Neelkanth Medicare Pvt. Ltd vs Ici Healthcare Pvt. Ltd

[Arising out of orders dated 18.12.2020 in C.P. No. (IB) 784/9/NCLT/AHM/ 2019 passed by the Ld. Adjudicating Authority (National Company Law Tribunal), Ahmedabad Bench, Ahmedabad.]

IN THE MATTER OF:

Neelkanth Medicare Private Limited, S-1, Ground Floor, Okhla Industrial Area Phase-II, New Delhi ..... Appellant. (Operational Creditor)

Versus

M/s ICI Healthcare Private Limited, 504, 5th Floor, Indraprast Apartment, Dilip Nagar, Nani Daman, DAMAN - 396210 Also at; P-18/26, Uppal Southend, Sector - 49, Nr. Scottish Mall, Sohna Road, Gurgaon - 122018. ....... Respondent. (Corporate Debtor)

For Appellant: Mr. Shubham Paliwal and Mehul Dhingra, Advocates. For Respondents: Ms. Manisha C Shah and CA Anjali Choksi, Advocates.

JUDGMENT

(09th March, 2022)

Justice Anant Bijay Singh;

The Appellant has preferred this Appeal under Section 61 of the

Insolvency and Bankruptcy Code, 2016 (for short IBC) being aggrieved and 2

dissatisfied by the order dated 18.12.2020 in C.P. No. (IB) 784/9/NCLT/AHM/

2019 passed by the Ld. Adjudicating Authority (National Company Law

Tribunal), Ahmedabad Bench, Ahmedabad whereby and where under the

Application under Section 9 of the Insolvency and Bankruptcy Code, 2016

filed by the Appellant herein was dismissed.

2. The facts giving rise to this Appeal are as follows:

i) On 10.11.2017, an agreement (Annexure A-2 at page 46 to 52 of the

Appeal) was executed between the Appellant / Operational Creditor and

Respondent / Corporate Debtor whereby the Appellant was appointed on

commission basis, as the clearing and forwarding agent for the products was

distributed and marketed by the Corporate Debtor.

ii) In terms of the aforesaid agreement the Appellant was required to

deposit with the Corporate Debtor an amount of Rs. 1,00,00,000/- in two

equal instalments of Rs. 50,00,000/- as Refundable Security Deposits

carrying simple interest @ 9% per annum payable on quarterly basis by the

Corporate Debtor to the Appellant.

iii) Further case of the Appellant is that on 13.11.2017 an amount of Rs.

50,00,000/- was deposited by the Appellant vide Cheque No. 107746 in terms

of the Agreement as part of the aforesaid refundable security deposit. The

balance security deposit of Rs. 50,00,000/- was deposited on 30.01.2018 by

the Appellant with the Corporate Debtor vide Cheque No. 143033.

iv) The Appellant rendered the services to the Corporate debtor in terms of

the said Agreement. As per the Agreement the Corporate Debtor was bound

to pay the commission amount as well as the interest on security deposit in

Company Appeal (AT) (Insolvency) No. 105 of 2021 3

the agreed manner. The Appellant raised various monthly invoices from time

to time demanding the agreed commission (Annexure A-3 Colly at page 53 to

75 of the Appeal).

v) Further case of the Appellant is that the Respondent / Corporate debtor

made a small part payment against the various invoices raised by the

Appellant / Operational Creditor. Till date a total payment of Rs. 9,05,526/-

has been made by the Corporate Debtor and the net outstanding due is Rs.

1,21,55,928/- which the Appellant is entitled for.

vi) The various emails and reminders were sent by the Appellant to the

Corporate debtor demanding payment towards the agreed commission for the

services rendered by the Appellant. However, despite several requests and

reminders, the Corporate Debtor did not adhere to the same. Pertinently, the

Corporate debtor neither replied to the said emails nor denied its liability for

the said outstanding amount.

vii) Due to various defaults in payments by the Corporate Debtor, the

Appellant was also compelled to terminate the Agreement dated 10.11.2017

and accordingly the Appellant sent an email on 18.12.2018 (Annexure A-4 at

page 76 of the Appeal) to the Corporate Debtor, inter alia, again demanding

the outstanding payment/amounts from the Corporate Debtor and also

intimating the termination of the Agreement.

