Sarita Jain Proprietor Of Pratham ... vs M/S Silvertoan Papers Limited

Meena Jain Proprietor, Tanu Traders ....Appellant Vs.

Silvertoan Papers Ltd. ...Respondent

Company Appeal (AT) (Insolvency) No. 319 of 2021

In the matter of:

Sarita Jain Proprietor, Pratham Traders ....Appellant Vs.

Silvertoan Papers Ltd. ...Respondent

Company Appeal (AT) (Insolvency) No. 320 of 2021

In the matter of:

Ankur Jain Proprietor, Tanya Traders ....Appellant Vs.

Silvertoan Papers Ltd. ...Respondent

Company Appeal (AT) (Insolvency) No. 323 of 2021

In the matter of:

Amit Jain Proprietor, Aadi Traders 2

....Appellant Vs.

Silvertoan Papers Ltd. ...Respondent For Appellant: Mr. Jay Salva, Senior Advocate with Mr. Prabhat Kr. Chaurasia, Advocate.

For Respondent: Mr. P. Nagesh, Senior Advocate with Mr. Akshay Sharma, Advocate.

JUDGMENT

(03rd February, 2022)

Ashok Bhushan, J.

1. These Appeals have been filed against the judgment and order dated

05.03.2021 passed by the Adjudicating Authority (National Company Law

Tribunal), New Delhi, Bench-VI, rejecting separate Applications filed by the

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

("Code" for short). All these Appeals raising common question of law and

facts have been heard together and are decided by this common judgment. It

is sufficient to refer the facts and pleadings in Company Appeal (AT) (Ins.)

No. 318 of 2021 to decide all these Appeals.

The Appellant, an Operational Creditor, claim to have supplied the

Wheat Straws to the Corporate Debtor on oral order placed by the Corporate

Debtor between 21.04.2016 to 10.09.2016. Appellant raised invoices

aggregating to Rs. 60,71,538/-. The last payment was received on

26.07.2016. Demand Notice dated 20.03.2019 under Section 8 was issued

by the Appellant to the Corporate Debtor demanding outstanding amount of

Company Appeal (AT) (Insolvency) Nos. 318, 319, 320 & 323 of 2021 3

Rs. 35,71,097/- plus interest. Section 8 Notice mentioned that 'amount fell

due on 10.09.2016. Notice was replied by the Corporate Debtor vide its Reply

dated 24.04.2019 which reply was referred as 'Notice of Dispute under

Section 8 (2) (a)'. In the Reply, the Corporate Debtor disputed the claim. It

was further pleaded that on 18.02.2017, Corporate Debtor called up a

meeting of several reputed business persons of Muzaffarnagar where it was

proposed by the Operational Creditor to supply back the quantity of the

similar material. Consequently, on 05.03.2017, the material was supplied

back to the Operational Creditor. The Operational Creditor filed an

Application under Section 9 of the Code dated 26.11.2019 being Company

Petition No. IB-3129/(ND)/2019 claiming debt of Rs.35,71,097/- with

interest. The Application under Section 9 further mentions that the

Corporate Debtor has acknowledged and confirmed the statement of

accounts on 01.04.2017 although debt fell due on 10.09.2016. Application

under Section 9 was replied by the Corporate Debtor where it was pleaded

that payments were made to the Applicants against the material supplied

and Corporate Debtor had called a meeting on 18.02.2017 in presence of

reputed persons of the district where Applicants had proposed to supply

back the quantity of similar material which the Applicant had supplied to

the Corporate Debtor in consequence of which on 05.03.2017 material was

supplied back. Corporate Debtor mentioned that after receipt of demand

notice, notice of dispute was issued by the Corporate Debtor, it was pleaded

that facts of supply back can be proved with the corresponding VAT/GST,

Excise and Income Tax etc. The Corporate Debtor after looking to the

Company Appeal (AT) (Insolvency) Nos. 318, 319, 320 & 323 of 2021 4

account confirmation paper dated 01.04.2017 lodged a First Information

Report against the Operational Creditor alleging fabrication of document

dated 01.04.2017 on which First Information Report has been lodged and

criminal proceedings are pending.

2. Learned Adjudicating Authority by the impugned judgment rejected

the Application under Section 9 on two grounds. Firstly, the Application is

barred by time since the document of acknowledgment is being disputed the

criminal proceedings are pending against the same and secondly, there are

pre-existing dispute between the parties. The Appellant aggrieved by the said

order has come up in the Appeal.

