P M Cold Storage Pvt Ltd vs Goouksheer Farm Fresh Pvt. Ltd. Through ...

P.M. Cold Storage Pvt. Ltd. Through Interim Resolution Professional, Having its registered office at 1A, Madan Mohan Burman Street, Kolkata-700007. West Bengal. ... Appellant

Versus

Goouksheer Farm Fresh Pvt. Ltd. Having its registered office at 63/3B, Sarat Bose Road, Kolkata-700025. West Bengal. ...Respondent No. 1

Mr. Sanjeev Jhunjhunwala, Resolution Professional, Siddha Weston, Suit No. 134, 1st Floor, 9, Weston Street, Kolkata - 700013. West Bengal. ...Respondent No. 2

Present

For Appellant: Mr. Vijay Singh and Mr. Prabhat Ranjan, Advocates. Mr. Pyanshu Upadhyay, Advocate for Ex-Directors.

For Respondents: Mr. Soumya Dutta, Advocate for Respondent No. 2.

JUDGMENT

(Date: 14.09.2022)

[Per: Dr. Alok Srivastava, Member (Technical)]

Company Appeal (AT) (Insolvency) No. 615 of 2020 Page 1 of 16 This appeal has been preferred under section 61(1) of the

Insolvency and Bankruptcy Code, 2016 (in short 'IBC') assailing

the order dated 17.6.2020 (hereinafter called 'Impugned Order')

passed in IA(IB) No NIL/KB/2020 in C.P (IB) No. 1582/KB/2019

passed by the Adjudicating Authority (National Company Law

Tribunal, Kolkata). The Adjudicating Authority has dismissed the

application filed by the Applicant P.M. Cold Storage Pvt. Ltd.

(Appellant in this appeal), whereupon the claim filed by the New

Hind Silk House Pvt. Ltd. has been considered admissible in the

Corporate Insolvency Resolution Professional (CIRP) of the

corporate debtor Goouksheer Farm Fresh Pvt. Ltd.

2. In brief, it is the case of the Appellant that after initiation of

CIRP consequent to the order by the Adjudicating Authority in C.P

(IB) No. 1582/KB/2019, a Committee of Creditors (CoC) was

constituted by the Interim Resolution Professional (IRP) with the

Appellant as the sole financial creditor in the CoC with 100%

voting rights. He has further stated that after the initiation of

CIRP on 13.12.2019, the first CoC meeting took place on 8.1.2020,

wherein the IRP informed the CoC that the claim of the Appellant

as financial creditor was the only claim received upto 26.12.2019

amounting to Rs.65,80,505.00. He has further stated that certain

decisions were taken in this CoC meeting relating to fee of

Company Appeal (AT) (Insolvency) No. 615 of 2020 Page 2 of 16 Resolution Profession (in short RP), appointment and engagement

of "I.P.E Egress Insolvency Professional LLP", estimated CIRP cost

alongwith expenses relating to registered valuers and statutory

auditor. He has further stated that the sole financial creditor

requested for an urgent meeting of the CoC vide e-mail dated

23.1.2020 regarding the expenses and appointment of

professionals done in the previously held CoC meeting and not

being satisfied with the projected expenses, he filed IA

392/KB/2020 on 13.2.2020 for replacement of RP. He has later

informed by the Resolution Professional in the 4th CoC meeting

held on 11.3.2020 that the CoC had been reconstituted, with the

admission of claim of another financial creditor New Hind Silk

House Pvt. Ltd. (in short 'NHSH') and its inclusion in the CoC with

admitted claim of Rs.1,96,63,603.00 and with this addition of the

second financial creditor, the voting share of the Appellant was

reduced to 25.07% from 100% in the CoC.

3. The Appellant has further stated that the claim filed by

NHSH was suspicious because of various discrepancies in the

documents filed with Form C. He has also stated that the IRP

being aggrieved by the action of the Appellant by filing IA No.

