TaxTMI 
TaxTMI 
2017 (10) TMI 916
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....aper book. Vide this resolution, authority has been given by the Company to Mr. R.P.Goyal, Director (Commercial), Mr.Sunil Gupta, Executive Director, R.K.Gupta, President and Company Secretary and Mr.Satya Parkash, General Manager (Legal) severally to file applications/petitions etc. under the Code and to do all the necessary acts in the progress of the case. 2. The Respondent-Corporate Debtor is a Company incorporated on 12.11.1990 with CIN No.U28991PB1990PLC010832. The authorised share capital of the company is Rs. 10,10,00,000/- and paid up capital Rs. 1,02,89,820/-, having its registered office at Ludhiana and therefore, the matter falls within the territorial jurisdiction of this Tribunal. 3. The facts, briefly stated, are that the Respondent-Corporate Debtor placed purchase orders to the petitioner company from time to time. The goods were supplied to various units of the respondent situated in Punjab and Madhya Pradesh. 4. It is averred that the respondent issued purchase orders as at Annexure A-10 (Colly) from pages 113 to 121 of the paper book. These purchase orders are dated 14.05.2014, 28.06.2014 and 14.07.2014, but the petitioner has also made a claim of various bill....
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..../2017 was received vide cheque dated 03.02.2016 and Rs. 74,457/- during the period from 06.04.2015 to 20.06.2015 by way of adjustments as depicted in the statement of account of the petitioner unit IV Ludhiana for the period from 01.04.2015 to 31.03.2016. This amount was not inadvertently reflected in the notice. However, to avoid any technicalities, the petitioner again sent a demand notice dated 06.06.2017 in Form Nos.3 and 4 Annexure A-4 to the Respondent-Corporate Debtor by registered post/acknowledgement due. Scanned copy of the notice in these Forms and the attachments were also sent on 07.06.2017 at the email address of the Respondent-Corporate Debtor. 11. It is stated that the respondent sent a fabricated document prepared in MS Word form purporting to be email print out dated 17.06.2017 by registered post on 19.06.2017, which was delivered to the petitioner on 21.06.2017. In any case, this email was received after the expiry of ten days from the delivery of the notice. This email was sent on wrong address [email protected] and another wrong address [email protected] and also copy to Deepak Kalra, Sanjeev Kalra without mentioning their email addresses. This document/re....
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....16. It is pertinent to mention that before the matter was listed for the first time, a petition filed by Punjab National Bank (PNB) a Financial Creditor against the petitioner as a Corporate Debtor C.A.No.(IB)-202(PB)/2017 under Section 7 of the Code, was admitted by the Hon'ble Principal Bench of NCLT, New Delhi vide order dated 26.07.2017. In view of the above, CA No.129 of 2017 dated 19.08.2017 was filed on 23.08.2017 by Mr.Mohender Kumar Khandelwal, Interim Resolution Professional appointed by the Principal Bench in the said case, for substituting the name of Mr.Khandelwal to continue to represent the company in the present case. This application has been filed under Rule 11 of the NCLT Rules, 2016 read with Section 151 of the Code of Civil Procedure. It is stated that consequent upon the admission of application filed by PNB by the Hon'ble Principal Bench, Mr.Khandelwal has taken over the management of the affairs of the company pursuant to Section 17 of the Code and therefore, he would represent and act on behalf of the company in this matter in terms of Section 25 (2) (b) of the Code. The Interim Resolution Professional vide email dated 02.08.2017 has approved and ratified t....
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....ficers of the petitioner regarding the rejected material, wherein the officers of the petitioner accepted that 229729 kg of material supplied was faulty and hence rejected. The minutes of the meeting dated 31.10.2014 and the invoices are at Annexure R-7 (Colly). Out of this quantity, the operational creditor took back 91,579 kg of material and costs of processing and the cost of material incurred is stated to be more than Rs. 80 Lacs, which is yet to be recovered from the petitioner. It is further submitted that the Corporate Debtor had already returned the rejected material to the tune of Rs. 45 Lacs approximately. Copy of the calculation along with the invoices for the material returned are is at Annexure R-8 (Colly). Even earlier in the year 2012-13 also, the rejected material was returned vide document Annexure R-9 (Colly) and those invoices are of the year 2012. 21. The respondent further stated that the instant petition is not maintainable by virtue of Section 11 of the Code in view of the fact that the Respondent-Corporate Debtor is undergoing the resolution process in a case admitted by the Principal Bench of NCLT, New Delhi. 22. The respondent has even denied that the op....
