Prayag Polytech Private Limited vs Bon Lon Petrochem Llp

[Arising out of orders dated 14.06.2019 in CP (IB) No. 383 (ND) of 2019 passed by the Ld. Adjudicating Authority (National Company Law Tribunal), New Delhi, Bench-III.]

IN THE MATTER OF:

Prayag Polytech Private Limited Through Mr. Milan Aggarwal, Director C-587, Industrial Area, Phase-1, Bhiwadi-301019 Rajasthan, India ...... Appellant. (Financial Creditor)

Versus

Bon Lon Petrochem LLP 105 First Floor, Samrat Bhawan, Ranjeet Nagar, Near Satyam Complex, New Delhi-110008 ....... Respondent. (Corporate Debtor) Present: For Appellant: Mr. Virender Ganda, Sr. Advocate with Mr. Vipul Ganda and Ms. Aastha Trivedi, Advocates. For Respondents: Mr. R.S. Raju and Mr. Saurabh Kaushik, Advocates.

JUDGMENT

(04th March, 2022)

Justice Anant Bijay Singh;

This Appeal has been preferred by the Appellant being aggrieved and

dissatisfied by the order dated 14.06.2019 in CP (IB) No. 383 (ND) of 2019 2

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

New Delhi, Bench-III whereby and where under the Application under Section

7 of the Insolvency and Bankruptcy Code, 2016 (for short IBC) filed by the

Appellant herein - Prayag Polytech Pvt. Ltd. was dismissed.

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

i) The Appellant agreed to advance certain amount as loan to the

Respondent to the tune of Rs. 1,60,00,000/- against payment of interest at

the rate of 15% per annum for the period from May 8, 2017 till date, which is

as hereunder:

Particulars Amount

(in Rupees)

Amount disbursed on 8.5.2017 50,00,000

Amount further disbursed by the Financial 80,00,000 Creditor on 9.5.2017

Balance as on 9.5.2017 1,30,00,000

Amount further disbursed by the Financial 30,00,000 Creditor on 12.5.2017

Balance as on 12.5.2017 and onwards 1,60,00,000

ii) Further case of the Appellant is that the Respondent had paid interest

and deposited the tax deducted at source in favour of the Appellant. The said

tax deducted at source is also reflected in the Form 26AS of the Appellant.

The interest payable as on December 25, 2018 is as follows:

Company Appeal (AT) (Insolvency) No. 705 of 2019 3

Particulars Amount

(in Rupees)

Total Interest Accrued 29,98,192

Less: TDS (1,64,214)

Less: Interest Paid Nil

Total Interest Payable (as on December 25, 28,33,978 2018)

iii) The Appellant sent a recall notice dated January 2, 2019 to the

Respondent, requesting it to repay the Total Amounts Due to the Appellant

which was due and payable by the Respondent to the Appellant. The

Respondent neither paid the Total Amounts Due to the Appellant pursuant to

the said recall notice or did they respond to the said recall notice.

iv) The Respondent did not repay the Total Amounts Due to the Appellant,

the Appellant initiated the Corporate Insolvency Resolution Process in relation

to the Respondent by filing Application under Section 7 of the IBC before the

Ld. Adjudicating Authority in which the total amount due including interest

shown as Rs. 1,88,33,978/- till 25.12.2018 (Annexure 2 Colly at page 33 to

93 of the Appeal).

v) The Respondent then appeared and filed a reply affidavit before the Ld.

Adjudicating Authority and after hearing the parties, the Ld. Adjudicating

Authority has dismissed the Application filed by the Appellant under Section

7 of the IBC. Hence this Appeal.

Company Appeal (AT) (Insolvency) No. 705 of 2019 4

Submissions on behalf of the Appellant

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

argument and in his Written Submissions submitted that the Appellant under

an oral agreement, disbursed an amount of Rs. 1,60,00,000/- during the

period commencing on May 8, 2017 till May 12, 2017.

4. It is further submitted that the Appellant is neither a Non-Banking

Financial Company nor registered with the Reserve Bank of India as a Non-

Banking Financial Institution or Bank under the Reserve Bank of India Act,

1934 nor has any other business related with the Respondent.

5. It is further submitted that the Ld. Adjudicating Authority dismissed

the Insolvency Petition on the basis of mere speculation and on oral

submission of the Respondent (without any supporting document), that the

amounts have been given for a period of more than 10 years.

6. It is further submitted that the Ld. Adjudicating Authority erred in not

appreciating that the amounts due is reflected in the balance sheet of the

Respondent in the name of the Appellant. Based on these submissions and

also in the eyes of law, the impugned order is fit to be set aside.

Submissions on behalf of the Respondent

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

and in his Reply Affidavit along with Written Submissions submitted that the

entire case of the Appellant as well as the Respondent is based on an alleged

oral agreement/arrangement and the correctness of the same can be verified

Company Appeal (AT) (Insolvency) No. 705 of 2019 5

only by leading evidence available to both the parties and cannot be done in

summary proceedings before NCLT/NCLAT.