392/KB/2020 for his replacement went on to admit this doubtful

claim of NHSH to the detriment of the Appellant, and aggrieved by

Company Appeal (AT) (Insolvency) No. 615 of 2020 Page 3 of 16 this action of the RP, he filed IA (IB) No. NIL/KB/2020, which was

dismissed by the Impugned Order dated 17.6.2020, whereupon

aggrieved by this order, the appellant has preferred this appeal.

4. We heard the arguments of both sides in the appeal and also

perused the record.

5. The Learned Counsel for Appellant has argued that the claim

of NHSH admitted by the RP is barred by limitation and therefore

his inclusion in the CoC on the basis of such a claim is not legal.

He has elaborated that the claim in Form C submitted by NHSH on

26.2.2020 is verified by NHSH on 26.12.2020, which raises doubt

about its authenticity. He has further submitted that the

acknowledgment of debt pf NHSH which is purportedly signed by

the corporate debtor and referred in the Impugned Order in

paragraph 10, is unclear about the person who has signed it. He

has argued that the last payment in the repayment of the said debt

was made by the corporate debtor on 5.8.2016. The claim has

been taken to be within limitation on the basis of acknowledgment

of debt signed by an unknown person belonging to corporate

debtor on 1.4.2017 and since this document is unauthentic, the

claim is barred by limitation.

Company Appeal (AT) (Insolvency) No. 615 of 2020 Page 4 of 16

6. It is claimed by the Learned Counsel for the Appellant that

two acknowledgments of the debt dated 1.4.2016 and 1.4.2017 are

ostensibly signed by directors of the corporate debtor. He has

reproduced the signatures of the directors who were on the board

of directors of the corporate debtor from the record of Ministry of

Corporate Affairs' website to show that Shrestha Jha, Sandeep

Agarwal and Dhruv Agarwal, who were directors on the corporate

debtor company on 1.4.2016 (which is the date on which the

acknowledgment of debt is given on the Ledger account Statement)

have different signatures than the one that appears on the

document showing acknowledgment by the corporate debtor of the

debt (at page 196 of the appeal paperbook). In a similar manner,

the document which is produced to show confirmation of debt as

on 1.4.2017 (attached at page 197 of the appeal paperbook) is

supposed to be signed by a person and the signature does not

match the signature either of Shrestha Jha, Sandeep Agarwal and

Dhruv Agarwal as appearing in record uploaded on Ministry of

Corporate Affairs website. He has further submitted that Shrestha

Jha resigned from the board of directors of corporate debtor on

30.3.2019 and Sandeep Agarwal and Dhruv Agarwal both resigned

from the board of directors of corporate debtor on 8.1.2019. He

has argued that the mismatch of signatures raises distinct doubt

about the authenticity of two documents at pages 196 and 197 of

Company Appeal (AT) (Insolvency) No. 615 of 2020 Page 5 of 16 the appeal paperbook and therefore, these documents which are

the basis for considering the claim to be within limitation should

not be relied upon.

7. The Learned Counsel for Appellant has further stated that

the claim filed by the NHSH is purported to be given by hand, even

though it is a normal practice in the present times that claims are

filed either by electronic mail or registered/speed post, so that date

of submission is certain.

8. The Learned Counsel for Appellant has claimed that the RP

has failed to perform his duty which is stipulated in regulation 13

(1) of the Insolvency and Bankruptcy Board of India (Insolvency

Resolution Process for Corporate Persons) Regulations, 2016 (in

short 'CIRP Regulations') in verifying the genuineness and

authenticity of the documents submitted by NHSH, which is a

serious dereliction of duty and the Appellant is pursuing action

with respect to the conduct of the RP before the Hon'ble Delhi High

Court. He has further argued that the Adjudicating Authority has

failed to appreciate the fact that the balance sheets for the

financial years 2016-17, 2017-18 and 2018-19 were prepared by

the RP through auditors, on 12.3.2020, after the RP had admitted

the claim of NHSH. He has also submitted that the Appellant has

Company Appeal (AT) (Insolvency) No. 615 of 2020 Page 6 of 16 filed application IA-392/KB/2020 for change of RP on 13.2.2020