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....ssued on 01.09.2015. 25. Rejoinder is supported by the affidavit of Mr.Mohender Kumar Khandelwal, who has taken over the management and control of the petitioner on the basis of his appointment as Interim Resolution Professional by the Principal Bench of NCLT, New Delhi. 26. I have heard the learned counsel for the petitioner and the learned senior counsel for the respondent and have also perused the record quite extensively. 27. The first issue would be whether there is any bar to the continuation of this petition by virtue of Section 11 of the Code in view of the order of admission passed against the respondent in C.A.No.(IB)-202(PB)/2017 by the Hon'ble Principal Bench on 26.07.2017 and appointment of the Interim Resolution Professional. Section 11 of the Code reads as under: "Persons not entitled to make application 11. The following persons shall not be entitled to make an application to initiate corporate insolvency resolution process under this Chapter, namely: (a) a corporate debtor undergoing a corporate insolvency resolution process; or (b) a corporate debtor having completed corporate insolvency resolution process twelve months preceding the date of making of....
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.... been extended to the Code. By virtue of Rule 10(1) of the Rules, only a few of the NCLT Rules, 2016 have been made applicable to the procedure for conducting the proceedings under the Code. Rule 10 (1) of the Rules reads as under:- "Filing of application and application fee 10. (1) Till such time the rules of procedure for conduct of proceedings under the code are notified, the application made under sub-section (1) of section 7, sub-section (1) of section 9 or sub-section (1) of section 10 of the Code shall be filed before the Adjudicating Authority in accordance with rules 20, 21, 22, 23, 24 and 26 of Part III of the National Company Law Tribunal Rules, 2016." Therefore, rule 11 of the NCLT Rules is not applicable to the proceedings under the Code. 31. It is still to be seen as to whether there is any other provision of the Code or rules framed thereunder, which enables such a substitution in view of the subsequent development. 32. Under Section 17 of the Code from the date of appointment of the interim resolution professional, the management of the affairs of the Corporate Debtor vests in the interim resolution professional under sub section (2) of Section 17 of the Co....
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....hird parties, exercise rights for the benefit of the corporate debtor in judicial, quasi-judicial or arbitration proceedings." 36. In view of what has been stated above, I am of the considered view that Mr.Khandelwal should be allowed to be substituted being the interim resolution professional appointed for the petitioner by the Hon'ble Principal Bench in a petition against it on 26.07.2017, the bar created by Section 11 of the Code being not applicable in the instant case the proceedings having been lawfully initiated before the appointment of Mr.Khandelwal. 37. The next question is whether there is existence of dispute of the unpaid debt, to disentitle the petitioner to an order of admission. Section 9(1) of the Code entitles an operational creditor to apply for the initiation of corporate insolvency process after 10 days of delivery of notice under Section 8 (1) of the Code, if the operational creditor does not receive the payment or notice of dispute under Section 8 (2) of the Code from the Corporate Debtor. Sub-section 5 of Section 9 of the Code reads as under:- "(5) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section....
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.... the petitioner on 21.06.2017. 39. Learned counsel for the petitioner vehemently contended that this email was sent at the wrong email Id of the company at [email protected] instead of [email protected]. Copy of this email was even sent at the wrong email Id of the Advocate as discussed in the facts of the case at [email protected] instead of [email protected]. Along with this email, copy of the earlier email dated 10.02.2017 in reply to the legal notice was also annexed, but the said document also shows that the email was at the wrong email Id of Mr.Talwar Advocate and cannot be considered as a valid document for challenging the instant petition. 40. The facts of the case would reveal that both the parties have tried to play hide and seek in support of their respective pleas. I would have thought of imposing heavy costs on the defaulter, while disposing of the matter, but it seems that both the parties are responsible for such a mess that I would be refrain from passing such an order. 41. The demand notice dated 06.06.2017 in Forms 3 and 4 was despatched to the Respondent-Corporate Debtor on 07.06.2017 and it was delivered to the Corporate Debtor on 09.06.2017 by speed....
