Wednesday, 10 March 2021

Pradeep Kumar,(Sole Proprietor, Pradeep Kumar & Co.) Vs. Apace Builders and Contractors Pvt. Ltd. - Section 9 application filed by Sole Proprietorship Concern.

NCLT New Delhi (05.02.2021) in Pradeep Kumar,(Sole Proprietor, Pradeep Kumar & Co.) Vs. Apace Builders and Contractors Pvt. Ltd.[Company Petition No. IB 2339/ND/2019] Held that;

  • in the case of M/s Khera Enterprise Vs. M/s Talwar Agencies Pvt. Ltd., wherein it has been stated “in case the application is filed by the proprietorship concern then steps be taken by the petitioner to amend the memo of parties” submitted that they shall amend the memo of parties, hence stated that the technical objection raised by the corporate debtor shall be removed.

  • -further relying on the judgments of Hon’ble NCLAT in Neeta Saha Vs. Ram Niwas Gupta, “wherein it was held that the application filed by the sole proprietorship firm under I& B code are maintainable.”

  • Therefore, in the given facts and circumstances, the present application is complete and the Applicant has established its claim which is payable and due by the corporate debtor. In the light of above facts and records, the present application is admitted.

 

Excerpts of the order;

# 1. The Present Application is filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (for brevity ‘code’) read with Rules 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority), 2016 (for brevity ‘the Rules’) through Mr. Pradeep Kumar (for brevity ‘Applicant’) being the sole proprietor of Pradeep Kumar & Co., with a prayer to initiate the Corporate Insolvency process against Apace Builder Contractors Pvt. Ltd. for brevity (‘Corporate Debtor’).


# 2. The Applicant is a sole proprietor of Pradeep Kumar & Company, being the proprietorship firm having date of commencement on 03/03/2015 formed under the provision of Micro, Small and Medium Enterprise Development Act, 2006 bearing Udhyog Adhaar Memorandum No. DL07A0001519 and having its office at 3rd Flat NO. C89X3, Pocket C, Dilshad Garden Shahdara, New Delhi – 110095 and registered email id pradeepkumarcompany2012@gmail.com. The applicant is involved in the business of manufacture of wooden products such as Veener Sheets, Plywood, Ribs, door frames, lamination board and wooden containers.


# 7. Pursuant to the defaults, the applicant issued a demand notice dated 27.06.2019 under Section 8 of the code calling upon the corporate debtor to pay the total outstanding amount of Rs.16,72,339/- including interest calculated up to 26.06.2019. The notice was served upon the registered as well as corporate address office of the corporate debtor via speed post. The demand notice was also sent at the registered Email ID, as mentioned in the master data vide email dated 23.07.2019. The copies of proof of delivery and tracking report of email have been annexed.


# 8. The corporate debtor has not replied to the said demand notice. Consequently, the applicant filed the present application under section 9 of IBC, 2016 and served the copy of this application, which was duly delivered to the Corporate Debtor as per service affidavit. As per Form V, the total debt outstanding is Rs.16,72,339/- including interest upto 26.06.2019. The applicant submits that interest will be calculated up to date of final payment.


# 9. The Corporate debtor filed reply to the said application and raised the following objections:

  • a) The corporate debtor raised preliminary objection with regards the maintainability of the said application that in present case the proprietorship firm is not an entity established under law. Hence is not eligible to initiate the insolvency process. The corporate debtor for this submission has relied upon the judgment of NCLT New Delhi Bench in case titled as R G Steel Vs. Berry Auto Ancillaries (P) Ltd., the said petition was dismissed and it was held that “a sole proprietary concern taking into consideration the definition of person is not entitled to approach this tribunal on its own” 

  • b) The corporate debtor has raised an issue that supply with respect to first purchase order was not complete. Further raised issue with respect to the quality of goods and rejection of the goods against which credit notes were issued, as reflected in the ledger of applicant. Corporate debtor has denied the rate of interest charged by the applicant.

  • No documents in support of the contention raised by the corporate debtor are field.


# 10. The applicant filed a rejoinder contravening the averments made in the reply and relied upon the following:

a) The applicant has relied on following cases in support of contention that the sole proprietorship concern can through its proprietor file an application under Section 9 of the code.

  • i. M/S Vani Biochem Vs. M/s Vaayucom Private Limited, NCLT Amravati bench.

  • ii. M/s Rahul Engineers Vs. Ferrox Chemicals Private Limited, NCLT Mumbai Bench 

  • iii. M/s Wasmake Industries Vs. M/s Utkal Builders, NCLT Cuttack Bench

  • iv. BG Textile Vs. H Sakhiya Fashion Private Limited, NCLT Ahmadabad bench

Further the applicant relying upon the judgment of NCLT, New Delhi Bench – II in the case of M/s Khera Enterprise Vs. M/s Talwar Agencies Pvt. Ltd., wherein it has been stated “in case the application is filed by the proprietorship concern then steps be taken by the petitioner to amend the memo of parties” submitted that they shall amend the memo of parties, hence stated that the technical objection raised by the corporate debtor shall be removed.


# 11. The applicant submits that in pursuance of the liberty granted by the Tribunal on 21.12.2020 an amended memo of parties was filed vide application on 28.12.2020, and further relying on the judgments of Hon’ble NCLAT in Neeta Saha Vs. Ram Niwas Gupta, “wherein it was held that the application filed by the sole proprietorship firm under I& B code are maintainable.”


# 13. The date of default is 26.06.2019 and the present application is filed on 18.09.2019. Hence the application is not time barred and filed within the period of limitation.


# 14. The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application.


# 15. The Applicant has filed its bank statement stating that the amount claimed or any part thereof, has not been received by the applicant nor had any person, on its behalf had received in any manner the amount due to them as required u/s. 9(3)(c) of I & B Code. The Applicant has filed an affidavit in compliance of section 9(3)(b) affirming that no notice of dispute has been given by the corporate debtor relating to dispute of the unpaid operational debt.


# 16. The present application is filed on the Performa prescribed under Rule 6 of the Insolvency and Bankruptcy Code, 2016 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 r/w Section 9 of the code and is complete.


# 17. Having heard and the Ld. counsels for the parties and documents on records, it is clearly established that the default in payment of the Operational debt has occurred by the corporate debtor. Though the corporate debtor has raised dispute with regards the payments of invoices on grounds of substandard quality of goods but has not placed on record any document which proves the pre-existing dispute between the parties. There is no merit in the so-called dispute raised by the corporate debtor as mere reply filed by the corporate debtor to the present application, is unable to establish any pre-existing dispute of genuine nature. This leaves no doubt that the default has occurred for the payment of the operational debt to the applicant and the so called dispute raised by the corporate debtor is merely a moonshine dispute as laid down in “Mobilox Innovative Private Limited vs. Kirusa Software Private Limited”, the Hon’ble Supreme Court observed 

  • “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 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 required 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.”

Therefore, in the given facts and circumstances, the present application is complete and the Applicant has established its claim which is payable and due by the corporate debtor. In the light of above facts and records, the present application is admitted.


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