Ravi Kumar Tomar vs Newgen Speciality Plastics Ltd. & Anr

(Arising out of the order dated 24.12.2021 passed by the National Company Law Tribunal, New Delhi Bench, Court No. III in IB-230/ND/2020)

IN THE MATTER OF: RAVI KUMAR TOMAR S/o Shri Jaipal Das Ex-Director of Royal Polyurethane (India) Pvt. Ltd. R/o House No. 3034, Ground Floor, ELDECO, Sonipat, Haryana ...Appellant

Versus

NEWGEN SPECIALITY PLASTICS LTD. Through its Liquidator, Shri Sandeep Kumar Bhatt Office: 83-B, Pocket-IV, Mayur Vihar, Phase 1, Delhi 110091 Eamil Id: vk.singh@newgenpoly.com ...Respondent No. 1

ROYAL POLYURETHANE (INDIA) PVT. LTD. Through its Interim Resolution Professional Shri Rakesh Kumar Parakh Regn. No. IBBI/IPA-001/IP-00272/2017- 18/10516 Email Id. Parakh.rajesh@gmail.com Office: 507, Plot No. 3B1, Twin District Centre, Sector 10, Commercial Block of Hotel cum ... Respondent No. 2 Commercial Building, Rohini, Delhi 110085

Present: For Appellant: Mr. Rajat Aneja, Ms. Aditi Shastri, Advocates 2

For Respondents: Mr. Mohit Nandwani, Adv. For R1 CMA Sandeep Kr. Bhatt and CMA Kamal Tyagi, Advocates for Liquidator

JUDGMENT

Per: Justice Rakesh Kumar Jain.

This appeal has been filed by an Ex-Director of M/s Royal

Polyurethane (India) Pvt. Ltd. (Corporate Debtor) against the order dated

24.12.2021 passed by the Adjudicating Authority (National Company Law

Tribunal, New Delhi Bench, Court No. III) by which an application filed

under Section 9 of the Insolvency and Bankruptcy Code, 2016 (in short

'Code') read with Rule 6 of the Insolvency and Bankruptcy (Application to

Adjudicating Authority) Rules, 2016 (in short 'Rules') by M/s Newgen

Speciality Plastic Ltd. (Operational Creditor)/Respondent No. 1 has been

admitted.

2. In brief, the case set up by Respondent No. 1 before the Adjudicating

Authority is that the Corporate Debtor had placed a purchase order dated

10.08.2018 for supply of Ice Box and Carrier Frames for a sum of Rs.

4,67,98,086/-. It is alleged that the Operational Creditor had carried out its

contractual obligation successfully and issued various invoices No. 0423, M-

0468, 0487 and 0533 respectively. The Corporate Debtor had accepted the

invoices and made part payments and no dispute was raised about the

invoices. It is alleged by the Operational Creditor that last order for the Ice

Box and Carrier Frames was delivered on 15.03.2019 and since the

payments were not being made, it called upon the Corporate Debtor through

notice to pay a sum of Rs. 27,15,669/-. This application was contested by

the Appellant by filing a reply in which it is averred that it was engaged as a

Company Appeal (AT) (Insolvency) No. 65 of 2022 3

dealer by the Operational Creditor on 09.08.2019 to manage the

distribution of boxes from Hyderabad to various districts of Telangana and

pursuant to a contract awarded by the Govt. of Telangana in favour of the

Respondent No. 1, The Respondent No. 2 placed the purchase order dated

10.08.2018 for a sum of Rs. 4,67,98,086/- for supply of Ice Box and Carrier

Frames against which the Respondent made an advance payment of Rs.

29,51,011/- to the Operational Creditor and thereafter, the goods worth Rs.

27,15,699.11/- was supplied by the Operational Creditor through the

invoice. It is alleged that after adjusting the advance amount of Rs.

29,51,011/- against the invoice of Rs. 27,15,699.11, the operational creditor

was liable to refund Rs. 2,35,341.89/- but instead of refunding this

amount, the Operational Creditor sent a notice dated 31.07.2019 in terms of

Section 8 of the Code alleging that the outstanding debt is of Rs.

27,15,669/-. It is also averred that the said demand notice was replied on

23.08.2019 and the refund of Rs. 2,35,341.89/- was claimed. It is also an

admitted fact that before goods could have been supplied by Respondent No.