viii) Further case is that the Appellant / Operational Creditor sent a

Demand Notice on 21.08.2019 (Annexure A-6 at page 78 to 80 of the Appeal)

to the Corporate Debtor under Section 8 of the IBC. Thereafter, on

Company Appeal (AT) (Insolvency) No. 105 of 2021 4

31.08.2019, the Appellant received an undated reply issued by the Corporate

debtor to the aforementioned Demand Notice. In the said reply no existing

disputes between the parties were not pointed out (Annexure A-7 at page 81

to 83 of the Appeal). Thereafter, the Appellant preferred Application under

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

the parties, the said Application was dismissed. Hence this Appeal.

Submissions on behalf of the Appellant

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

and in his memo of Appeal along with Written Submissions submitted that

the Ld. Adjudicating Authority has dismissed the Application under Section 9

of the IBC filed by the Appellant herein on two grounds one the Demand Notice

(Annexure A-6 at page 78 to 80 of the Appeal) was not supported with Board

Resolution and therefore, due to want of proper authorization, supported with

Board Resolution, demand notice and subsequent filing of the Application

under Section 9 of the IBC is bad in eye of law and not maintainable and

second Agreement dated 10th November, 2017 contains an arbitration clause

(para 32 at page 51 of the Appeal) therefore filing Petition under Section 9 of

the Code is gross violation of the agreement entered into between the parties

and bad in the eye of law.

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

consider that the Board Resolution dated 02 July 2019 by the Appellant

Company whereby one Mr. Jatinder Kumar was authorized to initiate

proceedings under the Code against the Respondent.

Company Appeal (AT) (Insolvency) No. 105 of 2021 5

5. It further submitted that neither the Ld. Adjudicating Authority nor the

Respondent ever raised any objection at the time of Pleadings with respect to

absence of Board Resolution or doubted the authority of the signatory of the

Operational Creditor.

6. It is further submitted that the proviso of Section 9 of the IBC provides

that the Adjudicating Authority, shall before rejecting an application under

sub-clause (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 this respect, reference may be drawn to the

Judgment of this Appellate Tribunal in the matter of Palogix Infrastructure

Private Limited Vs. ICICI Bank Limited, Company Appeal (AT) (Insolvency) No.

30 of 2017 at para 37 wherein the Tribunal has held that in case if there is a

defect in Application then the Applicant is to be granted seven (7) days' time

to remove the defect, this has not been followed. Based on these submissions

the impugned order is fit to be set aside and the Appeal be allowed.

Submissions on behalf of the Respondent

7. Learned Counsel for the Respondent during the course of argument and

in his Reply Affidavit submitted that an agreement dated 10.11.2017 executed

between the Appellant and Respondent clause No. 32 of the said agreement

which reads hereunder:

"This agreement shall be governed by Indian Laws, if any

question of dispute shall at any time during the term or

thereafter arise between the parties with respect to the

Company Appeal (AT) (Insolvency) No. 105 of 2021 6

validity, interpretation, implementation or alleged material

breach of any provision of this agreement or the rights or

obligations or the parties hereunder or regarding any

question including the question as to whether the

termination of agreement by either party has been

legitimate, then the parties shall attempt to settle such

dispute amicably between them, in the event that such

dispute has not been amicably settled within 90 days,

then such a question or dispute shall be referred to

any finally resolved by arbitration with arbitration

rules of arbitration and conciliation act 1996. For

time being in force which rules are deemed to be

incorporated by reference in the clause. The precise location

of the arbitration shall be Gurugram. All proceedings of such

arbitration, including without limitation, any agreement or

awards, shall be in the English language."

8. It is further submitted that as there were serious disputes regarding

notice of termination of agreement was given by the Appellant by e-mail dated

18.12.2018 (Annexure-2 of the Reply) which is not in accordance with the

agreement. The Respondent did not accept this resignation. After sending

mail, the Appellant accepted goods and sales are made and also payments are

received. The agreement is in force and continuous till dated 21.08.2019. The

stock received by the Appellant and sales made by the Appellant post this

date. The Respondent produced the total statement of sales made by the

Company Appeal (AT) (Insolvency) No. 105 of 2021 7

Appellant starting from the date of contract i.e. 10.11.2017 till 21.08.2019

(Annexure-3 of the Reply). The Appellant received stock from Respondent from

January, 2019 to August, 2019 and the Appellant sold goods from January,

2019 to August, 2019. The Respondent adjusted amount of commission

against stock which is in the possession of the Appellant. The Appellant

suppressed material facts and after resignation dated 18.12.2018 the contract

was continued. The agreement is in force till 21.08.2021.

