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In the matter of S.R. Industries Ltd. Cp (Ib) No. 305-Chd-Pb-2019

NCLT5 Mar 2021

Case brief

AI extract

What is this about?

The Tribunal admitted the application for initiation of Corporate Insolvency Resolution Process (CIRP) against S.R. Industries Ltd., finding that the statutory conditions for default were met and the debt was undisputed. Moratorium under Section 14 was declared, and an Interim Resolution Professional was appointed.

What did the court decide?

Petition admitted; moratorium declared under Section 14; Mr. Tara Chand Meenia appointed as Interim Resolution Professional.

In the matter of S.R. Industries Ltd. Cp (Ib) No… — Insolvency and Bankruptcy | NCLT (2021)

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THE NATIONAL COMPANY LAW TRIBUNAL “CHANDIGARH BENCH, CHANDIGARH” (Exercising powers of Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016)

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CP (IB) No. 305/Chd/Pb/2019

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Under Section 9 of the Insolvency and Bankruptcy Code, 2016.

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In the matter of:

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Sh. Jaspal Singh, Proprietor of M/s Creative Arts At 79, DSIDC Sheds, Okhla Industrial Area, Phase-I, New Delhi-110020.

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.…Petitioner/Operational Creditor

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Versus

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S.R. Industries Ltd.

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having its registered office at E-217, Industrial Area, Phase 8B, Mohali-160071

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…Respondent/Corporate Debtor

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Judgement delivered on: 05.03.2021

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Coram: HON’BLE MR. AJAY KUMAR VATSAVAYI, MEMBER (JUDICIAL) HON’BLE MR. RAGHU NAYYAR, MEMBER (TECHNICAL)

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For the Operational Creditor : Mr. Dharam Pal Garg, Advocate For the Respondent : None

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Per: Ajay Kumar Vatsavayi, Member (Judicial)

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JUDGEMENT

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The present petition is filed, under the Section 9 of the Insolvency and Bankruptcy Code, 2016 ( for short hereinafter referred to as ‘Code’ ) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 ( for short hereinafter referred to as ‘Rules’ ) by Sh.

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CP (IB) No. 305/Chd/Pb/2019

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Jaspal Singh being proprietor of M/s Creative Arts ( ‘Operational Creditor/Petitioner’ ), with a prayer to initiate the Corporate Insolvency Resolution Process ( CIRP ) against M/s S.R. Industries Ltd. ( for short hereinafter ‘Corporate Debtor’ ).

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The Corporate Debtor namely, M/s S.R. Industries Limited is a company incorporated on 19.07.1989 under the provisions of Companies Act, 1956 with CIN No. L29246PB1989PLC009531 having its registered office at E-217, Industrial Area, Phase 8B, Mohali, Punjab, which falls within the State of Punjab. Therefore, the matter falls within the territorial jurisdiction of this Tribunal. The Authorized Share Capital of the Corporate Debtor is ₹ 36,50,00,000 and paid-up share capital of the Company is ₹3 4,24,57,000 as per the averments made by the Petitioner.

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The brief facts of the case as stated in the petition, are that the operational creditor is a manufacturer of footwear packaging boxes. The operational creditor has supplied footwear packing boxes during the period of three years from 2016-17 to 2018-19 amounting to ₹91, 71,345/-. The petitioner has attached various invoices raised during the Financial Year 201617 to 2018-19 as Annexure A-3 (colly) of the petition. Out of the above said amount, petitioner has received a sum of ₹69,68,889/ - (Rupees sixty nine lakh sixty eight thousand eight hundred and eighty nine only). In Part-IV of the petition, the amount claimed to be in default is ₹42,88,694/ - and the date on which the amount became due is 31.03.2019. The computation of default in tabular form is found at page No.27 (Annexure A-2) of the application.

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A demand notice in Form 3/4 dated 02.05.2019 is stated to be served upon the corporate debtor by speed post (page No.57 of the

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CP (IB) No. 305/Chd/Pb/2019

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application) at the registered address of the corporate debtor. The corporate debtor vide demand notice dated 02.05.2019 was called upon to pay the total unpaid operational debt amounting to ₹ 42,88,694/- within ten days of the receipt of the notice. The demand notice was accompanied by copy of invoices against which debt is outstanding along with computation of amount defaulted by the corporate debtor. The corporate debtor has replied vide letter dated 07.05.2019 to the demand notice issued by the operational creditor.

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It is deposed by the petitioner that the operational creditor has not received any notice from the corporate debtor regarding pendency of any dispute or arbitration in respect of demand sent. The affidavit is appended with the application from page Nos.50 to 52 as Annexure A-5.

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It is submitted that the respondent-corporate debtor has failed to comply with the demand notice dated 02.05.2019 and has not made any outstanding payment and hence this petition.

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In Part-III of Form 5, the operational creditor has proposed Mr. Tara Chand Meenia, being registration No. IBBI/IPA-001/IP-P001125/201819/11822 as Interim Resolution Professional. The consent of the proposed IRP furnished in Form 2 is placed at Annexure A-11 (pages 59 to 61) in which it has been stated that he is not serving as IRP/RP in any other proceedings and there is no disciplinary proceedings pending against him with the Board or Insolvency Professional Agency of Indian Institute of Insolvency Professionals of ICAI.

