Mr. Narendrabhai Shah Director Pioneer ... vs Lim Fa Pte Ltd

[Arising out of Order dated 20th January, 2020 passed by the Adjudicating Authority (National Company Law Tribunal), Ahmedabad Bench, Ahmedabad in C.P. (I.B) No. 82/NCLT/AHM/2018]

IN THE MATTER OF:

Narendrabhai Shah, Director Pioneer Globex Pvt. Ltd. Residing At: 173/B, Jainam, Vijaynagar, Bhavnagar - 364002. ...Appellant

Versus

LIM FA PTE Ltd. Having its office at: 284, Jalan Besar, Singapore - 208947

Having Corresponding Aedress at: B/501, Mohan Villa, Bajaj Road Vile Parle (West), Mumbai - 400056. ...Respondent No. 1

Shri Sunil Kumar Agarwal, Tower 6/603 Devnandan Heights, Near Poddar School, New D. G. Road, Chandkheda, Ahmedabad - 382424 ...Respondent No. 2

For Appellant: Mr. Abhijeet Sinha and Ms. Pratiksha Sharma, Advocates.

For Respondent: Mr. Vijay M Chauhan and Mr. Sahil Mahajan, Advocates for R-1. Mr. Sumit Kansal, Advocate for R-2.

Cont'd..../ 2

[20.09.2021]

A. I. S. Cheema, J.

The Appellant - Director of the Corporate Debtor - 'Pioneer Globex Private

Limited' has filed this appeal being aggrieved by the orders dated 20.01.2020

passed by the Adjudicating Authority (National Company Law Tribunal),

Ahmedabad Bench, Ahmedabad in C.P. (I.B) No. 82/NCLT/AHM/2018. The

Application under Section 9 of Insolvency and Bankruptcy Code, 2016 (for short

'IBC') was filed by Respondent No. 1 - 'M/s Lim Fa Pte Ltd.' - Operational

Creditor against the Corporate Debtor. The Operational Creditor claimed before

the Adjudicating Authority that it is a Company incorporated under the laws of

Singapore and inter alia carrying on business in metal scrap. Operational

Creditor claimed that it had entered into a contract dated 01.03.2016 (Appeal

page 90) with the Corporate Debtor and had supplied metal scarp through

shipment from Poland to Nhava Sheva Port in India and issued invoices. It is

claimed that inspite of repeated requests and reminders Corporate Debtor

avoided to pay the due amount of CFR value USD 2,17,682.10/- Operational

Creditor also claimed interest on the amount in default. Operational Creditor

claimed that it sent demand notice dated 11.12.2017 (Appeal page 87) alongwith

Annexures mentioned to the Corporate Debtor but the debt was not cleared.

Operational Creditor further pointed out before the Adjudicating Authority the

Company Appeal (AT) (Insolvency) No. 338 of 2020 3

following documents filed with the Application under Section 9. Para 7 of the

impugned order reads as under:

"In support of its claim, the petitioner has submitted the following documents:-

Sl. Particulars Page No. No. 01 Application by operational creditor - form 5 1-5 02 Copy of computation of amount and date of 5 default 03 Copy of master date of respondent 6 04 Annexure - I copy of demand notice along 7-16 with annexure annexed therein 05 Copy of postal receipt and track report 19-24 obtained from Indian Postal Dept. 06 Annexure-II - copy of affidavit 19-24 IA - copy of the sales contract 25 IB - copy of bill of lading, packing list, 26-31 certificate of origin, certificate of weight and declaration IC - copy of letter dated 14.05.2016 32 ID - copies of letter dated 20.07.2012, 33-35 23.08.2016 and 27.06.2016 IE - copies of email 36-37 07 Board resolution 39

2. The Corporate Debtor claimed before the Adjudicating Authority by way of

reply that the Application filed was without proper authority; that notice dated

11.12.2017 could not be treated as demand notice; that relevant document

confirming non-payment has not been filed; and that there were no agreement

with regard to rate of interest.

