Dismissed

In the matter of Hotel Jaltarang Private Limited C.P. No. 3768-IBC-MB-2019

NCLT12 Oct 2022

Case brief

AI extract

What is this about?

The NCLT Mumbai Bench dismissed a company petition filed by an operational creditor to initiate CIRP against a corporate debtor. The petition, which sought recovery of operational debt via invoices spanning multiple years, was held barred by limitation as the Tribunal cannot sever time-barred invoices from a composite debt notice under Section 8.

What did the court decide?

Dismissal of the company petition filed by Shri Sadguru Traders seeking to initiate CIRP against Hotel Jal Tarang Private Limited.

In the matter of Hotel Jaltarang Private Limited C.P… — Insolvency and Bankruptcy | NCLT (2022)

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IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH COURT III

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C.P. No. 3768/IBC/MB/2019

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Under Section 9 of the Insolvency and Bankruptcy Code, 2016 read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudication Authority) Rule 2016)

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In the matter of Shri Sadguru Traders Regd. Office: A-299, TTC MIDC Industrial Area, Village Mahape, Navi Mumbai-400701

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… Operational Creditor

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Hotel Jal Tarang Private Limited Registered Office at Amrapali Shopping Centre, V.L. Mehta Road, JVPD Scheme, Vile Parle(West), Mumbai – 400 049. And Administrative office at14, Kadamgiri complex Hanuman Road, Vile Parle (East), Mumbai – 400 057,

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..…..Corporate Debtor

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Reserved for order on: 07.09.2022

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Order Pronounced on: 12.10.2022

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Coram:

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Hon’ble Shri H.V. Subba Rao, Member (Judicial) Hon’ble Smt. Anuradha Sanjay Bhatia, Member (Technical)

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For the Petitioner : Mr. Yogendra M. Kanchan, Advocate

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For the Respondent : Mr. Nausher Kohli, Advocate

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Per: Shri H.V. Subba Rao, Member (Judicial)

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Page 1 of 8

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IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH

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C.P. No. 3768/IBC/MB/2019

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ORDER

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1. This Company petition is filed by Shri Sadguru Traders (hereinafter called “Operational Creditor”) seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Hotel Jal Tarang Pvt. Ltd. (hereinafter called “Corporate Debtor”) by invoking the provisions of Section 9 of Insolvency and Bankruptcy Code, 2016 (hereinafter called “Code”) read with Rule 6 of Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for resolution of a sum of Rs. 6,48,704/- (Rupees Six Lakhs Forty Eight Thousand Seven Hundred Four Only) being an Operational Debt due and payable by the Corporate Debtor.

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2. The brief facts of the case are as follows:

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i. The Applicants submits that, being a sole Proprietary Firm the Operational Creditor is involved in the wholesale business of supply of food grains. The Corporate Debtor had placed various purchase orders to the Applicant requesting supply of various food grains and grocery items. Therefore, Applicant supplied the goods and thereafter raised the various invoices.

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ii. The Applicant submits that the Corporate Debtor has made certain part payments towards some of the invoices and the last part payment of Rs. 19,828/- was made on 16.08.2017. Further, that the Operational Creditor waited for considerable period of time with the hope that the unpaid balance amount of the invoices would be cleared at the earliest by the Corporate Debtor.

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iii. The Applicant further submits that, issued demand notice dated 15.05.2019, under section 8 of the I.B. Code 2016, to the Corporate Debtor, calling upon to make the balance unpaid principle amounts of several unpaid invoices for sum of Rs. 6,48,704/- (Rupees Six

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Page 2 of 8

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C.P. No. 3768/IBC/MB/2019

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IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH

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Lakh Forty-Eight Thousand Seven Hundred and Four Only),

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iv. The Applicant also state that the Corporate Debtor even failed within 10 days to bring to the notice of the Operational Creditor (a) existence of a dispute, if any, and record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute; (b) the repayment of unpaid operational debt (i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or (ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by the CD.

