company Appeal (AT) (Insolvency) No. 981 of 2020 14

the Ld. Adjudicating Authority is hereby allowed and it is hereby ordered as

under:

a) Since both parties have appeared, no fresh notice is required to be given

them.

b) The Learned Counsel for both the parties are directed to appear before

the Ld. Adjudicating Authority (National Company Law Tribunal), New Delhi

Bench- V on 18.01.2022 for passing orders in terms of the provisions of

Sections 10, 13 and 14 of the IBC and also passing an order regarding

appointment of an Interim Resolution Professional/Resolution Professional in

the Corporate Insolvency Resolution Process proceedings.

24. Registry to upload the Judgment on the website of this Appellate

Tribunal and send the copy of this Judgment to the Ld. Adjudicating Authority

(National Company Law Tribunal), New Delhi Bench- V forthwith.

[Justice Anant Bijay Singh] Member (Judicial)

[Ms. Shreesha Merla] Member (Technical)

New Delhi 15th December, 2021 R. Nath.

Company Appeal (AT) (Insolvency) No. 981 of 2020