3. The Adjudicating Authority regarding dispute of non-filing of document

confirming no payment (Section 9 (3) (e) of IBC) and that interest was not agreed

Company Appeal (AT) (Insolvency) No. 338 of 2020 4

to, has not held to be favouring the Corporate Debtor. The counsel for the parties

while making submissions, did not argue on these grounds. However, the

Counsel for the Appellant has argued with regard to the claim of the Corporate

Debtor before Adjudicating Authority that the metal scrap said to have been sent

through Bill of Lading No. AMRUIN863194 or Invoice No. PC/LF/101/16, said to

be carrying the metal scrap, was not received by Corporate Debtor. Corporate

Debtor claimed before the Adjudicating Authority that it verified from the

Commissioner of Nhava Sheva Port with regard to Bill of Lading dated 16.04.2018

but reply was not yet received.

4. The Adjudicating Authority referred to the resolution passed in the meeting

of Board of Directors dated 04.12.2017 and which had been filed with the

Application, authorising Mr. Pratik D. Shah as the authorised representative of

the Company to file the Company Petition and held that the Application filed

could not be said to be bad in law. The Adjudicating Authority also referred to

the notice dated 11.12.2017 (Appeal page 87) and recorded that the notice

making demand was supported by the required documents which were annexed

with the notice (Appeal page 87 at 89) and referring to the documents held that

the notice qualified to be demand notice under the IBC. The objection of not

filing document confirming no payment was discarded for reasons mentioned in

Para 17 of the impugned order. As regards interest, Adjudicating Authority

referring to the Interest Act, 1978 and observed that there was nothing to show

that it was agreed that there would be no charging of interest. Thus, the defence

Company Appeal (AT) (Insolvency) No. 338 of 2020 5

on this count was discarded. These grounds are not agitated in arguments before

us. Even otherwise we do not find force in these grounds and find reasons

recorded by the Adjudicating Authority to be well founded.

5. As regards the dispute raised by the Appellant of non-receipt of the metal

scrap, impugned order Para 20 to 22 read as follows:

"20. The respondent has denied having received metal scrap through bill of lading No. AMRUIN863194 of invoice No. PC/LF/101/16 carrying metal scrap. The appeal further states that, none of the documents referred to by the applicant evidence delivery of goods and the email correspondence produced by the applicant are misconceived and intentionally placed with the present petition.

21. On perusal of the records it is found that, prior to filing of the instant application, the respondent has never questioned about the delivery of goods in the communication made between the respondent and the applicant. That itself shows that the claim made by the respondent that no goods have been delivered to them is misleading, more so when all the documents like sales contract, tax invoice, bill of lading, packing list, certificate of origin, certificate of weight and declaration annexed to the application at page 10-16 bear stamp and signature of the respondent which shows that the respondent had received delivery of such goods.

Company Appeal (AT) (Insolvency) No. 338 of 2020 6

22. On perusal of the record it is found that the petition is complete in all respect."

6. Thus, the Adjudicating Authority admitted the Application.

7. One grievance of the Appellant is that the Corporate Debtor had filed I.A.

No. 678/2019 (Appeal page 136-Annexure A-8) making 'Nhava Sheva Port

Authorities' as respondent to claim that the said authority had not given

documents regarding delivery of the goods was not duly decided. The Appellant

has referred to impugned order Para 25 where it was observed that the I.A. does

not merit any consideration.

8. In the course of the Appeal the Appellant was given opportunity and the

Appellant has with Dy. No. 25367 and 26409 filed documents and Convenience

Compilation - Dy. No. 27238 and referred to screenshots from the 'icegate

website' to argue that the goods were not received by the Corporate Debtor but

the same were delivered to someone else.

9. Against this Learned Counsel for the Respondent - Operational Creditor

has supported the impugned order referring to the documents as were filed before

the Adjudicating Authority, which had been filed with the Appeal and culled out

into Convenience Compilation filed vide Dy. No. 27150. The Learned Counsel for

the Operational Creditor is supporting the impugned orders passed and claims

that the Appeal should be dismissed.

