The NCLT rejected an application by Ms. Bhumisha Shah to initiate CIRP against West Coast Frozen Foods. The Tribunal found the claimed debt did not cross the 1 crore threshold and noted the existence of a dispute regarding cross-claims and fact inconsistencies in invoices.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE NATIONAL COMPANY LAW TRIBUNAL AHMEDABAD
COURT - II
CP (IB) 198/NCLT/AHM/2021
[Application for initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency & Bankruptcy Code, 2016]
In the Matter of:
Ms. Bhumisha Shah Applicant/ Operational Creditor Sole Proprietor of Candida Bio Aqua Solutions
Versus
West Coast Frozen Foods Private Limited
Respondent/ Corporate Debtor
Order Pronounced on: 10 /02/2023
Coram:
DR. DEEPTI MUKESH MEMBER (JUDICIAL) AJAI DAS MEHROTRA MEMBER (TECHNICAL)
CP (IB) /198/NCLT/AHM/2021
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MEMO OF PARTIES
Ms. Bhumisha Shah
Sole Proprietor of Candida Bio Aqua Solutions Shop No. 22 to 24 Luprit Arcade, Nr. HP Gas Dealer Beside Indian Oil Petrol Pump Olpad, Surat 394 540 Gujarat State … Applicant/Operational Creditor Versus
West Coast Frozen Foods Private Limited
Plot No. 321, 322, 323, ORMA, ORMA Road Olpad Saras Road Olpad Surat 394540 Gujarat State … Respondents/Corporate Debtor
Appearance: For Applicant : Ms. Noopur Dalal, Advocate For the Respondent : Mr. Jay Kansara Advocate a/w. Ms. Aaksha Sajnani, Advocate i/b. Wadia Ghandy & Co.
CP (IB) /198/NCLT/AHM/2021
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ORDER
CP (IB) /198/NCLT/AHM/2021
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with CIN: U15120GJ2005PTC095804, having registered office at Plot No. 321, 322, 323, ORMA, ORMA Road, Olpad Saras Road, Olpad, Surat, Gujarat 394 540, Gujarat State. The authorised share capital of the corporate debtor is Rs. 5,00,00,000/- and paid up share capital is Rs. 3,45,00,000/-. The corporate debtor is engaged in the business of sale of shrimp feed and other aqua culture products.
CP (IB) /198/NCLT/AHM/2021
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CP (IB) /198/NCLT/AHM/2021
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Consequent to the business dealings between the parties till 31.03.2019, all amounts payable by the corporate debtor to the applicant towards supply of shrimp, were set off against the receivables by Fine Foods and West Coast Aqua i.e. group companies of the corporate debtor. On the contrary, group company of the corporate debtor is entitled to receive a sum of Rs. 1,02,071/- from the applicant. A Civil Suit bearing No. RCS 05 of 2020 for recovery of the said amount of Rs. 1,02,071/- is pending for adjudication before Principal Civil Judge, Olpad, Surat, copy of which is annexed to the reply.
CP (IB) /198/NCLT/AHM/2021
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CP (IB) /198/NCLT/AHM/2021
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aforesaid invoices and no dispute on interest clause was ever raised. There is no pending dispute between the corporate debtor and operational creditor and no dispute was raised before issuance of demand notice. The corporate debtor has failed to provide any document in their reply to demand notice evidencing pre-existence of dispute. The setting off of the debts of the group transactions of the operational creditor and corporate debtor as shown by the corporate debtor in his reply is baseless and against the accounting standards and also has never been approved or consented or agreed by the applicant. Regarding authenticity of invoices issued to the corporate debtor, the invoices attached with the application are computer generated and hence were not signed. The applicant has relied upon the following judgements copies of which are annexed to the written submissions to support its arguments with respect to interest on delayed payment:
CP (IB) /198/NCLT/AHM/2021
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CP (IB) /198/NCLT/AHM/2021
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agreement treating the same as valid and binding. No amount remained due and payable by the respondent to the applicant. The tabular summary provided at page Nos. 112 to 114 of the reply clearly showcases that on the contrary the Fine Foods, i.e. group company of the respondent is entitled to receive a sum of Rs. 1,02,071/- from the applicant for the supply of raw material by it. The applicant for the first time addressed a purported recovery notice dated 10.02.2020 claiming an amount of Rs. 75,88,665/- as due and payable by the respondent to the applicant. There was no claim of interest in the said notice and no invoice was shared with the letter dated 10.02.2020. The respondent replied the notice vide letter dated 03.03.2020 calling upon the applicant to provide detailed particulars of the claims raised in the notice, however, the applicant failed to respond to the letter of the respondent. The applicant issued demand notice dated 07.07.2021 calling upon the respondent to pay a sum of Rs. 1,21,41,864/-. For the first time, the applicant issued thirteen invoices upon the corporate debtor. Nothing with respect to the aforesaid invoices were mentioned in the letter dated 10.02.2020 issued by the applicant. The invoices raised by the applicant are false and fabricated. The 12 invoices annexed to the demand notice were neither stamped nor signed by any authorised personnel of the applicant. Upon direction of the
