Prayag Polytech Pvt. Ltd vs Prayag Tubes Pvt. Ltd

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Ins) No. 485 of 2021 IN THE MATTER OF: M/s Prayag Polytech Pvt. Ltd. ...Appellant Vs. M/s Prayag Tubes Pvt. Ltd. ...Respondent Present: For Appellant: Mr. Vipul Ganda, Mr. Aman Choudhary, Ms. Guresha Bhamra, Advocates For Respondent: Mr. Robin Singh Sirohi, Mr. Ajay Gaggar, Mr. Uttiyo Malik, Advocates for R1

ORDER

(Through Virtual Mode)

17.11.2021: We have heard Shri Vipul Ganda, Learned Counsel appearing

for the Appellant and Learned Counsel for the Respondent.

2. This appeal u/s 61 of the 'Insolvency and Bankruptcy Code' 2016 ('I&B')

Code has been filed against the impugned order dated 04.03.2021 passed by the

'National Company Law Tribunal', New Delhi Bench in Company Petition IB No.

2923/ND/2019 by which the application filed by the Appellant as 'Operational

Creditor' has been rejected refusing for initiating the Insolvency process.

3. The Appellant / Applicant has supplied the master batches to the

Respondent for which the Appellant had raised various invoices totalling a sum

of Rs. 13,78,404/-. Out of the said amount, the Appellant had received only an

amount of Rs. 6,62,944/- and there was a balance of Rs. 7,15,460/-. A Demand

Notice in Form No. 3 was served by the Appellant on 09.08.2019 which was

replied by the Respondent on 27.08.2019 denying the debt or their liability. The

Company Appeal (AT) (Ins) No. 485 of 2021 1 Appellant filed an Insolvency Petition on 24.10.2019 to which reply was filed.

The 'Adjudicating Authority' by the Impugned order dated 04.03.2021 had

rejected the application.

4. The 'Adjudicating Authority' has taken note of the reply of the 'Corporate

Debtor' and has come to the conclusion that the amount which is claimed to be

due by the Appellant was actually adjusted for payment of dues of a groups

company namely 'M/s Prayag Polymers Pvt. Ltd'. Accepting the said defense of

the Respondent, the application has been rejected.

5. Learned Counsel Shri Vipul Ganda appearing for the Appellant challenging

the order, contends that the letter was issued by Mr. Devender Kumar Aggarwal,

permitting that the adjustment of the said amount for M/s Prayag Polymers Pvt.

Ltd. but Mr. Devender Kumar Aggarwal was not authorised to do so and merely

because Mr. Devender Kumar Aggarwal has consented for such adjustment, the

Respondent cannot be said to be relieved of the liability to pay the balance

amount. He further submits that, that amount was never paid to the Appellant,

hence the default was committed. Hence, the application ought to have been

admitted and the 'Adjudicating Authority' committed error in rejecting the said

application. He further has referred to a settlement dated 18.12.2019 which has

two groups i.e. R.K. Groups and D.K. Groups, where he submit that the various

clauses indicates that there was no authority with the D.K.Group to issue any

letter or issued any document or deed.

6. Learned Counsel Shri Vipul Ganda further submitted that letter was never

issued by Mr. Devender Kumar Aggarwal as purported. He submits that no

Company Appeal (AT) (Ins) No. 485 of 2021 2 'Board Resolution' has been placed on record authorising Mr. Devender Kumar

Aggarwal to issue such letter.

7. The submissions of the Learned Counsel for the Appellant have been

refuted by the Respondent who submits that the amount which is claimed by

the Appellant was actually permitted to be adjusted against the dues of M/s.

Prayag Polymers Pvt. Ltd.

8. Learned Counsel has referred to, in this context the letters dated

29.11.2018 and 30.11.2018 which was signed by Mr. Devender Kumar Aggarwal

as Managing Director. He has also referred to the letter of M/s. Prayag Polymers

Pvt. Ltd. of same date 30.11.2018, where acknowledgement of debt, where it

has been confirmed that amount of Rs. 7,15,460.67/- payable to M/s Prayag

Polytech Pvt. Limited against the supplies made has been adjusted against the

outstanding loan repayable by M/s. Prayag Polytech Pvt. Ltd.