and it is quite probable that the RP, hurt by such action of

Appellant, admitted a time-barred claim to NHSH on 2.3.2020,

thereby inducting NHSH in the CoC with 74.93% voting rights,

which has severely harmed the interest of the Appellant in the

insolvency resolution process of the corporate debtor. He has also

submitted that the application before the Adjudicating Authority

and also the present appeal do not suffer from any non-joinder of

two directors of the corporate debtor since the Appellant has

assailed the action of the RP in admitting the claim of NHSH in the

CIRP of the corporate debtor.

9. The Learned Counsel for RP/Respondent No. 2 (R-2 in short)

has argued that only ground on which the Appellant is challenging

the admission of NHSH's claim relates to limitation. He has agued

that in the light of confirmation of balance dated 1.4.2017, which

is signed by the corporate debtor, the said claim is clearly within

limitation as the Section 7 petition was filed on 25.9.2019. He has

further submitted that the Appellant was the lone member of the

CoC at the beginning of CIRP, and it was only after 27.2.2020,

when a claim of Rs.1,96,63,603/- of NHSH was admitted that the

Appellant felt that his interests were being severely affected and it

started raising question that the claim of NHSH was time-barred.

Company Appeal (AT) (Insolvency) No. 615 of 2020 Page 7 of 16

10. The Learned Counsel for R-2 has further submitted that

NHSH has submitted ledger account showing balance dues, which

confirmed by the corporate debtor on 1.4.2016 and again on

1.4.2017, bank statement of NHSH showing initial payment to the

corporate debtor and Form 26AS showing TDS deposited by the

corporate debtor in support of its claim. He has further submitted

that the RP has verified the claim in accordance with Regulation

14 of CIRP Regulations, 2016 and it was only after complete

verification of the said claim that he proceeded to admit it.

11. The Learned Senior Counsel for R-2 has further argued that

since inclusion of NHSH's claim severely affected the vote share of

the Appellant in the CoC, it started raising frivolous objections

regarding admission of NHSH's claim and inclusion in the CoC and

this issue was discussed threadbare in the 5th meeting of CoC on

3.6.2020, when the RP had suggested taking legal opinion in the

matter, which was also done. He has claimed that the RP has

issued a detailed response to the objections of Appellant vide e-

mail dated 7.6.2020 and in the light of documents, particularly,

the balance confirmation by the corporate debtor on 1.4.2017 and

also the of in the outstanding debt in the balance sheet, the said

claim is clearly within limitation. Regarding receiving the claim of

Company Appeal (AT) (Insolvency) No. 615 of 2020 Page 8 of 16 NHSH in person, the Learned Counsel for R-2 has said that there

is no bar in the CIRP Regulations that the claim cannot be received

by hand. Also, an issue raised by the Appellant that the date of

verification of Form C is 26.12.2019, even though the Form was

submitted on 26.2.2019 is due to typographic error. He has

further argued that suspended directors of the corporate debtor

have confirmed to the RP that the balance confirmations were

signed by the corporate debtor and made available to NHSH, and

therefore, they are the actual confirmations provided by the

corporate debtor to NHSH.

12. The Learned Counsel for R-2 has argued that this appeal is

not maintainable because the Appellant has challenged the action

of suspended directors in signing the balance confirmation

documents, but they have not been impleaded in the appeal, and

therefore, the appeal suffers from the deficiency of non-joinder of

necessary parties. In any case, he has argued that acceptance of

NHSH claim is a matter between RP and NHSH and the Appellant

cannot have any grievance against acceptance of such claim. He

has finally submitted that in view of the documents submitted

regarding the claim of NHSH, it is well within limitation and has

been correctly admitted by the RP, which has also been upheld by

Company Appeal (AT) (Insolvency) No. 615 of 2020 Page 9 of 16 the Adjudicating Authority and, therefore, the appeal should be

dismissed.