Company Appeal (AT) (Insolvency) No. 338 of 2020 7

10. We are taking up the arguments raised by the Learned Counsel for the

Appellant with regard to authority of Mr. Pratik D. Shah who filed the Application

as authorised signatory of the Operational Creditor Company. The application is

signed by Mr. Pratik D. Shah supported by affidavit. The Learned Counsel for the

Appellant referred to Annexure A10 (page 148) pursis which was filed by

Operational Creditor alongwith copy of Circular Resolution dated 04.12.2017

(Appeal page 149). It is signed by two Directors of the Operational Creditor. The

arguments of the Learned Counsel for the Appellant is that it being a Foreign

Company the document does not show that it has been apostilled or that it has

been notarized. The Learned Counsel states that it is a plain paper resolution

without signature and does not even bear stamp of the Company. What we find

is that apart from this document there was another document dated 04.12.2017

filed by the Operational Creditor with tittle "TO WHOMSOEVER IT MAY

CONCERN". The document (at Appeal page 119) is signed and bears stamp of the

Operational Creditor. The document refers to the Board Resolution dated

04.12.2017 (Appeal page 149) and that the Board of Directors have authorised

Mr. Pratik D. Shah as authorised representative of the Operational Creditor to file

legal proceedings against the Corporate Debtor - 'Pioneer Globex Pvt. Ltd.'. The

Adjudicating Authority has relied on such document and accepted that filing of

Application could not be said to be bad.

11. Learned Counsel for the Appellant relied on Section 85 of the Indian

Evidence Act, 1872, which reads as follows:

Company Appeal (AT) (Insolvency) No. 338 of 2020 8

"85. Presumption as to powers-of-attorney. -- The Court shall presume that every document purporting to be a power-of-attorney, and to have been executed before, and authenticated by, a Notary Public, or any Court, Judge, Magistrate, 1[Indian] Consul or Vice-Consul, or representative2 *** of the 3[Central Government], was so executed and authenticated."

12. Learned Counsel for the Appellant then relied on judgment in the matter of

"Jaldhi Overseas Pvt. Ltd. vs. Bhushan Poer & Steel Limited", 2017 SCCOnline Cal

4414 to argue that unless the document executed in a Foreign Country is

apostilled, the same cannot be accepted in evidence. Perusal of the judgment in

the matter of 'Jaldhi Overseas Pvt. Ltd.' (supra) shows that it related to

enforcement of a foreign award. Dispute raised was that the execution application

had not been notarised in the proper manner as required under the law. In that

matter the execution was witnessed by a Notary Public of Singapore. In para 60 of

the judgment the Hon'ble High Court found that and in that case Court was

satisfied that appropriate procedure for notarial attestation on the Power of

Attorney had been duly and validly done. It is apparent that matter of 'Jaldhi

Overseas Pvt. Ltd.' related to execution of Power of Attorney. In the present

matter, we are concerned with the Directors of the Company passing resolution in

favour of a person to act as Authorised Representative of the Company. Section

85 of the Evidence Act relates to documents purporting to be Power of Attorney.

When such document is authenticated by any Notary Public, any Court, Judge,

Magistrate, Indian Consul or Vice-Consul or representative of Central

Company Appeal (AT) (Insolvency) No. 338 of 2020 9

Government presumption regarding execution and authentication arises. The

Learned Counsel for the Operational Creditor has pointed out that the

Operational Creditor has two Directors and both the Directors signed the Circular

Resolution, copy of which is at Annexure A10 and thus it is stated by him that

there is no defect in giving authority to Mr. Pratik D. Shah. In fact, record further

shows that Mr. Pratik Shah was even earlier following up with Corporate Debtor

when dues of Corporate Debtor had not been cleared.

13. We find ourselves in agreement with the Learned Counsel for the

Operational Creditor. It is not that anybody has come on behalf of Operational

Creditor to object to the manner in which the resolution was passed. On the

basis of technicalities raised by the Corporate Debtor we do not find that much

weight can be given to the argument raised on this count.

14. As regards the dispute raised with regard to the notice under Section 8 of

IBC. The Notice is dated 11.12.2017 at Appeal page 87 to 89. The dispute raised

is that this notice is not in format and as required under Section 8 read with Rule

5(a) of the Insolvency and Bankruptcy (Application to the Adjudicating Authority)

Rules, 2016 ('Rules' in short). There is Form 3 below the Rules with regard to the

format. We have perused the format and particulars recorded in the notice dated

11.12.2017, which annexed copy of the sales contract, copy of tax invoice, copy of

bill of lading, packing list, certificate of origin, certificate of weight and

declaration as well as list of invoice alongwith interest calculation. Basic

requirements of Section 8(1) are as follows:

Company Appeal (AT) (Insolvency) No. 338 of 2020 10

"8. (1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debt or copy of an invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed."

