Vimal Coal Pvt Ltd vs Apna Paper Mills Pvt Ltd

[Arising out of Order dated 4th March, 2020 passed by National Company Law Tribunal, Ahmedabad Bench, Ahmedabad in C.P. No.(IB) 204/9/NCLT/ AHM/2019]

IN THE MATTER OF: Before NCLT Before NCLAT

Vimal Coal Pvt. Ltd. Petitioner/ Appellant T. Hiranand Estate Operational Creditor Naroad Road Ahmedabad, Gujarat 380 025

Versus

Apna Paper Mills Pvt. Ltd. Respondent Respondent

Plot No.782 40 Shed Corporate Debtor IInd Phase, GIDC, Vapi, Gujarat

For Appellant: Shri Mohit K. Bafna and Shri Pulkit Tare, Advocates

For Respondent: Shri Mandeep Kalra and Shri Suresh Kumar, Advocates (R-1)

ORAL JUDGEMENT (Per - Justice A.I.S. Cheema) (Virtual Mode)

16.10.2020 The Appellant - Operational Creditor filed Application under

Section 9 of Insolvency and Bankruptcy Code, 2016 (IBC - in short) before the

Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench,

Ahmedabad) in C.P. (I.B) No.204/NCLT/AHM/2019 against the Respondent -

Corporate Debtor. The Appellant claimed that it had supplied imported steam

coal to the Respondent between 1st April, 2015 to 31st March, 2016 and delivered

the same to the Respondent as per invoices. Amount of Rs.14,09,449/- was due

and outstanding from the Corporate Debtor which amount included interest as 2

on 15th March, 2018. The Appellant claimed that as the operational debt was

outstanding and not paid, the Application under Section 9 of Insolvency and

Bankruptcy Code, 2016 (IBC - in short) deserves to be admitted. The Appellant

claims that before filing Application under Section 9 on 5th March, 2019, Notice

under Section 8 of IBC was sent on 10th January, 2019 (Copy of which is at Page

- 66).

2. The Respondent filed Affidavit in Reply before the Adjudicating Authority

and claimed that the amount claimed was barred by limitation as the Application

was filed beyond period of three years of default. The claim of the Appellant that

on 28th July, 2016, ledger account of the Operational Creditor with regard to the

Corporate Debtor was acknowledged by the authorized representative of the

Corporate Debtor, was disputed. The Respondent claimed that the signature

claimed on the ledger account was not done by any authorized signatory of the

Respondent. Respondent also claimed that Police Complaint dated 20th June,

2019 was filed making allegations of forgery.

3. The Adjudicating Authority after hearing the parties, observed in Para - 12

of the Impugned Order as under:-

"12. On perusal of the records it appears that the operational creditor intentionally filed this application with some malicious intent so as to pressurise the corporate debtor, where the legislation intention is purely based on the resolution of the company. That, the operational creditor failed to show that the corporate debtor is insolvent. That, all the invoices are time barred. That apart, no documents like purchase orders, delivery challans, lorry receipt etc. are produced in order to show that the goods were delivered."

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4. The Adjudicating Authority went further and made reference to Section 65

of IBC and observed that the Operational Creditor had misused the I&B Code

and imposed a penalty of Rs.1 Lakh on the Appellant - Operational Creditor. The

Application thus came to be dismissed.

5. The Operational Creditor thus filed this Appeal and has raised issues with

regard to the Impugned Order.

6. The learned Counsel for the Appellant states that the Corporate Debtor did

not dispute that the coal was supplied and that there was no dispute raised with

regard to the quality of the coal. The learned Counsel states that the Respondent

before the Adjudicating Authority claimed that it had made some payment to one

Mr. Rajiv - the Agent of the Appellant, in cash. The learned Counsel referred to

e-mail dated 22nd July, 2016 (Appeal Page - 62) to say that the Corporate Debtor

informed by this e-mail that the Operational Creditor should contact Mr. Rajiv

as the payment has been released to him. It is argued that no such payments

were released and the amounts were outstanding. It is argued that there is no

proof regarding making of such payments. The Counsel for the Appellant referred

to Annexure - A/4 (Appeal Page - 63) which is ledger account kept by Operational

Creditor opened in the name of Corporate Debtor - Apna Paper Mills Pvt. Ltd.