2 to Respondent No. 1, the CIRP proceedings were initiated against the

Respondent No. 1 in a separate case on 19.11.2018 and according to the

Appellant the advance payment was made by the Respondent No. 2 to

Respondent No. 1 for the supply of goods under the same purchase order

dated 10.08.2018 and thus, by mere initiation of CIRP against the

Respondent No. 1 will not invalid the advance made by the Respondent No.

2 to the Respondent No. 1 in relation to the same purchase order dated

10.08.2018.

Company Appeal (AT) (Insolvency) No. 65 of 2022 4

3. On the other hand, Counsel for Respondent No. 1 has submitted that

it is undergoing liquidation in which the liquidator has been appointed on

07.01.2019 by the Adjudicating Authority. The supplies were made during

the CIRP i.e. 24.11.2018 and 15.03.2019 and former RP/Liquidator had

never confirmed that the supplies have been made against the advance. The

supplies were made so that funds may be made available with Respondent

No. 1 to run the Company. It is alleged that insolvency commencement date

of the Corporate Debtor has a great significance because thereafter

moratorium was imposed, IRP is appointed, the officers of the management

of the Corporate Debtor are suspended and any dues prior thereto of the

Corporate Debtor can only be claimed by filing a claim with the Insolvency

Professional of the Corporate Debtor but the settlement of pre-CIRP dues

against the supplies made after the insolvency commencement date is not

legal. In this regard, reference has been made to the case of Uttrakhand

Power Corporate Ltd. Vs. M/s ANG Industries Ltd. CA (AT) (Ins) No. 298 of

2017 to contend that the dues, unpaid for the period prior to insolvency

proceedings can be recovered only by submitting a claim before the RP. It is

further submitted that any transfer of property of the Corporate Debtor on

account of an antecedent debt to a creditor shall be a preferential

transaction whereas in the case of Binani Industries Ltd. Vs. Bank of

Baroda & Anr. CA (AT) (Ins) No. 82 of 2018, it has been held that non-

differential treatment of similarly situated creditors shall be maintained. It

is also urged that after the moratorium, payment/settlement of pre-CIRP

claim during the CIRP period is contrary to Section 14 and in this regard a

decision of this Appellate Tribunal, in the case of Indian Overseas Bank Vs.

Company Appeal (AT) (Insolvency) No. 65 of 2022 5

Mr. Dinkar T. Venkatsubramaniam RP for Amtek Auto Ltd. CA (AT) (Ins) No.

267 of 2017 has been relied upon.

4. The Ld. Adjudicating Authority has observed that the Operational

Creditor had made supplies to the Corporate Debtor during the time when it

was going through CIRP and no payment is made by the Corporate Debtor

post commencement of CIRP of the Operational Creditor with respect to

those supplies.

5. Now, the issue involved in this case is as to whether the advance paid

to the Operational Creditor before the commencement of the CIRP of the

Operational Debt can be adjusted towards the supplies made to the

Corporate Debtor during CIRP by the Operational Creditor?

6. It has been recorded in the impugned order that pursuant to the

liquidation of Respondent No. 1, the Respondent No 2 (Corporate Debtor)

has filed a claim in Form-C dated 14.02.2020 for a total outstanding

amount of Rs. 23,23,133/- (including interest) before Anil Kumar and the

same has been acknowledged.

7. However, the entire case of the Appellant is that the advance has been

made against the same purchase order, therefore, it deserves to be adjusted.

The argument raised by the Counsel for the Appellant may appear to be

attractive and interesting but the fact remains that after initiation of CIRP

against the Respondent No. 1, supplies made by it for creation of the

liquidity, in order to run the Company, cannot be adjusted with the advance

given before the initiation of CIRP against it because in that situation it

would be transfer of the asset of the Corporate Debtor on account of an

antecedent debt to a creditor (Respondent 2) which shall be preferential

Company Appeal (AT) (Insolvency) No. 65 of 2022 6

transaction and the same has been frowned upon by this Tribunal in the

case of Binani Industries Ltd. (Supra). Moreover, once the moratorium is

kicked in it does not allow to recover any amount from the Corporate Debtor

nor the Corporate Debtor can appropriate any amount towards its own

dues. Thus, looking from any angle, we do not find any error in the

impugned order for the purpose of interference and hence, the present

appeal is hereby dismissed. No costs.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Ms. Shreesha Merla] Member (Technical)

New Delhi

22nd August, 2022.

Sheetal

Company Appeal (AT) (Insolvency) No. 65 of 2022