15. The Notice more than enough meets the requirements of Section 8(1). For

mere technicality that the notice should purport to be in the format (although

sufficiently meeting the requirements of the format) we do not want to ascribe

undue weight to such argument which is mere technicality.

16. Learned Counsel for the Appellant has argued that the Operational Creditor

attached various documents regarding loading of the goods for shipment to prove

dispatch but however document of delivery to the Corporate Debtor has not been

proved. We have gone through the record and the Additional Documents filed by

the Appellant. The Learned Counsel for the Operational Creditor referred to the

documents filed with the Appeal (which were filed with the Application under

Section 9 of IBC), copies of which have also been filed with the Convenience

Compilation Dy. No. 27150 by the Respondent.

17. The Counsel for the Respondent submitted that firstly there is Sales

Contract dated 01.03.2016 (Appeal page 90) which is document with regard to

the agreement between the parties. Then reference is made to the Tax Invoice

(Appeal page 91). The Learned Counsel pointed out that this Tax Invoice is not

only signed by the Operational Creditor but even the Director of Corporate Debtor

signed this document. Reference is also made to the Bill of Lading (Appeal page

Company Appeal (AT) (Insolvency) No. 338 of 2020 11

92) to submit that the Bill of Lading as per requirement of the Corporate Debtor

was made, "To order" as regards the consignee. The Learned Counsel for the

Operational Creditor has read this document Bill of Lading having B/L No.

AMRUIN863194 with document at page 112 of the Appeal where on the letter

head of the Corporate Debtor Director, Hardik Shah verified the same Bill of

Lading for quality and quantity of goods 'that has been shipped'. The Bill of

Lading is dated 04.05.2016 and letter issued by the Director of Corporate Debtor

is dated 14.05.2016. The document may be reproduced. The same reads as

under:-

"I HARDIK SHAH a director in M/s Pioneer Globex Private Limited declare and state as under:-

1. I hereby confirm that the consignment bearing BL No. AMRUIN863194 concerning METAL SCRAP material before its shipment has been duly verified by the authorized representatives of our Company and Company is satisfied as to the quality and quantity that has been shipped. The company will not be raising objections concerning the quality and/or quantity of the said material so shipped hereafter

2. The writing shall be binding upon Company and its Successors and assigns.

Place : Mumbai

Dated : 14/05/2016

For Pioneer Globex Pvt. Ltd.

Director"

Company Appeal (AT) (Insolvency) No. 338 of 2020 12

18. Thus, it is argued by the Learned Counsel for the Operational Creditor that

the Bill of Lading was duly acknowledged as well as shipment was acknowledged.

The Counsel also referred to Packing List (Appeal page 93), Certificate of Origin

(Appeal page 94), Certificate of Weight (Appeal page 95) and Declaration (Appeal

page 96) all dated 17.04.2016 which bear stamps and signatures not only of the

Operational Creditor but also of the Corporate Debtor.

19. As regards the strenuous argument made by Learned Counsel for the

Appellant to show that the material under Bill of Lading was delivered to someone

else, Learned Counsel for the Operational Creditor rightly pointed out terms of

Bill of Lading. The Convenience Compilation filed by Respondent vide Dy. No.

27150 has alongwith the Bill of Lading dated 04.05.2016 fine print terms. Typed

copy of the same has also been filed, which is at page 30 and term 4(1) may be

reproduced:

"4. NEGOTIABILITY AND TITLE TO THE GOODS

(1) This Bill of Lading shall be non-negotiable unless made out "to order" in which event shall be negotiable and shall constitute title to the Goods and the holder shall be entitled to receive or to transfer the Goods herein described."