The Counsel referred to the figures in this account to show that the amounts

stated therein were due and outstanding. It is argued that when the Corporate

Debtor did not pay, the Operational Creditor's Representative had gone to the

Corporate Debtor and the Official of the Corporate Debtor asked the Office to put

an acknowledgement on the document and accordingly the amount was

acknowledged.

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7. It would be appropriate to photocopy the Annexure - A/4.

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Regarding such endorsement on this Annexure - A/4, the learned Counsel

for the Appellant referred to the written submissions, which were filed by the

Appellant before the Adjudicating Authority (copy of which is at Annexure - A/12

- Page 112 @ 116). The Paragraphs - 12 and 13 of that written submissions may

be reproduced:-

"12. The Respondent Company has filed an objection raising an Issue of Limitation. It is respectfully submitted that the Applicant has supplied material during the period from 22-09-2015 to 28.12.2015. It is submitted that as per the terms, the amount is to be paid after Fifteen (15) days from the date of respective invoice. It is submitted that the last date of invoice is 28-12-2015. It is submitted that the Respondent Company has acknowledged its liability on 28-07-2016. It is submitted that one Shri Dipen Mukharjee, an employee and representative of the Applicant went to the Office of the Respondent Company at Vapi. The said Representative met Mr. Faruk Qureshi. He gave instruction to his Office to acknowledge the outstanding and the same was done. It is submitted that the period of limitation would start from 28-07-2016 and the present Petition is filed on 05-03-2019. It is respectfully submitted that the present Petition is within the limitation.

13. It is further submitted that the Respondent Company is now disputing the acknowledgement dated 28-07-2016 stating that the signature in the said confirmation does not belong to Authorized Signatory of the Respondent. It is submitted that the Applicant is not in a position to ascertain whether the person signing on the instruction of Mr. Faruk Qureshi is authorized or not. It is very much clear that this is modus operandi of the Respondent Company to get the signature from the person who is not authorized and raised the said objection."

[Emphasis supplied]

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8. Referring to such argument raised before the Adjudicating Authority, the

Counsel for the Appellant submits that the amount was acknowledged. The

written submissions in Para - 3 claim that the Coal vide several invoices starting

from 22.09.2015 to 28th December, 2015 totalling the amount of Rs.9,91,325/-,

was supplied. The written submissions claim that the payments were to be made

within 15 days from date of invoice and in default of which interest @ 18% per

annum was liable to be paid. Thus, the time would start from 15 days after the

last invoice which is stated to be of 28th December, 2015. The Section 9

Application was filed on 5th March, 2019 and thus, for saving a limitation which

is of three years, the only document relevant is account ledger which is

reproduced (supra).

9. With regard to such document, the Respondent appears to have filed

Statement of Objections and Affidavit in Reply (Annexure - A/8 - Page 94) and

pleaded as under:-

4. It is submitted that the alleged default has occurred on 12.01.2016 and the captioned proceedings have been filed after January 2019 which clearly show that the captioned Application is barred by law of limitation. I further strongly deny that the respondent has acknowledged and confirmed invoices and outstanding payment on 28.07.2016. It is stated that the signatures in the said confirmation does not belong to any of the authorized signatory of the respondent. It is further stated that the signatures does not belong to staff of the respondent herein. I state that the details of authorized signatory has been extracted from MCA website and only the following persons viz Ismail Yasinladu Qureshi, Farooq Haji Yasin Qureshi, Salim Yasin Qureshi are authorized to sign and the purported acknowledgement has not been signed by aby of the aforementioned persons. Annexed hereto and marked as "Annexure - I" is the copy of the details of authorised signatory extracted from the MCA website. The applicant is put to strict proof thereof. It is stated and submitted that the Applicant has not explained the delay caused in filing the present application and has failed to file

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any application for condoning the delay caused in filing the present application. Hence, it is submitted that the captioned application is barred by limitation and is liable to be dismissed."