3. Shri Jay Salva, Learned Senior Counsel for the Appellant submits that

by virtue of confirmation of the accounts by the Accountant of the Corporate

Debtor on 01.04.2017 there shall be fresh period of limitation and

Application under Section 9 cannot be said to be barred by time. It is

submitted that the First Information Report alleging fraud and forgery was

filed much after filing of the Application under Section 9, hence, cannot be

relied. One Shri Devpal, the Accountant of the Corporate Debtor has signed

the acknowledgment. Although it is claimed by the Corporate Debtor that

decision was taken to re-supply the material, where supply of material by

vehicles have been mentioned by Motor Cycle, scooter etc. which belies the

claim of re-supply of the material.

4. Shri P. Nagesh, Learned Senior Counsel for the Respondent refuting

the submissions of the Counsel for the Appellant contends that Application

Company Appeal (AT) (Insolvency) Nos. 318, 319, 320 & 323 of 2021 5

was clearly time barred since according to the own case of the Applicant, the

debt fell due on 10.09.2016 and the Application was filed in November,

2019. It is submitted that the acknowledgment dated 01.04.2017 was a

forged document. The Corporate Debtor never acknowledged the debt. The

document filed by the Operational Creditor on face of it is clearly forged. It is

submitted that the name of the Corporate Debtor is mentioned in account

confirmation document as "Silvertoan Papers Mills Ltd." whereas the correct

name of the Corporate Debtor is "Silvertoan Papers Limited". The signature

appended on the document of authorised signatory has also been forged.

Person is claimed to have been signed as 'Devpal' whereas the correct name

of accountant is 'Deopal' and signs as 'Deopal'. The Corporate Debtor after

coming to know about the forgery committed in the document dated

01.04.2017 has filed criminal complaint which an F.I.R has been registered

on 17.11.2019. Further, return of the stock on 05.03.2017 was fully proved

from the returns filed in the Sales Tax Act and the claim of the Appellant

that they did not return back is wholly false and frivolous. It is submitted

that the date of default in notice under Section 8 dated 20.03.2019 is

10.09.2016 and there was no claim of any extension of limitation in the

notice under Section 8 whereas notice of dispute was issued by the

Corporate Debtor after receipt of the demand notice where details of dispute

and re-supply of the materials have been specifically pleaded.

5. We have considered the submissions of the Learned Counsel for the

parties and perused the record.

Company Appeal (AT) (Insolvency) Nos. 318, 319, 320 & 323 of 2021 6

6. The Adjudicating Authority has rejected the Application under Section

9 holding it to be barred by time. It was the case of the Appellant-

Operational Creditor itself that amount fell due on 10.09.2016 which is

mentioned in Section 8 notice. The Operational Creditor before the

Adjudicating Authority claim extension of limitation on the basis of account

confirmation dated 01.04.2017 allegedly signed by one Devpal the

Accountant of the Corporate Debtor. The Corporate Debtor in reply has

disputed the claim of the Appellant and has filed a criminal complaint

regarding forgery of the document dated 01.04.2019 on which First

Information Report has been registered and criminal proceedings are

pending. When the very basis of the claim of the Operational Creditor that

their Application is within time is under cloud and is disputed by the

Corporate Debtor, no error has been committed by the Adjudicating

Authority by not placing reliance on account confirmation document dated

01.04.2017 for giving extension of the limitation to the Operational Creditor.

7. In addition to above, there is one more reason due to which the

Application under Section 9 deserves a rejection. A notice of demand dated

20.03.2019 was issued by the Operational Creditor under Section 8 claiming

the outstanding amount which was replied by notice dated 24.04.2019.

Subject of the reply dated 24.04.2019 is as follows:-

"Subject: Notice of dispute under Section 8(2)(a) of the Insolvency and Bankruptcy Code in response to your Demand Notice, allegedly issued under the Insolvency and

Company Appeal (AT) (Insolvency) Nos. 318, 319, 320 & 323 of 2021 7

Bankruptcy Code, 2016 and Rules and Regulations made there under."