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v. The Applicant further submits that the Corporate Debtor has admitted the delivery of the goods vide their reply dated 28.05.2019, However neglected to pay the balance amount of Rs. 6,48,704/-

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3. The Respondent in their reply submitted, and stated that:

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I. The Operational Creditor had issued a notice dated 15.05.2019 to which the Respondent replied letter dated 28.05.2019 gave an informative reply and sought time to give detailed reply.

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II. The Respondent states that the amounts claimed by the OC is not due and payable by the CD., if the accounts are audited and finalized and various amounts paid by the CD by cash, bank transfer (NEFT) and credit notes for goods which were of substandard were returned to the Applicant are taken into consideration.

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III. The Corporate Debtor submitted that the goods such as rice, masala and all other various items, used in the preparation of cooking of coastal foods, were ordered and purchased from the OC. Corporate Debtor further states that they had maintained high quality standard of coastal foods, therefore requiring high quality of goods supplied to them, However, the quality of goods

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Page 3 of 8

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IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH

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C.P. No. 3768/IBC/MB/2019

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supplied by the OC were substandard and of inferior quality making their reputation to be hampered.

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IV. The Respondent further states that after scrutinizing the accounts and the records maintained by the OC, it has been now noticed that in respect of various different bills raised by the OC, the payment has been made in cash by the CD however it seems that the OC have deliberately not given any credit for the said amount which has been received by them.

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V. The Respondent states that after it was noticed about the Operational Creditors that they are supplying inferior quality of goods in various different restaurants owned by the Corporate Debtor, it was noticed that the Staff of the CD have acted in collusion and connivance with the representatives of the OC and therefore Corporate Debtor immediately stopped business transaction with the Operational Creditors.

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VI. On letter dated 28.05.2019 have specifically requested the OC to provide the details and particulars of the accounts and to grant them inspection however for the reasons best known to the OC, the said inspection was not granted to the CD which clearly shows that the OC have approached this bench not with clean hands but tried to prejudice the minds of this bench on the basis of the false, frivolous and bogus documents.

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VII. The Corporate Debtor / Respondent contends that this company petition is filed in respect of the certain goods allegedly sold in the year 2016. And that there are certain bills/invoices, which are of May 2016, June 2016, July 2016 and August 2016 claimed in respect of the said bills are hopelessly barred by law of limitation and therefore even there are certain bills of 12.01.2015 i.e the majority of the invoices relied upon by the Petitioner are all dated 3 years prior to the filing of the Petitions.

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VIII. The Respondent further contends that the Petitioner supplied food grains to the Respondents’ restaurant located Lower Parel,

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Page 4 of 8

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IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH

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C.P. No. 3768/IBC/MB/2019

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Vile Parle, MIDC and Versova. Undisputedly, each and every restaurant would have independent and distinct requirements as to quality and quantity. The location of all 4 restaurants are different from one another. However, the Petitioner has clubbed over 382 no. of Invoices in the Petition and filed one composite petition which is impermissible in law.

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IX. Further that the Petitioner has failed to produce any Purchase Orders in support of the Invoices raised by it. In any contract for purchase and supply, there must be a trail established by contemporaneous records such as Purchase Orders, forms, returns, VAT returns, Output taxes etc. However, no such document has been produced along with the present Petition.

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FINDINGS

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Heard the submissions on both sides and perused the material available on record.

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As stated in the reply, the Corporate Debtor is resisting the admission of the above Company Petition mainly on two grounds:

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i. Limitation

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ii. Pre-existing disputes

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Since limitation is the most important aspect that goes to the root of the matter, let us decide the above issue in the first instance.

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The present Company Petition is filed claiming an amount of Rs. 6,48,704/- the alleged Operational Debt due and payable by the Corporate Debtor being the unpaid amount due towards the supply of certain food and spicy items supplied to the Corporate Debtor’s restaurant by the Operational Creditor. The Operational Creditor annexed the details of the invoices under the heading “Debtors Outstanding Statement as on 31.08.2019” under Exhibit ‘H’ at page Page No. 53 of the Company Petition. The Operational Creditor claimed the amounts under different invoices covering from 07.09.2015 till 08.01.2018.