10. The Reply also claimed that Complaint had been filed regarding alleged

forgery, with the Police.

11. When we consider the Application which was filed under Section 9 which

is Annexure - A/7 (Page - 75), in Part - V Column - 8, there is reference to

conformation letter dated 28.07.2016. However, in the Affidavit attached with

the Application under Section 7 (copy of which starts at Page 83) apparently

there is no reference as to how this supposed to be acknowledgement came into

existence. It was merely stated in Para - 2.6 of the Affidavit attached with the

Form as under:-

"It is respectfully submitted that the said goods were consumed by the Respondent without any complaint. However, no payments were received by the Applicant from the Respondent Company. It is respectfully submitted that the Applicant made several requests by telephonic calls and personal visits and the Applicant was assured that the outstanding invoices shall be paid immediately. It is respectfully submitted that the Respondent has acknowledged and confirmed the invoices and outstanding payment on 28-07-2016."

12. Thus, only statement made was that the Respondent had acknowledged

on 28.07.2016 without any particulars. The Respondent in Affidavit in Reply as

per Annexure - A/8 seriously disputed the execution of this document as

regards the Part which is claimed by the Appellant to be acknowledgement. It is

only a signature with rubber stamp and below the signature (not above), there is

an endorsement "ok 28.07.2016".

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13. Section 18 of the Limitation Act, 1963 reads as under:-

"18. Effect of acknowledgment in writing.--(1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.

(2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received.

Explanation.--For the purposes of this section,--

(a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set off, or is addressed to a person other than a person entitled to the property or right,

(b) the word "signed" means signed either personally or by an agent duly authorised in this behalf; and

(c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right."

14. It is quite settled that the acknowledgement has to be a conscious

acknowledgement of the debt. There could be refusal to pay but it should show

that there has been an acknowledgement of the debt outstanding. In the present

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matter, the endorsement concerned is seriously disputed and even if we are to

accept the case of the appellant [portion of which argument we have reproduced

(supra)], what it states is that Mr. Dipen Mukharjee - employee and

Representative of the Appellant went to the Office of Respondent and met Mr.

Faruk Qureshi and the said Faruk Qureshi gave instructions to his Office to

acknowledge the outstanding and the same was done. Thus, even the Appellant

is not claiming that Mr. Faruk Qureshi signed it. Who signed, nothing is clear.

In the facts of the matter, the contention of the Corporate Debtor that the

signature is not of Authorized Representative, cannot be simply brushed aside.

From side of Operational Creditor, there is no Affidavit regarding how such

endorsement was made. Annexure - A/4 does not inspire confidence.

15. We do not find that the Adjudicating Authority erred when it concluded

that the debt claimed was time barred. On this count, we did not find any

substance in the Appeal.

16. However, we accept the argument of the learned Counsel for the Appellant

that there was no good ground made out to hold that the initiation of the

proceedings was fraudulent and malicious as admittedly, there was supply of

coal and it was inappropriate to impose the penalty.

17. For the above reasons, we partly allow the Appeal. we set aside the Order

passed by the Adjudicating Authority in Paragraphs - 13 and 14 of the Impugned

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Order imposing penalty of Rs.1 Lakh on the Operational Creditor/Appellant.

Rest of the Impugned Order of the Adjudicating Authority we maintain.

The Appeal is disposed accordingly.

[Justice A.I.S. Cheema] Member (Judicial)

(Justice Anant Bijay Singh) Member (Judicial) rs/md

Company Appeal (AT) (Ins) No.538 of 2020