Mahendra Govindlal Agarwal vs Taranjot Resources Pvt Ltd & Anr

NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI Company Appeal (AT)(Ins) No. 554 of 2020

IN THE MATTER OF: Mr. Mahendra Govindlal Agarwal R/o. Survey No.146/3, Block No.165 Plot No.165/1, Village Jolva, Taluka Palsana, Jolva, Surat - 394 305, Gujarat ...Appellant

Versus

1.Taranjot Resources Pvt. Ltd A company incorporated under the Companies Act, 1956 and having its registered office At 806, SNS Arista, Plot No.94/2, T.P.Scheme No.29, Rindh, Surat - 395 003, Gujarat. ...Respondent No.1

2.Dhanurdhar Processors Pvt. Ltd. 146/3, Block No.165, Plot No.165/1, Village Jolva, Taluka Palsana, Jolva, Surat 394 305, Gujarat (Through Mr. Rajeev Saxena, Interim Resolution Professional, 102, Manas Bhavan Extn. 11, RNT Marg Indore, Madhya Pradesh). ...Respondent No.2

Present:

For Appellant : Mr. Aditya Pande and Mr. Rahul Chitnis, Adovocates.

For Respondent : Ms. Natasha Dhruman, Advocate for Respondent No.1. Mr. CS Niyati Sengar, Advocate for Respondent No.2

(20th August, 2020)

1 Company Appeal (AT)(Ins) No. 554 of 2020 Dr. Ashok Kumar Mishra, Technical Member

The Appellant -Mr. Mahendra Govindlal Agarwal, a Director and a

Shareholder of the Respondent No.2/ Corporate Debtor under Corporate

Insolvency Resolution Process (for short CIRP) has filed this Appeal under

Section 61 of the Insolvency and Bankruptcy Code, 2016 (for short I&B Code,

2016) against the impugned order dated 05.06.2020 passed by Adjudicating

Authority (National Company Law Tribunal, Ahmedabad Bench) Court-1 in

CP(IB) No.357/9/NCLT/AHM/2018.

2. The Appellant has prayed for setting aside the above order dated

05.06.2020 passed by Adjudicating Authority apart from seeking costs etc.

3. The Appellant has thrusted upon the following submissions based on

which they want the order of the Adjudicating Authority should be set aside:-

a. Not assigning any reason in support of its conclusion and not dealt

with all the issues raised by the parties to the lis;

b. Demand Notice and Petition not backed by a valid resolution of the

Board of Directors of the Operational Creditors and;

2 Company Appeal (AT)(Ins) No. 554 of 2020 c. Non-considering pre-existing disputed between Operational Creditor

and Corporate Debtor regarding the quality of coal supplied by the

Operational Creditor.

4. The Appellant has given a lot of thrust that the Petition filed before the

Adjudicating Authority by the Operational Creditor was not authorised by its

Board of Directors and no resolution of the Board have been passed. He has

also thrusted that the Annual Return dated 01.09.2019 of the Operational

Creditor does not contain the reference of Board of Directors meeting held on

19.04.2018.

5. The Appellant has also asserted that there is a pre-existing dispute in

the supply of coal by the Operational Creditor particularly with regard to the

poor quality of coal supplied by the Operational Creditor resulting into a

substantial losses by the Corporate Debtor. He has also submitted that the two

officers of the Operational Creditor has confirmed such poor quality in the

letter dated 01.01.2018 and addressed to the Operational Creditor - Page 161

of the Appeal paper book.

6. The Appellant further submits that the Opeational Creditor has returned

the cheques issued by the Corporate Debtor clearly shows and confirms that

3 Company Appeal (AT)(Ins) No. 554 of 2020 the dispute regarding the quality of coal supply by the Operational Creditor

resulting into the returning of cheques.

7. The Respondent - Operational Creditor has categorically denied the

quality of coal issue and has provided the certificate of sampling and analysis

at Page 433 and 434 of the Reply Affidavit obtained from 3rd party

Government approved lab. He has also stated that the Corporate Debtor is

concealing the facts of delivery challans. This has been incorporated in Para

8 of the impugned Order. He has confirmed that he has raised the invoices and

the payment were supposed to be released within 10 days from the date of

delivery of coal as per the condition mentioned in the copy of invoices.

8. The Respondent i.e Operational Creditor has sent the demand notice

dated 20th April, 2018 to the Corporate Debtor and its two Directors in

accordance with the provisions of the I&B Code and no reply was received

after the expiry of more than 10 days from the Corporate Debtor. The Reply

has not been received even till the date of filing of the petition in July, 2018.

No dispute was raised against the Demand Notice.

9. The Adjudicating Authority has observed in Para 11 of the impugned

order that the Operational Creditor is claiming the principal amount of Rs.