9. It is further submitted that the Appellant is concealing aforesaid

transactions and received the stock in the godown and sales made by him

from 01.04.2019 to 21.08.2018 (Annexure-5 of Reply). The notice of

termination of agreement was given by the Appellant by e-mail dated

18.12.2018 which is not in accordance with the agreement as per the clause

No. 27 of the agreement. As per the agreement the Appellant has not given

notice in writing, not by registered post or by courier at the address of

Respondent. The Appellant has concealed aforesaid facts and not come with

clean hands. The invoices produced by the Appellant are totally false. Invoices

shows only minimum sale guarantee. Such clause is not in agreement. As per

the agreement 1.5% commission on value of goods sold by Appellant. The

Appellant did not produce any invoices of sale of goods supported by all

invoices of commission due from Respondent and also commission entries

with respect to some third party viz Curamed rupees found in the ledger which

is produced by the Appellant. This shows the wrong amount debited by the

Appellant in this account. The Respondent has paid Rs. 29,70,524/- against

interest and commission which is shown in the Bank statement (Annexure-4

Company Appeal (AT) (Insolvency) No. 105 of 2021 8

of the Reply). The statement of the Appellant attached with the demand notice

shows receipt of only Rs. 16,50,160/- this shows the claims are manipulated

which is reflected in false and misleading evidence and the account is not true

and not accepted by the Respondent. The statement of commission and

interest received by the Appellant from the date of the contract i.e. 10.01.2017

till today (Annexure-6 of the Reply).

10. It is further submitted that the stock lying at Appellant's godown worth

Rs. 90,55,105/- (Annexure-7 of the Reply) and the Appellant has not handed

over the stock to the Respondent till today.

11. It is further submitted that all the payment towards commission on

sales and interest on security deposit are paid to the Appellant. The

Respondent produced a summary of stock transferred to the Appellant,

onwards sales by Appellant, calculation of commission and interest, payment

of commission and interest and reconciliation of all accounts (Annexure-8 of

the Reply).

12. It is further submitted that the deposit shall carry simple interest at the

rate of 9% per annum payable on quarterly basis. The deposit amount shall

be paid by Neelkanth (Appellant) in two equal parts of Rs. 50,00,000/- in

November, 2017 and Rs. 50,00,000/- in January, 2018 (Annexure-6 of the

Reply).

13. It is further submitted that the notice is a prerequisite under Section 8

of the IBC, before filing the petition under Section 9 of the IBC, there is no

legal notice served with profound respect to the alleged notice dated

Company Appeal (AT) (Insolvency) No. 105 of 2021 9

23.08.2019. The Respondent given reply of the notice on 02.09.2019

(Annexure-9 of the Reply), there is a pre-existing dispute. The notice of

termination of agreement was given by the Appellant by e-mail dated

18.12.2018 which is not in accordance with the agreement and it was not

accepted by the Respondent. Based on these submissions, the Appellant has

not come with clean hands, therefore, the Appeal of the Appellant is not

maintainable in law and the same deserves to be dismissed with costs.

FINDINGS

14. After hearing the parties and having gone through the pleadings, we are

of the considered view that the following facts are admitted in the instant

Appeal.

 On 10.11.2017, an agreement (Annexure A-2 at page 46 to 52 of the

Appeal) was executed between the Appellant / Operational Creditor and

Respondent / Corporate Debtor whereby the Appellant was appointed

on commission basis, as the clearing and forwarding agent for the

products distributed and marketed by the Corporate Debtor.

 In terms of the aforesaid agreement the Appellant was required to

deposit with the Corporate Debtor an amount of Rs. 1,00,00,000/- in

two equal instalments of Rs. 50,00,000/- as Refundable Security

Deposits carrying simple interest @ 9% per annum payable on quarterly

basis by the Corporate Debtor to the Appellant.