8. In reply notice, the claim of the Appellant for outstanding amount was

disputed. In reply, it was pleaded that the Corporate Debtor had supplied

back the similar material on 05.03.2017. In paragraph 6 under the heading

'concealment of material facts' wherein clause (d), following was stated:-

"d) That aggrieved by your mischievous behaviour and nuisance created by you at our client's business premises, our client called up a meeting dated 18.02.2017 in the august presence of the reputed business persons of Muzaffarnagar namely Mr. Pankaj Agarwal, Chairman Muzaffarnagar Paper Manufactures Association, Mr. Naushad Ahmad, Village Pradhan, Daulatpur Village apart from the Managing Director of our client Company Mr. Amrish Kumar, other Directors at our Mill, situated at 9th KM Stone, Bhopa Road Muzaffarnagar to settle out the dispute. That in such meeting you yourself had categorically proposed to supply back the quantity of the similar material which you had supplied to our client. Consequently, against your proposal, our client has supplied the material to you on 05.03.2017 and thereafter nothing remains due to be paid from our client side. The said fact can also be corroborated from the various returns and balance sheet of our client. The copies of bills are attached herewith as Annexure-A and the copy of the Ledger is also attached herewith as Anne xure-B."

Company Appeal (AT) (Insolvency) Nos. 318, 319, 320 & 323 of 2021 8

9. In paragraph 13 of the reply notice, following was stated:-

"13. That without prejudice to the instant notice of dispute, our client is in the process of initiating appropriate legal action e.g. filing a criminal complaint under the Provision of Indian Penal Code for fraud, forgery, misrepresentation, Defamation and Criminal breach of trust."

10. It is relevant to notice that the reply notice of the Corporate Debtor

dated 24.04.2019 was responded by the Appellant by way of letter dated

02.07.2019, response has been filed as Annexure A-10 filed by the Appellant

herself. The claim of the Corporate Debtor that the materials have been

supplied back has been denied. In reply to paragraph 6(d) where the

Corporate Debtor has categorically pleaded regarding supply back of the

similar materials, it has been answered by the Operational Creditor in

paragraph 6(a)-(e) which is to the following effect:-

"6(a)-(e). That the contents of para 6(a) to 6(e) under response are blatant lie and same has been illegally manufactured to falsely and malafidely create dispute in the case hence, the contents of para 6(a) to para 6(e) are wrong and vehemently denied. It is submitted that your client is put to strict proof thereof to corroborate the false and frivolous averments made under the paras under response. It is further submitted that your client have forged and manufactured false bills, ledger accounts etc. in order to achieve their malafide and deceitful designs. That the averments in the paras under response are also proven to be false and

Company Appeal (AT) (Insolvency) Nos. 318, 319, 320 & 323 of 2021 9

fabricated from the fact that our client supplied the materials during April, 2016 to September, 2016 and your client after accepting all the materials supplied by our client without any demur or protest, has also made part payments aggregating to Rs.25,00,441/- through RTGS and the last payment was made by your client on 26.07.2016. It is correct that our client was supplier to your client and had supplied wheat straw and loose baggages to your client as detailed in demand notice dated 20.03.2019. It is wrong and vehemently denied that the materials supplied by our client was of inferior quality. It is wrong and specifically denied that there was any meeting held on 18.02.2017. It is also wrong and vehemently denied that our client proposed to supply back similar material to your client. It is submitted that your clients have stated false averments with malafide intention to avoid payment of outstanding dues or our client."

11. The allegation of supply back of the material is being disputed. The

claim of supply back of the material was raised by the Corporate Debtor on

05.03.2017 in response to meeting dated 18.02.2017. The notice under

Section 8 was issued by the Operational Creditor on 20.03.2019 i.e. much

after the claim of the Corporate Debtor to supply back the material which

was in 2017 i.e. two years thereafter. The Operational Creditor disputing the

claim of supply back of the similar material itself is a dispute which is clearly

mentioned in the reply notice of the Corporate Debtor. These issues could

not have been gone into the proceeding under Section 9 and there being pre-

existing dispute between the parties the Application under Section 9 filed by

Company Appeal (AT) (Insolvency) Nos. 318, 319, 320 & 323 of 2021 10

the Appellant has rightly been rejected. We thus, are of the view that no case

has been made out to interfere with the order passed by the Adjudicating

Authority rejecting Section 9 Application. There is no merit in the Appeals.

All the Appeals are dismissed.

[Justice Ashok Bhushan] Chairperson

[Dr. Alok Srivastava] Member (Technical)

New Delhi Anjali

Company Appeal (AT) (Insolvency) Nos. 318, 319, 320 & 323 of 2021