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.... Code was enacted was because liquidation proceedings went on interminably, thereby damaging the interests of all stakeholders, except a recalcitrant management which would continue to hold on to the company without paying its debts. Both the Tribunal and the Appellate Tribunal will do well to keep in mind this principal objective sought to be achieved by the Code and will strictly adhere to the time frame within which they are to decide matters under the Code." 44. The question before the Hon'ble Supreme Court was not whether the time of 10 days provided in Section 8 of the Code is mandatory or directory, but the emphasis was on the adherence to the timelines provided under the Code being its very object. 45. I am of the view that if the notice of the existing dispute is not received by the operational creditor or that the payment of the amount of debt is not made, Section 9 of the Code entitles the operational creditor to file an application for triggering the insolvency resolution process after expiry of 10 days period, but when it is admitted that the reply to the demand notice was received by the corporate debtor by registered post, despatched on the last date of the expiry....
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....resulted in generation of severe product cracks during the cold formability. These quality parameter deficiencies had made this material worthless & useless for a specific use they brought for. This serious issue of quality was very much brought into the notice of petitioner's Marketing and Quality People who are fully aware of this lapse at their company end. 48A. It was further stated that due to lacklustre & evasive approach of the Marketing and Quality Control Team of the petitioner, this matter of poor quality materials remained under settlement for years. During this time, the respondent suffered very heavily in monetary terms towards imposition of liquidated damages/penalty due to inordinate delay in production, delivery of finished goods against confirmed purchase orders of the respondent's esteemed customers. Not only this monetary loss, the respondent also lost the business from the affected customers in specific and the reputation of their company as a whole. 49. It was further stated that though the initial quality testing results were sufficient enough to take back this bad material by Bhushan Steel yet Marketing and Quality showed their rigidity & adamancy and asked....
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....ng with the respondent in single grade En-8D sizes are 32/38/40 mm from the last couple of months. It was further stated that after so much of discussion, there is no reply/solution from the petitioner side regarding return or replacement or the way to use this material. It is further intimated that the things are pending at the end of the petitioner and it was requested to close the case without further delay. The consignment of the goods in question was approximately Rs. 1 crore and therefore, the respondent could not abide any more. 53. The same issue of the crack problem was also raised with the email dated 26.08.2014 at page 60 of the reply and copy of the invoice No.116 dated 10.07.2014 to which this email pertains is at page 61 of the paper book is Invoice No.116, dated 10.07.2014. In any case, these invoices which the respondent sent with the emails to the petitioner are not the disputed invoices. 54. The respondent has relied upon the minutes of the meeting dated 31.10.2014 which was attended by the representatives of both the sides as at Annexure R-7. This meeting was held regarding the rejected material due to cracks received from the petitioner with diameter M32, M34,....
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....jection was raised with regard to the quality issue at various stages. 57. The learned counsel for the petitioner, however, referred to page 107 of the paper book of the company petition, which is copy of the ledger account to suggest that in respect of 10 rejected invoices, the adjustment has been made towards the outstanding amount of the respondent on 02.01.2015 to 28.01.2015. This contention was raised in response to the document Annexure R-8 attached with the reply regarding recovery towards quality issue of materials grade En8d supplied and accepted by the petitioner. The document is dated 05.08.2017. Out of these 13 bills, the material in respect of invoices taken back by the petitioner is in the tabulated form at page 89 of the reply, the value of which is to the tune of Rs. 45,13,112/-. This tabulated information was not disputed as the credit of the bills, the material of which was rejected is made in the Ledger Books of the petitioner as per entries from 02.01.2015 to 28.10.2015. 58. Learned counsel for the petitioner, however, contended that out of various invoices claimed in this case, the dispute at best can be of only three of the invoices of the year 2013. As per ....