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Page 5 of 8

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IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH

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C.P. No. 3768/IBC/MB/2019

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The Operational Creditor in part 4 of the Company Petition mentioned as if the debt fell due on 21.02.2018 i.e. the date of last unpaid invoice and part payment of 19,828/- made on 16.08.2017 and thus, the Operational Creditor computed the period of filing the above Company Petition from 16.08.2017 for invoices from 2015 till 21.02.2018.

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In order to decide the above issue, it is important to look at Article 14 of the Limitation Act which deals with the period of limitation for price of goods sold and delivered.

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Article 14-

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Description of suit	Period of	Time from wh	ich
	limitation	period begins	to
		run
For the price of goods sold and	Three year	The date of	the
delivered where no fixed period		delivery of	the
of credit is agreed upon		goods.

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It is very clear from the above Article that the above Company Petition has to be filed within 3 years from the date of default of the respective invoices after excluding the credit period if any.

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It is the submission of the Counsel appearing for the Operational Creditor that even though certain invoices preceding 3 years presenting the company petition are barred by limitation, the above Company Petition can be admitted in respect of the unpaid invoices that are within the limitation and thus prayed for the admission of the above Company Petition.

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The learned counsel appearing for the Corporate Debtor opposed the above argument of the Operational Creditor contending that even if the aforesaid Invoices (which are ex-facie barred by limitation) are to be excluded, the Petition would still not be

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Page 6 of 8

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IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH

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C.P. No. 3768/IBC/MB/2019

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maintainable in view of the decision of the Hon’ble NCLAT in Next Education India Private Limited vs. K12 Techno Services Private Limited. In Company Appeal No. 98/2019 where it was observed and held as under:

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Para- 13. Whether the ‘Operational Creditor’ can change the ‘date of default’ by confining the invoices to a later period, when the Demand Notice under section 8 includes all the invoices from the date of default and the ‘debt amount’ is crystallized based on the invoices.

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Para- 21. As can be seen from Section 8, reproduced above, the moment there is an occurrence of a default, copy of an invoice demanding payment of the amount involved in the default is to be delivered by way of a Demand Notice to the ‘Operational Creditor’. Form III gives the details of the invoices. In the instant case, the ‘Operational Creditor’ has given the details of invoices from (pages 399 to 406 of Volume II) and has also crystalized the amount at Rs. 2,39,85,521.35/-, which is unpaid from 2011. Therefore, the argument of the Learned Counsel for the ‘Operational Creditor’ that the period should be confined only from 2015 to 2017 cannot be sustained. The Tribunal cannot confine to one or other invoice if the Applicant has relied on all the invoices to arrive at the amount of Rs. 2,39,85,521.35/- in the Demand Notice under Section 8. We are of the view that the

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Tribunal does not have jurisdiction in these Insolvency Proceedings to cut-short the invoices which would cause recurring dates of cause of action as it is not a suit for recovery.”

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In view of the aforesaid reasons coupled with the above law laid down by the Hon’ble NCLAT mentioned (supra) this bench is of the considered view that there is no merit in the above Company

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Page 7 of 8

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IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH

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C.P. No. 3768/IBC/MB/2019

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Petition and the same deserves to be dismissed as barred by limitation.

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Since this Bench is dismissing the above Company Petition on the main issue of limitation, the other issue with regard to preexisting disputes need not be dealt.

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Accordingly, the above Company Petition is dismissed .

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Sd/Sd/ANURADHA SANJAY BHATIA H.V. SUBBA RAO MEMBER (TECHNICAL) MEMBER (JUDICIAL)

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In the matter of Hotel Jaltarang Private Limited C.P. No. 3768-IBC-MB-2019

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In the matter of Hotel Jaltarang Private Limited C.P. No. 3768-IBC-MB-2019

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