4 Company Appeal (AT)(Ins) No. 554 of 2020 87,25,069.90/- whereas even the worst situation the dispute is Rs.20Lakhs

hence, Debt is more than Rs.1 Lakh. Hence it is an admitted liability.

10. The Operational Creditor -Respondent has also raised the issue of

forging of signature of their representatives in the confirmation letter dated

01.01.2018.

11. As far as the return of cheques to the Corporate Debtor is concerned,

the Respondent has categorically stated that they have misrepresented before

the Operational Creditor that they were closing the account maintained with

Cosmos Bank. Hence, they need old cheques back and they will issue fresh

and valid cheques for the new accounts proposed to be opened with another

Bank.

12. The Respondent/Operational Creditor has also stated that in the Annual

Returns there are only 12 rows and hence they have skipped the recording of

Board meeting dated 19.04.2018. They have confirmed on affidavit

convening of Board Meeting dated 19.04.2018.

13. We have carefully gone through the various submissions as raised

above both by the Appellant and the Respondents and have observed the

followings:

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Company Appeal (AT)(Ins) No. 554 of 2020

a) The order dated 05.06.2020 delivered by Adjudicating Authority is

briefly covering all the issues that has been raised by both Appellant

and Respondents and the Adjudicating Authority has heard the case

more than 10 times and then he has given his observation and finally

admitted the Petition. The presentability of the Author of the

Judgment/order varies from individual to individual, the expected thing

in the judicial fora is that the judgment must be reasoned judgment and

all issues are clearly to be brought out. We feel that on overall reading

of the order, he has considerably brought out all the issues and basis for

his arriving at a particular conclusion including passing of orders.

b) The Operational Creditor is no doubt, a body corporate and artificial

person under the Companies Act, 2013 and they have given under the

Affidavit that they have conducted more than 12 Board Meetings

including Board Meeting on 19.04.2018. However, they have escaped

the recording of all Board Meetings in the Annual Return as there are

only 12 rows in the prescribed form. We found no ground to reject such

explanation. The grounds for rejecting an Application is categorically

mentioned in Section 9(5) (ii) of the I&B Code, 2016 and the same is

given hereunder:

6

Company Appeal (AT)(Ins) No. 554 of 2020 "Section 9(5)(ii) - reject the application and communicate such decision to the operational creditor and the corporate debtor, if--

(a) the application made under sub-section (2) is incomplete;

(b) there has been payment of the unpaid operational debt;

(c) the creditor has not delivered the invoice or notice for payment to the corporate debtor;

(d) notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility; or

(e) any disciplinary proceeding is pending against any proposed resolution professional:

Provided that Adjudicating Authority, shall before rejecting an application under subclause (a) of clause (ii) give a notice to the applicant to rectify the defect in his application within seven days of the date of receipt of such notice from the adjudicating Authority.

In the Appeal Paper Book page 33 Annexure A-2, the

Application filed by Operational Creditor is provided by Appellant

wherein all the columns are filled up. The Application is complete in

all respects.

c) In this case, the Operational Creditor is disputing the signature of its

representative on acknowledgment of defects as stated in letter dated

01.01.2018 and they have alleged that this is a forged signature. He has

also submitted that the supplies were made even after 18.12.2017 by

7 Company Appeal (AT)(Ins) No. 554 of 2020 the Operational Creditor and Corporate Debtor never asked to stop this

supply. The Operational Creditor has also provided third party Govt.

approved labs for sampling and testing of goods as appearing at page

No.433-434 of Reply of Operational Creditor. The Corporate Debtor

has failed to communicate the Operational Creditor after receipt of

Demand notice for the dispute and hence he has not complied with the

provisions of Section 8(2) (a) of the IBC, 2016:

Section 8(2) - The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational creditor--

(a) existence of a dispute,[if any, or] record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute;

d) As far as returning of cheques are concerned, the cheques were

of 2nd January, 2018 to 3rd March, 2018 from the details matching with

the challan date and cheque date as appearing at page 161 to 169 of the

appeal paper book, all the cheques have been returned in an

approximately 60 days after receipt of goods. This is a business

relationship and in business such things happen. In this context, the

Interim Resolution Professional (for short IRP) has also submitted that

8 Company Appeal (AT)(Ins) No. 554 of 2020 the Corporate Debtor has 41 Operational Creditors and one Financial

Creditor Page 3-10 of the Affidavit in reply filed by IRP.

14. After considering the various submissions made by the Appellant and

the Respondents and our observation as stated supra, we find no merit in this

Appeal & hence uphold the order of Adjudicating Authority and dismiss the

Appeal.

No order as to costs.

(Justice Jarat Kumar Jain) Member (Judicial)

(Dr. Ashok Kumar Mishra) Member (Technical)

(Ms. Shreesha Merla) Member (Technical)

New Delhi

RK

9 Company Appeal (AT)(Ins) No. 554 of 2020