20. Thus, it is argued by the Learned Counsel for the Operational Creditor that

when the Corporate Debtor wanted the goods to be sent "To order", the Bill of

Lading was negotiable and once it is negotiable and there are documents to show

Company Appeal (AT) (Insolvency) No. 338 of 2020 13

acknowledgement of Bill of Lading by the Corporate Debtor, rest is matter within

knowledge of the Corporate Debtor as to how the Corporate Debtor has further

negotiated the Bill of Lading. We find substance in the argument of Learned

Counsel for the Operational Creditor. Thus, we discard the argument by Learned

Counsel for the Appellant that the Corporate Debtor did not receive the value of

the goods.

21. Learned Counsel for the Respondent pointed out reminders sent by the

Operational Creditor to the Corporate Debtor on 20.07.2016. 23.08.2016 and

27.06.2017 (Copies at page 113 to 115 of the Appeal). The document dated

27.06.2017 sent to the Corporate Debtor mentions that despite regular and

intense follow up by Deepak Shah and Pratik Shah, outstanding amounts have

not been paid. The letter was addressed to Hardik Shah as well as the Appellant

- Narendra Shah for the Corporate Debtor.

22. The Counsel for the Respondent - Operational Creditor has referred to

email dated 12.10.2016 sent by Mr. Hardik Shah to info@pratikcorporation.com,

who was in contact with the Corporate Debtor for payments on behalf of the

Operational Creditor. The email reads as follows:

"From: hardik SHAH hardikshah_us@yahoo.com;

To: info@pratikcorporation.com;

Subject: Regarding payment Sent: Tue, Oct 11, 2016 1:03:45 PM

Dear all

Regarding the problems that have been created in Limfa due to the delay in the payment we sincerely apologise for

Company Appeal (AT) (Insolvency) No. 338 of 2020 14

that. As of we have tried out level best and come up with a solution in which we will be clearing the payment in 3 parts in one month where we will be doing a transaction of goods worth 1 m in one month and every transaction of 3pp k we will be cutting of 100 k so at the end of the month we will be reducing almost 300 k. And so our limit will be reduced to 2 m from 2.3 m. Kindly support us for the same so we can move the business ahead and looking for a healthy relation for future with your good company. Looking for a positive response from ur side.

Thanks Hardik Shah

Sent from my iPhone"

23. In addition to above Learned Counsel for Operational Creditor pointed

out document at page 117 of the Appeal dated 18.10.2016 vide which

document Hardik Shah sent message forwarded by Kshitij Shah to

infro@pratikcorporation.com. The Learned Counsel for the Operational Creditor

pointed out that in this email also the dues payable by the Corporate Debtor

were acknowledged. The Learned Counsel for the Operational Creditor rightly

argued that if the Corporate Debtor had not received the goods, there were no

reasons for the Director of the Corporate Debtor to accept that they will be

clearing the payments, as seen in the email dated 12.10.2016.

24. We find that the Adjudicating Authority has rightly found that there are

dues outstanding which attract Section 9 of IBC. The Appellant is trying to

confuse by referring to portal of 'Icegate' but when there are documents in

Company Appeal (AT) (Insolvency) No. 338 of 2020 15

favour of the Operational Creditor as discussed above, we do not find that

Appellant is able to show that the goods were not received and that the

Corporate Debtor did not have any liability to pay. We do not find any fault

with the impugned order admitting the Application under Section 9.

25. In the course of Appeal, Learned Counsel for the Appellant also tried to

refer to documents at page 118 - 'VALIKPATRA' in favour of Advocate 'Minesh

J. Soni', who appeared for the Operational Creditor before Adjudicating

Authority. The Learned Counsel argued that the document purports to have

been signed by Manager of Respondent Bank, which was not the case. We do

not find that any such ground was raised before the Adjudicating Authority

questioning the power given to the Advocate by the authorised person. At stage

of Appeal, we will not give weight to this in absence of ground being raised

before the Adjudicating Authority. If pointed out, it was a curable defect.

26. We do not find that there is any substance in the Appeal. Appeal is

dismissed. No orders as to costs.

[Justice A.I.S. Cheema] The Officiating Chairperson

[V. P. Singh] Member (Technical) Archana

Company Appeal (AT) (Insolvency) No. 338 of 2020