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Notice of this petition was issued to the corporate debtor on 04.07.2019 to show cause as to why this petition be not admitted. On the last date of hearing the following order was passed:-

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CP (IB) No. 305/Chd/Pb/2019

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“On 28.01.2020, the following order was passed:

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“Inspite of availing substantial time, the respondent-corporate debtor has not chosen to file any reply till date. Mr. C.M. Pandey, Legal Advisor, the authorised representative appeared for the respondent-corporate debtor and seeks further time to file reply. Three weeks time finally granted to file their reply with copy in advance to the counsel opposite, failing which they are liable to pay cost of Rs. 10,000/- to the “Prime Minister’s National Relief fund”. Rejoinder thereto, if any, be filed at least a week before the date fixed with copy in advance to the counsel opposite. List the matter on 19.03.2020.”

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2. Inspite of the above order, neither any reply has been filed by the respondent-corporate debtor till date nor paid the costs and also there is no representation on subsequent dates and even today. The learned counsel for the petitioner prays for deciding the matter on the basis of available record.

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3. Order reserved.”

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We have heard the learned counsel for the petitioner and perused

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the record.

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The first issue for consideration in whether the demand notice in Form 3/4 dated 02.05.2019 was properly served. The demand notice dated 02.05.2019 was sent at the address mentioned in the master data of the corporate debtor and it was stated that the same has been duly served on the corporate debtor. It is stated that corporate debtor has sent a reply vide letter dated 07.05.2019 (Annexure A-1).

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The next issue for consideration is whether the operational debt was disputed by the corporate debtor. The respondent-corporate debtor has neither filed any reply to the petition nor disputed the liability towards the operational creditor. It is observed that the corporate debtor has replied vide letter dated 07.05.2019 and has admitted the liability amounting to ₹ 42,88,694/- against the supply of goods. Copy of letter is at page No.26 as Annexure A-1 of the application.

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We have gone through the contents of the petition filed in form 5 and find the same to be complete. As discussed above, there is a total unpaid

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CP (IB) No. 305/Chd/Pb/2019

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operational debt (in default) of ₹42,88,694/ -. It is mentioned that demand notice dated 02.05.2019 was sent for an amount of ₹42,88,694/ -. Copy of various invoices raised during the financial years 2016-17 to 2018-19 are attached as Annexure A-2 (colly). As a statutory requirement under Section 9(3)(b) of the Code, an affidavit dated 21.05.2019 stating that no notice was received regarding any pre-existing dispute or arbitration in respect of demand raised by operational creditor is attached. A reply has been served to the operational creditor vide letter dated 07.05.2019 in which the corporate debtor has confirmed the liability towards operational creditor. It has been shown that the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in Part-IV till date. It is also observed that the conditions under Section 9 stand satisfied. The operational creditor states that from the above mentioned fact, it is clear that the liability of the respondent-corporate debtor is undisputed. Accordingly, the petitioner has proved the debt and default.

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In the given facts and circumstances, the present petition being complete and having established the default in payment of the Financial Debt for the default amount being above ₹1,00,000/ -, the petition is admitted in terms of Section 9(5) of the IBC and accordingly, moratorium is declared in terms of Section 14 of the Code. As a necessary consequence of the moratorium in terms of Section 14, the following prohibitions are imposed, which must be followed by all and sundry:

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“(a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including

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CP (IB) No. 305/Chd/Pb/2019

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execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;

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(b) Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;

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(c) Any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;

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(d) The recovery of any property by an owner or lessor, where such property is occupied by or in the possession of the corporate debtor.

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(e) It is further directed that the supply of essential goods or services to the corporate debtor as may be specified, shall not be terminated or suspended or interrupted during moratorium period.

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(f) The provisions of Section 14(3) shall however, not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator and to a surety in a contract of guarantee to a corporate debtor.

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(g) The order of moratorium shall have effect from the date of this order till completion of the corporate insolvency resolution process or until this Bench approves the

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CP (IB) No. 305/Chd/Pb/2019

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resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of corporate debtor under Section 33 as the case may be.”

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The Law Research Associate of this Tribunal has checked the credentials of Mr. Tara Chand Meenia and there is nothing adverse on record. In view of the above, this Bench appoints Mr. Tara Chand Meenia having Registration No. IBBI/IPA-001/IP-P001125/2018-19/11822, E-mail: [email protected], M: 9643105559 as Interim Resolution Professional. The IRP is directed to take the steps as mandated under the IBC inter-alia under Section 15, 17, 18, 20 and 21 of IBC, 2016.

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The Interim Resolution Professional shall after collation of all the claims received against Corporate Debtor and the determination of the financial position of the Corporate Debtor constitute a Committee of Creditors and shall file a report, certifying constitution of the Committee to this Tribunal on or before the expiry of thirty days from the date of his appointment, and shall convene first meeting of the Committee within seven days of filling the report of Constitution of the Committee. The Interim Resolution Professional is further directed to send regular progress reports to this Tribunal every fortnight.

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A copy of order shall be communicated to both the parties. The learned counsel for the petitioner shall deliver copy of this order to the Interim Resolution Professional forthwith. The Registry is also directed to send copy

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CP (IB) No. 305/Chd/Pb/2019

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of this order to the Interim Resolution Professional at his e-mail address

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forthwith.

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Sd/Sd/(Raghu Nayyar) (Ajay Kumar Vatsavayi) Member (Technical) Member (Judicial)

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March 05, 2021 pc

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CP (IB) No. 305/Chd/Pb/2019

In the matter of S.R. Industries Ltd. Cp (Ib) No. 305-Chd-Pb-2019

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In the matter of S.R. Industries Ltd. Cp (Ib) No. 305-Chd-Pb-2019

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