13. The main issue that arises in this appeal is whether the

claim submitted by NHSH is under limitation based on the

documents submitted alongwith the claim in Form C, and whether

the RP has looked into the veracity and genuineness of the said

claim in the light of provisions of IBC and regulations 13 and 14 of

CIRP Regulations.

14. We note that the Adjudicating Authority has considered

various documents submitted by NHSH regarding its claim along

with Form C and held that RP has considered and screened all the

documents properly as per the provisions of IBC and CIRP

Regulations and further the allegations made by the Appellant

have not been substantiated. In addition, he has held that the

application is also bad for non-joinder of two directors of the

corporate debtor, who had signed the confirmations of ledger

account. As a result, the IA filed by P.M. Cold Storage Pvt. Ltd.

before the Adjudicating Authority was dismissed by the Impugned

Order.

Company Appeal (AT) (Insolvency) No. 615 of 2020 Page 10 of 16

15. We also note that the Appellant had filed IA-392/KB/2020

on 13.2.2020, for replacement of the RP and the grounds stated in

this Interlocutory Application were relating to high expenses of the

RP, appointment of Transaction Auditor and professional fee of

other personnel engaged by the RP. He had sent e-mail dated

23.01.2020requesting for an urgent meeting of the CoC and this

Interlocutory Application IA-392/KB/2020 was accepted for

hearing by the Adjudicating Authority and dismissed vide order

dated 26.5.2020.

16. We now look at the veracity or otherwise of documents filed

by NHSH alongwith Form C regarding its claim in the light of

contentions of the rival parties and on basis of record.

17. The RP has accepted the confirmation of ledger accounts of

the corporate debtor with respect to NHSH as on 1.4.2016 and

1.4.2017 (attached at pp.196-197 of the appeal paperbook

respectively). The Learned Counsel for Appellant has challenged

the signatures of the representatives of corporate debtor on both

these documents and stated that the corporate debtor has shied

away from disclosing identity of directors, who have signed the

balance of statement acknowledging the said debt. In the counter

affidavit filed on behalf of RP that in paragraph 12, it is stated that

Company Appeal (AT) (Insolvency) No. 615 of 2020 Page 11 of 16 "the directors of the corporate debtor have also confirmed the

genuineness of the balance confirmations', but nowhere the name

or identity of such directors has been disclosed. The Appellant has

looked at the record relating to the corporate debtor uploaded on

the Ministry of Corporate Affairs' website to find out the name of

directors who were on the board of corporate debtor as on

1.4.2016 and also 1.4.2017, and also looked at their signatures as

they appear on Form DIR-22 filed by the corporate debtor with the

Registrar of Companies (and uploaded on the MCA portal). He has

reproduced these signatures in Document 2 titled "Comparisons

Chart of the signatures of the CD" (attached at pp. 29-30 of the

Short Synopsis filed vide dy. No. 38883 dated 26.8.22) to show

that the signatures, as they appear in the balance confirmations

given by the corporate debtor's directors and the signatures of the

corporate debtor's directors, who were part of the board of

corporate debtor on the relevant dates do not match at all. We

also take note of the fact that the said directors, namely Shrestha

Jha resigned on 30.3.2019 and Sandeep Agarwal and Dhruv

Agarwal resigned on 8.1.2019 from the position of directorship of

corporate debtor and the new directors Atul Kumar Mandal and

Nilay Swarnakar were inducted into the board of directors on

5.1.2019. It does not stand to reason and logic as to how the

present directors could authenticate the signatures of past

Company Appeal (AT) (Insolvency) No. 615 of 2020 Page 12 of 16 directors who supposedly signed the confirmation of documents on

1.4.2016 and 1.4.2017. Moreover, these balance confirmations

were ostensibly given in person to the RP as claimed by the RP,

hence, they should normally contain signature of the person

receiving these documents in the office of RP. In view of the afore-

stated reasons, we are not persuaded about the authenticity and

veracity of ledger account confirmations and are of the opinion

that they cannot be taken as written acknowledgement of the

balance debt.