CP (IB) /198/NCLT/AHM/2021
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Adjudicating Authority vide order dated 07.04.2022, legible copies of the invoices were submitted by the applicant vide affidavit dated 27.05.2022. The twelve invoices annexed to the demand notice are completely different set of invoices as compared to the invoices placed with the application. The claim amount and the quantities of goods in both the set of invoices are different and the applicant has failed to put forth any explanation for the same. None of the invoices bear the stamp or signature of the corporate debtor, therefore, it is evident that the said invoices were never served to the corporate debtor. The applicant has not produced any evidence to show that such invoices were ever served upon the corporate debtor before issuance of demand notice. Pursuant to order dated 07.04.2022 to remove the defects in the application, the applicant has furnished copy of eleven invoices with the affidavit. The eleven invoices attached to the affidavit for removal of defects contain the stamp and signature of the applicant only, making it evident that the invoices have been stamped and signed at a later stage. The claim amounts are differing among the three different sets of invoices submitted by the applicant. The claim amount in respect of the invoices placed along with the application adds upto Rs. 66,73,437/-. Against that, the aggregate amount for the eleven invoices placed along with the affidavit for removal of defects
CP (IB) /198/NCLT/AHM/2021
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is Rs. 98,91,673/-, whereas the total amount comes to Rs. 1,15,88,665/- if the twelve invoices placed with the demand notice are to be considered. The claim with respect to quantities mentioned in each set of invoices is also contradictory. The quantity of goods as per the invoices annexed to the petition adds upto 14,184 kilograms, whereas, in accordance with the twelve invoices annexed to the demand notice it adds upto 21,844 kilograms. There is no agreement between the parties pertaining to levy of interest amount or penalty charges.
CP (IB) /198/NCLT/AHM/2021
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CP (IB) /198/NCLT/AHM/2021
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attached to the application do not stipulate the interest terms. A scanned copy of the invoice is reproduced below for reference:
No. 9405 of 2017), relevant portion of which is reproduced below:
CP (IB) /198/NCLT/AHM/2021
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“40. It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the Adjudicating Authority must reject the application under Section 9 (5) (2) (d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the ‘existence’ of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the Adjudicating Authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the ‘dispute’ is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster.
CP (IB) /198/NCLT/AHM/2021
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Sd/- Sd/AJAI DAS MEHROTRA DR. DEEPTI MUKESH MEMBER (TECHNICAL) MEMBER (JUDICIAL)
DR. DEEPTI MUKESH MEMBER (JUDICIAL)
Nair/Abhishek LRA
CP (IB) /198/NCLT/AHM/2021
3 issues framed by the court
Whether the amount of default claimed by the operational creditor crosses the threshold limit for initiating Corporate Insolvency Resolution Process.
Whether a dispute existed regarding the debt between the parties at the time of filing the application.
Whether the application is within the prescribed limitation period.
Colour shows how this judgement treated each authority
Mr. Prashant Agarwal, Member of suspended Board of Bombay Rayon Fashions Limited v. Vikash Parasrampuria, Sole Proprietor of Chiranjilal Yarns Trading and Ors.Referred¶55
Pavan Enterprises v. Gammon IndiaReferred¶55
Mobilox Innovative Private Limited v. Kirusa Software Private LimitedApplied¶79
Mobilox Innovative Private Limited vz. Kirusa Software Private Limited (Civil Appeal No. 9405 of 2017)
2 provisions across 2 enactments
Ms. Bhumisha Shah
West Coast Frozen Foods Private Limited
Deepti Mukesh
Ajai Das Mehrotra
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