8. It is further submitted that the Appellant did not file any books of

accounts maintained by them under Section 186(p) of the Company's Act.

2013 nor placed any document / resolutions in respect of the transaction

involved in the present proceedings, therefore, the Ld. Adjudicating Authority

has rightly passed the Impugned Order. Based on these submissions, no

merit in the Appeal, the Appeal is fit to be dismissed.

FINDINGS

9. 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 claim of the Appellant that the loan is payable on demand and recall

notice sent on 02.01.2019 to pay the amount by 09.01.2019, in this

regard no reply given by Respondent, hence in default from 09.01.2019.

 The Respondent has taken the stand that the notice at page No 59 of

the Appeal is different from the correct address mentioned by the

Appellant themselves at page No. 42 of the Appeal and thus no delivery

was ever made. Further, a track report of the Post Office as "Not

Delivered Unclaimed" at page 63 of the Appeal filed by the Appellant

themselves shows there is not cause of action.

 The entire case of the Appellant as well as the Respondent is based on

an alleged oral agreement/arrangement and the correctness of the

Company Appeal (AT) (Insolvency) No. 705 of 2019 6

same can be verified only by leading evidence available to both the

parties before the Civil Court and cannot be done in summary

proceedings before NCLT/NCLAT. The disputed facts are arrived

between the parties as hereunder:

Sl. Facts as per the Appellant Facts as per the Respondent No. i. Relies on alleged oral Oral understanding but claims of agreement. Claims that the the said oral understanding amount remitted was a disputed. The amount remitted loan. was not a loan but as investment with Corporate Debtor and the details in Reply filed before NCLT.

ii. Loan of Rs.1,60,0000/- Amount was remitted to the was given to the Corporate account of corporate debtor for Debtor. long term investment.

iii. Interest chargeable was No interest was specifically 15% p.a. for the period payable.

08.05.2017 till date.

iv. Said Loan is Payable on No such arrangement or demand. agreement was arrived at. It was agreed that the amount has to be kept for long term of 10 years.

v. Claims to have sent notice No notice whatsoever was recalling the loan on received. The said claim is false on 02.01.2019. the face of the record in as much as:

Company Appeal (AT) (Insolvency) No. 705 of 2019 7

a) The alleged notice was sent to a wrong address and not the address of the Corporate Debtor;

b) The Postal Tracking Report filed by the Appellant says that the post was not delivered;

c) That the Appellant has made false averments before the NCLT stating that even after service the Corporate Debtor has not paid the amount; and

d) The Appellant has falsely claimed that the same is served.

vi TDS has been deducted by a) TDS was deducted for interest the Corporate Debtor. at the rate of 11% p.a. as required under law;

b) No payment made to the Appellant. The said interest added to the long term Borrowings; and,

c) No amount is due as alleged.

vii The Appellant is a company a) No such loan was ever granted;

under Companies Act and b) No entry in the relevant is a defaulter in filing registers prescribed by law are financial statements from maintained by the Appellant;

time to time. c) The Appellant has not filed any documents of its own to prove its The Appellant has not case; brought on record its books d) Claims that the loan is based on of account and balance oral agreement. sheet to show that the

Company Appeal (AT) (Insolvency) No. 705 of 2019 8

alleged amount was a short terms loan.

 It is seen from the record that the Appellant has not disputed the rate

at which the interest was payable either before the Adjudicating

Authority or before this Tribunal and therefore we are of the view that

the claim of the Appellant that interest was payable at 15% per annum

is not substantiated by any documentary evidence. We find force in the

contention of the Counsel for the Appellant that the amount remitted

by the Appellant has been reflected in the Balance Sheet of the

Respondent Company as 'Long Term Borrowings' due to its tenure being

10 years and later to be converted to 'Investment'. Hence, we are of the

view that the amount cannot be construed as a 'default' as on January,

2019. We are satisfied that the Appellant could not establish any

'default' on the part of the Respondent by way of any documentary

evidence.

 It is also an admitted fact that the Balance Sheet of the Respondent

which was relied on by the Appellant, perusal thereof, crystal clear that

the amount was accepted by the Respondent for investment purposes.

ORDER

10. 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 7 of the IBC,

therefore, the impugned order dated 14.06.2019 passed by the Ld.

Company Appeal (AT) (Insolvency) No. 705 of 2019 9

Adjudicating Authority (National Company Law Tribunal), New Delhi, Bench-

III in CP (IB) No. 383 (ND) of 2019 is hereby affirmed. There is no merit in the

instant Appeal, the Appeal is hereby dismissed. No order as to costs.

11. 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-III, forthwith.

[Justice Anant Bijay Singh] Member (Judicial)

[Ms. Shreesha Merla] Member (Technical)

New Delhi 04th March, 2022 R. Nath.

Company Appeal (AT) (Insolvency) No. 705 of 2019