18. We also note that the balance sheets for FY 2016-17, FY

2017-18 and FY 2018-19 were prepared by the RP through

Auditors on 12.3.2020. We note that at the point of initiation of

CIRP, only balance sheet for the FY 2015-16 was available. Thus,

the inclusion of the debt of NHSH in the balance sheet for FY

2015-16 in the 'Notes to Financial Statement' (attached at pp.125-

130 of the appeal paperbook) also does not appear to be reliable as

the relevant page 127 of the appeal paperbook does not contain

the seal of the Chartered Accountant M.D. Deboo and the

company. Thus, we are unable to place reliance of balance sheets

for the relevant FY 2016-17, FY 2017-18 and FY 2018-19

regarding acknowledgment of debt. Since they were prepared on

12.3.2020, and contain the admitted claim of NHSH which is in

Company Appeal (AT) (Insolvency) No. 615 of 2020 Page 13 of 16 question. Thus, in view of the fact that the last payment by the

corporate debtor was made to the financial creditor NHSH on

5.8.2016 and the claim was filed on 26.2.2019. We find that the

claim is barred by limitation.

19. We also consider the point raised by the Learned Counsel for

R-2 that the appeal suffered from non-joinder of two directors, who

have signed the ledger account confirmations but were not

enjoined parties in the Section 7 application before the

Adjudicating Authority nor in this appeal. We are of the view that

the acceptance/admission of claim of NHSH was done by the RP

and the Appellant is affected by this action of RP. He has joined

the RP as respondent in the appeal and therefore, we hold that the

appeal is properly constituted.

20. The fact that the corporate debtor has paid TDS on interest

payable cannot be considered as acknowledgment in writing of the

liability by the corporate debtor and therefore, such TDS payment

will not have any effect of being an acknowledgment of said debt.

21. We also find that rule 13 of CIRP Regulations, which is

regarding verification of claims by the IRP/RP, enjoins on the

IRP/RP the responsibility of verifying every claim submitted and

Company Appeal (AT) (Insolvency) No. 615 of 2020 Page 14 of 16 maintain a list of creditors for inspection by members and other

stakeholders in the CIRP. We are, therefore, of the view that since

the voting share in the CoC is extremely relevant and important

element in the CIRP insofar as the insolvency resolution of the CD

is concerned. It was the duty of the RP to exercise necessary care

and diligence in verifying the claims and scrutinise the documents

submitted with Form C for genuineness and authenticity. Such

exercise does not appear to have been done by the RP in the

present case. We would, therefore, urge the Insolvency and

Bankruptcy Board of India to investigate this matter further

regarding the conduct of RP and take necessary action under the

regulation.

22. In view of the detailed analysis and discussion above, we

come to clear conclusion that documents on which the RP relied

on in accepting and admitting the claim of NHSH and inducting it

as a member of CoC does not inspire confidence and should not

have been relied upon by the RP in admitting the claim of the

NHSH being within limitation. The Adjudicating Authority has,

therefore, committed an error in upholding the admission by RP of

claim of NHSH. Accordingly, we set aside the Impugned Order and

direct that NHSH shall not be a member of CoC in the CIRP of

Company Appeal (AT) (Insolvency) No. 615 of 2020 Page 15 of 16 Goouksheer Farm Fresh Pvt. Ltd. The appeal is disposed of with

these directions.

23. There is no order as to costs.

(Justice Rakesh Kumar Jain) Member (Judicial)

(Mr. Kanthi Narahari) Member (Technical)

(Dr. Alok Srivastava) Member (Technical)

New Delhi 14th September, 2022

/aks/

Company Appeal (AT) (Insolvency) No. 615 of 2020 Page 16 of 16