K.B. Polychem (India) Limited vs Rapt Industries Private Limited

Dr. Deepti Mukesh, J

The Present Application is filed under section 9 of Insolvency and Bankruptcy Code, 2016 (for brevity ‘IBC, 2016’) read with Rule 6 of the

Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity ‘the Rules’) by K.B. Polychem (India) Limited (for

brevity ‘Applicant’) through Mr. Saurabh Bhalla duly authorised vide Board Resolution dated dated 03.07.2018, with a prayer to initiate the

Corporate Insolvency process against Rapt Industries Private Limited (for brevity ‘Corporate Debtor’).

The applicant is a company originally incorporated as a private limited company under the provisions of Companies Act 1956 on 09.09.2009 with the

name K.B.Ploychem (India) Pvt. Ltd. and CIN U24139DL2009PTC267647. The company was converted into Public limited company under Section

18 of the Companies Act, 2013 on 29.07.2016 with the name as K.B. Ploychem (India) Ltd. having its registered office at: A-1, Basement DDA

Sheds, Okhla Industrial Area, Phase-2, New Delhi. Applicant is engaged in the business of manufacturing, trading and import of rubber, chemicals etc.

The Corporate Debtor is a private limited company incorporated on 10.12.2012 under the provisions of companies Act, 1956, having its registered

office at F-23, Dector-1, Bawana Industrial Area New Delhi â€" 110039, bearing CIN U22100DL2012PTC245889 as per master data. The

authorized share capital of the company is Rs. 15, 00,000/- and the Paid up share capital is Rs.5,00,000/-.The Corporate debtor is engaged in the

business of manufacturing of chemicals, printing ink etc.

The Applicant has stated that the corporate debtor placed specific verbal purchase orders for supply of chemicals, printing ink etc. It is stated that

as per the agreed terms the corporate debtor was required to make payment within 15 days of the aforesaid goods, failing which interest @ 24% was

chargeable. The applicant issued number of invoices out of which invoices from 25.02.2016 to 28.03.2016 are outstanding and are unpaid by the

corporate debtor for a total amount of Rs 4,76,154/-.It is also stated that the corporate debtor failed to issue C- form and hence is liable to pay the tax

amount along with interest and penalty imposed.

The Applicant submits that the corporate debtor had accepted the goods without any demur or objections. The applicant submits that inspite of

various requests were made to the corporate debtor to clear the outstanding dues. However, the corporate debtor did not reply and also failed to

discharge the outstanding liability.

The Applicant issued a demand notice dated 30.07.2018 in Form 3 under the provisions of section 8 of I & B Code, 2016 (Under Rule 5 of the

Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 calling upon the corporate debtor to pay the total outstanding amount

of Rs. 4, 76,154/- along with interest @ 24% p.a. due since March 2016 till date.

The corporate debtor vide reply dated 16.08.2018, raised the dispute with respect to quality of goods and also stated that the said issues of quality

was informed to the applicant. The corporate Debtor further stated that due to the said dispute they had raised various debit notes and the same were

sent to the applicant vide email dated 02.07.2018, 05.09.2018 and 05.12.2018 , including one to the advocate for the applicant company.

The applicant sent rejoinder to reply sent by the corporate debtor. It is submitted by the applicant, that the corporate debtor denied the claim of the

applicant and raised the issue of defect in quality of goods and also mentioned that the debit notes sent by CD were not signed nor supported by any

documents. Also, the applicant admitted that the debit notes were received as in its own statements in rejoinder to reply of Section 8 notice. The

averments of applicant in rejoinder is reproduced :

“In fact, there is no dispute with regards to the goods given by my client, yet with malafide motive in order to usurp the legitimate dues of

my client, your client withheld legitimate amount of my client and created a story of defective goods and went to the extent of creating a

false document i.e.: debit note, which was issued by your client when my client started following your client for outstanding payments in

April and May 2018 and then your client in order to avoid the payment, created a false debit note which expose itself as your client itself is

not sure whether it will save him from the liability and therefore the same neither bears any signature, date or particulars of contents of the

debit note nor substantiated by any supporting documents.â€​

Hence, the applicant filed present application under Section 9 of IBC and served the copy of this application to the Corporate Debtor. As per Form

V, the total debt outstanding as on 28.03.2016 is Rs 4, 76,154/- along with interest @24% per annum as per the terms of invoice. The Corporate

Debtor submitted that he had filed reply but the same has not come on record despite various opportunities given by the court.

Since a copy of reply was served to the applicant, the applicant filed rejoinder denying all averments of the corporate debtor. At the time of

hearing the reply had not come on record hence the reply and rejoinder were not dealt with.

Considering the documents on records and submissions of counsels, it manifests that the corporate debtor has raised a pre-existing dispute as

stated in its reply by sending debit notes which were sent to the applicant much prior to issue of the Section 8 notice.

The Hon’ble Supreme Court in the case of “Mobilox Innovative Private Limited vs. Kirusa Software Private Limited†in civil appeal

number 9405 of 2017 vide order dated 21.09.2017 has held that:

“Therefore, all 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. However, in doing so, the court does

not need to be satisfied that the defence is likely to succeed. The court does not at this stage examine the merits of the dispute except to the

extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has

to reject the application. In the present case the respondent has raised dispute with sufficient particulars. Besides the case records reveal

that there was existence of dispute much prior to the issuance of notice under section 8 of the code. The claims of the dispute suggest the

need of elaborate investigation. The moment there is existence of such a pre-existence dispute, the corporate debtor gets out of the clutches

of the code.â€​

In view of the aforesaid facts, a conclusion can be drawn that there is ‘Pre-existence dispute’ which was raised by the corporate debtor,

much prior to the notice served under section 8 of the Code. Hence, we are of the view that the claim of applicant is not proved beyond doubt and the

applicant cannot be considered for admission.

In view of the above discussion the present application is rejected and stands dismissed. The application is disposed of in terms of above order.