9. We have considered the submissions of the learned Counsel for the parties

and perused the records.

10. The reply to the Demand Notice which was sent by the Respondent, in the

reply. The facts in detail with regard to adjustment of claim of the amount has

been mentioned, which has been noticed by the 'Adjudicating Authority' in the

impugned order.

11. Learned Counsel for the Respondent has taken us to the letters which was

issued by Mr. Devender Kumar Aggarwal, Managing Director on 30.11.2018

which is to the following effect.

Company Appeal (AT) (Ins) No. 485 of 2021 3 "This is with reference to your letter dated

29.11.2018 requested us for adjustment of

outstanding payment of Rs. 7,15,460.67/-

against supplies made to you during the period

April 18 to September 18 including opening

balance with outstanding balance of loan of your

sister concern, M/s Prayag Polymers Private

Limited 2483-84, Prayag Infinity House, Nalwa

Street, Chuna Mandi, Pahar Ganj, New Delhi -

110055. Payable by us to them.

In this connection we hereby adjusting your

outstanding dues (against supplies made) with

loan amount payable by us to M/s Prayag

Polymers Private Limited.

Now after the above adjustment, your account

has become nil and nothing is payable by your

company."

12. Another letter on which, reliance has been placed by the Learned Counsel

for the Respondent, a letter of the same date which was issued by M/s Prayag

Polymers Pvt. Ltd. which was to the following effect: -

"This is with reference to your letter dated

30.11.2018 today we hereby confirm that amount of

Rs. 7,15,460.67/- payable by you to M/s Prayag

Company Appeal (AT) (Ins) No. 485 of 2021 4 Polytech Private Limited Registered Office 1106,

Vikram Tower, 16 Rajendra Place, New Delhi

110008(India) against supplies made, is being

adjusted against outstanding loan re-payable by

Prayag Polytech Private Limited to us."

13. The submission of the Learned Counsel for the Appellant is that Mr.

Devender Kumar Aggarwal was not entitled to issue such letter. He further

submits that no 'Board Resolution' has been filed where Mr. Devender Kumar

Aggarwal was authorised to issue letter regarding adjustment of the dues of

another company i.e. 'Prayag Polymers Pvt. Ltd.' However, it is not disputed

that Mr. Devender Kumar Aggarwal was the Managing Director on the day when

the letter was issued on 30.11.2018. The Managing Director of the Company is

fully entitled to discharge day-today functions.

14. We are of the view that with regard to the issuance of the letter dated

30.11.2018 there was no requirement of the Board Resolution. The Managing

Director who is defined in the Companies Act is clearly is empowered to carry

on day to day functions of the company. When the Board Resolutions are

necessary have also been contemplated u/s 179(3) of the Companies Act and

we are not persuaded to accept the submission of Learned Counsel for the

Appellant that there ought to have been a Board Resolution in favour of Mr.

Devender Kumar Aggarwal for issuance of letter dated 30.11.2018. The letter

was issued by the Managing Director which is proved from materials brought on

Company Appeal (AT) (Ins) No. 485 of 2021 5 record. No error has been committed by the 'Adjudicating Authority' in relying

on the said letter.

15. The view taken by the 'Adjudicating Authority' that there was no default,

since the amount claimed by the Petitioner i.e. the Appellant has been adjusted

for which there was sufficient material on the record. There is no error in the

order of Adjudicating Authority which needs interference by this Court in this

Appellate Jurisdiction.

With this, we do not find any merit in the appeal. The appeal is

dismissed.

16. We make it clear that the order passed in this appeal or the impugned

order passed by the 'Adjudicating Authority' shall have no bearing on the rights

of the parties in any other proceedings.

[Justice Ashok Bhushan] Chairperson

[Justice Jarat Kumar Jain] Member (Judicial)

[Dr. Ashok Kumar Mishra] Member (Technical) Shashi/nn

Company Appeal (AT) (Ins) No. 485 of 2021 6