2019 (12) TMI 1551 - Tri - Insolvency and Bankruptcy

Tribunal rules in favor of Financial Creditor in debt dispute under IBC, 2016

PM Cold Storage Pvt. Ltd. Versus Goouksheer Farm Fresh Pvt. Ltd.,

PM Cold Storage Pvt. Ltd. Versus Goouksheer Farm Fresh Pvt. Ltd., - TMI Issues Involved:1. Nature of the debt: Whether it is a financial debt or an operational debt.2. Maintainability of proceedings against a struck-off company.3. Compliance with procedural requirements, including the proposal of an Interim Resolution Professional (IRP).4. The impact of typographical errors on the petition's maintainability.5. Compliance with Section 186 of the Companies Act, 2013.6. Issuance of notice under Section 8 of the IBC, 2016.7. Admissibility of the petition under Section 7 of the IBC, 2016.Issue-wise Detailed Analysis:1. Nature of the Debt:The Financial Creditor contended that a loan of Rs. 50,00,000/- was given to the Corporate Debtor on 19 January 2017, supported by bank statements. The Corporate Debtor argued that the amount was an advance for the purchase of materials, not a loan, and highlighted the absence of a written agreement, promissory note, or security. However, the Tribunal found that the ledger account described the transaction as 'being amount paid towards loan and advances,' and thus, it was considered a financial debt. The absence of a written agreement did not alter the nature of the transaction.2. Maintainability of Proceedings Against a Struck-off Company:The Corporate Debtor's name had been struck off from the Register of Companies, raising questions about the petition's maintainability. The Tribunal referred to the Hon’ble NCLAT's decisions, which held that proceedings under Sections 7 and 9 of the IBC, 2016 are maintainable against a struck-off company. The Tribunal directed the IRP to file an application under Section 252(3) of the Companies Act, 2013 to restore the company's name formally.3. Compliance with Procedural Requirements:The Financial Creditor initially failed to propose the name of an IRP, which was deemed an incurable defect by the Corporate Debtor. The Tribunal allowed the Financial Creditor to rectify this by filing a supplementary affidavit proposing a qualified IRP, who was subsequently approved.4. Impact of Typographical Errors:The Corporate Debtor pointed out inconsistencies regarding the dates of default and payment due. The Tribunal considered these discrepancies to be of a technical nature that did not impact the petition's maintainability under Section 7 of the IBC, 2016.5. Compliance with Section 186 of the Companies Act, 2013:The Corporate Debtor argued that the requirements of Section 186, including the absence of a Board Resolution, were not met. The Tribunal held that this plea was devoid of merit due to the provisions of Section 238 of the IBC, 2016, which override other laws.6. Issuance of Notice Under Section 8 of the IBC, 2016:The Financial Creditor admitted that the notice under Section 8 was inadvertently sent and was actually a recall/demand notice. Despite this, the Tribunal found that the debt was due and payable, and a default had occurred, meeting the conditions of Section 7 of the IBC, 2016.7. Admissibility of the Petition Under Section 7 of the IBC, 2016:The petition was found to be complete and defect-free. The Tribunal admitted the petition for initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. A moratorium was declared, and public announcements were ordered as per Sections 13 to 15 of the IBC, 2016.Order:1. The petition under Section 7 of the IBC, 2016 is admitted.2. A moratorium is declared, prohibiting suits, asset transfers, and recovery actions against the Corporate Debtor.3. The supply of essential goods or services to the Corporate Debtor shall not be interrupted during the moratorium.4. Mr. Sanjeev Jhunjhunwala is appointed as the Interim Resolution Professional (IRP).5. The IRP is directed to convene a meeting of the Committee of Creditors and submit a resolution plan within 105 days.6. The Financial Creditor is directed to deposit Rs. 50,000/- in an ESCROW Account for preliminary expenses.7. The Registry is directed to communicate the order to all concerned parties.The matter is listed for a progress report on 06.02.2020, and certified copies of the order may be issued upon compliance with requisite formalities.