Mak V. Engineers Private Limited vs First Plumbing Pvt. Ltd

This is an application filed by M/s. Mak V Engineers Pvt. Ltd., the Applicant seeking to initiate corporate insolvency resolution process ("CIRP") under Section 9 of the Insolvency and Bankruptcy Code 2016 ("the Code") of M/s. First Plumbing Pvt. Ltd., the Respondent for the alleged default on the part of the Respondent in settling an amount of Rs. 2,59,077/- including the interest component towards the supply of goods and equipments effected by the Applicant. The details of transactions leading to the filing of this application as averred by the Applicant are as follows:

i. The Applicant herein has preferred an application under Section 9 of the Code against the Respondent for realization of an operational debt to the tune of Rs. 2,59,077/- including interest @ 18% p.a. as on 14.11.2018 owed by the Respondent. The Applicant is a company registered under Companies Act, 1956 primarily engaged in the business of designing and distributing of water pumps and water treatment services. The Respondent is also a company registered under Companies Act, 1956 engaged primarily in the business of construction related services.

ii. The Respondent has issued purchase orders dated 16.07.2015, 12.05.2016, 24.06.2016 and 14.07.2016 in favor of the Applicant for supply of goods and equipment. The Applicant had accordingly supplied the goods and equipment at Gurgaon, Chittorgarh and Delhi - the respective places mentioned in the purchase orders on timely basis and as per the demand and requirements. The invoices were raised against the supply of all the equipments. Further, the Respondent also issued to the Applicant nine Form-C against the supplied equipments in order to reduce the tax liabilities for inter-state supply of equipments.

S. No.

Form-C No.

Value

Invoice No.

1

HR06WC0515666

Rs. 7,22,160/-

19 & 21

2

HR06WC3154962

Rs. 7,65,000/-

26 & 27

3

RJ/C/2016-2017

Rs. 22,06,500/-

40 & 41

4

RJ/C/2016/2017

Rs. 7,86,000/-

82

5

RJ/C/2017-2018

Rs. 5,04,900/-

20

6

HR06WC3641351

Rs. 8,04,780/-

26

7

HR06WC3643660

Rs. 35,35,830/-

34, 35, 36 & 67

8

HR06WC3643885

Rs. 1,29,030/-

92

9

HR06WC3640738

Rs. 1,98,900/-

124

Total

Rs. 96,53,100/-

iii. It is pertinent to mention that after the introduction of GST, the last invoice raised against the supply of the equipments was duly taxed as per the new law.

iv. The total value of the goods and equipment inclusive of tax and discounts supplied to the Respondent by the Applicant in pursuance of the purchase orders dated 16.07.2015, 12.05.2016, 24.06.2016 and 14.07.2016 is Rs. 98,71,500/-. After adjusting the payment received, the debt is Rs. 2,59,077/- (including interest @ 18% p.a. as on 14.11.2018) and the Respondent is liable to pay the same to the Applicant.

v. The Applicant had sent several reminders over e-mail to the Respondent for release of payments on time to time basis. The aforesaid payment had been released by the Respondent in parts spreading over a long span only after constant follow ups and reminders by the Applicant. The Applicant has also sent several reminders to Respondent over e-mail regarding the release of the aforesaid payment and has been constantly following up since early 2018 but the Respondent is not paying any heed to such mails and follow ups.

vi. The Applicant had also sent a demand notice dated 23.07.2018 through their counsel demanding the Respondent to release the aforesaid payment in favor of the Applicant, however, neither the Applicant nor the counsel of the Applicant received any reply of the same and neither the outstanding amount had been credited to account of Applicant even till now.

vii. The Applicant had on 02.03.2019 mailed through speed post a Form 3 demand notice of unpaid operational debt dated 27.02.2019 on the address of the operational debtor in compliance of Section 8 of the Insolvency and Bankruptcy Code, 2016 read with Rule 5(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 bringing to the notice of Respondent existence of an unpaid operational debt.

viii. However, the Respondent has after the receipt of the demand notice neither raised any dispute nor had sent any record of the payment and has neither remitted the operational debt in the account of the Applicant within ten days of statutory period.

ix. It is submitted that the amount outstanding on part of the Respondent against the supply of goods and equipment by the Applicant constitutes operational debt u/s 5(21) of the Code.

Consequent to the issuing of notices by the Applicant as well as this Tribunal, the Respondent filed its reply on 05.11.2019 in which the following contentions are raised:

i. The Applicant did not work as per the terms determined between the parties due to which the Respondent suffered losses. The Applicant made an oral agreement with the Respondent that on the purchase of the goods it would give warranty on the use of goods. As the Respondent gave 18 months warranty to its clients the Applicant also gave 18 months warranty to the Respondent. During the warranty period it was the responsibility of the Applicant to maintain all appliances.

ii. The Applicant has concealed the amount given as discount to the Respondent. The Applicant is not liable to recover any amount from the Respondent and hence there is no question of interest @ 18% as calculated.

iii. After several negotiations made over phone on the maintenance, the Applicant made a request to send an e-mail on the maintenance and the same was sent on 10.10.2017 and in return the Applicant company promptly replied on the same date. The Applicant company denied some of the working area and admitted some 'will be done', but never did till to date.

iv. The Respondent spent Rs. 53,522/- in 2017 and Rs. 19,530/- in the year 2019 totaling Rs. 73,052/- which the Applicant was supposed to spend on maintenance. Apart from the expenses mentioned herein above, there are other sites and works to be maintained by the Respondent company which the Applicant company did not do.

We have gone through the details of documents filed by both the parties and heard the arguments made by the counsels of both the sides.

From the replies given by the Respondent it is clear that the Respondent has spent substantial amount in the years 2017 and 2019 for maintenance works which were supposed to be done by the Applicant company. Besides the Respondent has sent an e-mail to the Applicant on 10.10.2017 seeking to set right the snags and pending works. The reply sent by the Applicant in response to the e-mail on the same day clearly establishes the fact that the Applicant company denied some of the working areas and admitted some works "will be done" but it is understood that the Applicant company never did the work till date. All these details confirm the existence of dispute between the parties prior to the issue of Section 8 Notice and it is beyond the scope of this Tribunal to go into the details of dispute. In view of the above reasons, the application fails and it is dismissed with no cost.