 On 13.11.2017 an amount of Rs. 50,00,000/- was deposited by the

Appellant vide Cheque No. 107746 in terms of the Agreement as part of

the aforesaid refundable security deposit. The balance security deposit

Company Appeal (AT) (Insolvency) No. 105 of 2021 10

of Rs. 50,00,000/- was deposited on 30.01.2018 by the Appellant with

the Corporate Debtor vide Cheque No. 143033.

 As per case of the Appellant, some of Rs. 9,05,526/- has been made by

the Corporate Debtor and the net outstanding due is Rs. 1,21,55,928/-

which the Appellant is entitled for. The Appellant was also compelled to

terminate the Agreement dated 10.11.2017 and accordingly the

Appellant sent an email on 18.12.2018 (Annexure A-4 at page 76 of the

Appeal) to the Corporate Debtor, inter alia, again demanding the

outstanding payment/amounts from the Corporate Debtor and also

intimating the termination of the Agreement. By the said email one

Jatinder Kumar addressed to Naveen Jain informing that he has

decided to resign as C&F agent of ICI Healthcare Pvt. Ltd. as there is

kind of working environment makes it difficult for me as well as my

team and further requested to accept my resignation with effect from

today that is 18th December 2018 and clear the dues of approx. Rs. 20

Lacs in next 5 days.

 The Appellant / Operational Creditor sent a Demand Notice on

21.08.2019 (Annexure A-6 at page 78 to 80 of the Appeal) to the

Corporate Debtor under Section 8 of the IBC claiming outstanding due

of Rs. 1,21,55,928/-. The Respondent replied on 02nd September, 2019

in which it has been categorically stated that the Demand Notice does

not depict the correct financial position of the transactions between the

Appellant and the Respondent and further it has been stated that the

payment of Rs. 33,65,465/- has already been made against the invoices

Company Appeal (AT) (Insolvency) No. 105 of 2021 11

raised by the Appellant and further 'Medicine' stock of Rs. 88,67,000/-

is lying in the warehouse of the Appellant Company.

 The Adjudicating Authority dismissed the Application filed by the

Appellant herein under Section 9 of the IBC merely on two grounds;

firstly, that without authorization the Appellant had sent the demand

notice under Section 8 of the IBC and secondly without authorization

the Appellant has filed the Application under Section 9 of the IBC.

 It is also an admitted fact that clause 32 of the Agreement dated

10.11.2017 arrived between the parties, shows that such dispute has

not been amicably settled within 90 days, then such a question or

dispute shall be referred to any finally resolved by arbitration

with arbitration rules of arbitration and conciliation act 1996.

Instead of invoking Arbitration, the Appellant has filed this Application

under Section 9 of the IBC.

 After going through the record, we find that the Board Resolution

passed by the Board meeting of ICI Healthcare Pvt. Ltd on 31.02.2020

(page 142 of the Appeal) authorizes Mr. Naveen Jain to represent the

Company and take necessary action before the Hon'ble Court of

Ahmedabad. The demand notice under Section 8 of the IBC sent by the

Appellant to the Respondent on 21.08.2019 and further Application

under Section 9 of the IBC was filed on 01.10.2019 much before the

Board Resolution.

Company Appeal (AT) (Insolvency) No. 105 of 2021 12

ORDER

15. Taking all these facts and circumstances of the case, we are of the

considered view that there is no illegality in the impugned order while

dismissing the Application filed by the Appellant under Section 9 of the IBC,

therefore, the impugned order dated 18.12.2020 passed by the Ld.

Adjudicating Authority (National Company Law Tribunal), Ahmedabad Bench,

Ahmedabad in C.P. No. (IB) 784/9/NCLT/AHM/2019 is hereby affirmed.

There is no merit in the instant Appeal, the Appeal is hereby dismissed. No

order as to costs.

16. 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), Ahmedabad Bench, Ahmedabad forthwith.

[Justice Anant Bijay Singh] Member (Judicial)

[Ms. Shreesha Merla] Member (Technical)

New Delhi 09th March, 2022 R. Nath.

Company Appeal (AT) (Insolvency) No. 105 of 2021