M/S Ardex Endura (India) Pvt. Ltd. vs M/S Ajms Engineers Pvt. Ltd.

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 M/S Ardex Endura (India) Private Limited

(for brevity 'Applicant') through Mr. M.M. Ramachandra who is authorized vide board resolution dated 07.06. 2006 with a prayer to initiate the

Corporate Insolvency process against M/S Ajms Engineers Private Limited (for brevity 'Corporate Debtor').

The Applicants is a private limited company having CIN U24233KA1997PTCO22383 and having its registered office at Unit No. 406 & 407,

Brigade Rubix No 20 HMT Campus Yeshwantpur Hobli, Bengaluru- 560013.The Corporate Debtor is a private limited company incorporated under

the provisions of the Companies Act, 1956 on 23.04.1997 having CIN U74899DL1997PTC086817 as per Master Data and having registered office at

2 Floor, Vardhman Mayur PlazaLSC Mayur Vihar Phase IIDelhi-110091. The Authorized Share Capital of the Corporate Debtor is Rs. 2,00,00,000/-

and Paid Up Share Capital is Rs. 1,00,000/- as per Master Data of the company.

The Applicant submits that the corporate debtor had placed a purchase order no. AJMS/DW-193/0234/2011 dated 05.07.2011 for supply of water

proofing materials from the applicant and accordingly, the said goods were supplied by the applicant from time to time as per the requirements and to

the satisfaction of the corporate debtor, which were duly received & acknowledged by the corporate debtor. The applicant submits that the total goods

worth Rs. 56,95,089/- were supplied to the corporate debtor from time to time but the corporate debtor had failed to pay the entire amount due to the

applicant and has only paid a sum of Rs 45,11,234/- leaving balance of a sum of Rs 11,83,855/-till date.

The Applicant submits that the letters dated 31.03.2015 and 31.12.2015 issued by the applicant to the corporate debtor with respect to the balance

confirmation were duly acknowledged which exhibits the official stamp of the corporate debtor. The applicant has further submitted that the corporate

debtor had issued two cheques dated 01.03.2016 for an amount of Rs 5,00,219/- and Rs 3,36,341/-, to the applicant, in discharge of its liability,

however both the cheques were returned, the first cheque for the reason ""payment stopped by drawer"" and the second cheque for the reason ""kindly

contact the drawer/drawee bank and please present again.

The Applicant issued demand notice dated 10.01.2018 under the provisions of Section 8 of the Insolvency and Bankruptcy Code, 2016 as per Form

3 as prescribed under in the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 to the Corporate Debtor, demanding the

total amount of debt of Rs. 11,83,855/-. The notice was delivered at the registered address of the corporate debtor as reflected in the MCA website

and as per the tracking report filed by the applicant. The corporate debtor has neither replied to the above notice nor made any payment towards its

liability for the outstanding amount, to the applicant.

The Applicant filed present Application under section 9 of IBC, 2016 and served the copy of this application through speed post which has been

duly delivered to the corporate debtor as per the service affidavit and tracking report filed by the applicant.

The Corporate Debtor in its reply to the application contended that the balance confirmation letters dated 31.03.2015 and 31.12.2015 were never

received by the corporate debtor and are forged. Further, the corporate debtor has stated that the cheques bearing no 013058 shows that there are

two signatories of the cheques bearing the signature of Mr. Chand Babu Jain who had already resigned from the respondent company and therefore

was not authorized to sign or issueany cheque in favor of the applicants. The corporate debtor also mentions that Mr. Chand Babu Jain had filed cases

against the respondent company in order to extract money, take revenge and played fraud on the company, of which few cases are pending in

Karkardooma Court, Delhi.

The Corporate Debtor contended that the said cheques were not dishonored due to the reason insufficient funds but rather due to the reason ""to

contact the drawer/drawee bank and present again"" and ""payment stopped by drawer"". It is submitted that the bankers were informed by the

corporate debtor about the unauthorized signature on the cheques as the signature of the cheque were different than the authorized signatures

available with the bank. The corporate debtor wrote a letter dated 04.03.2016 to its banker informing the misuse of cheques by former director Mr.

C.B Jain of the company. The relevant extracts from the letter are reproduced herein as under:

The AJMS Engineers Pvt. Ltd. was having two directors namely Anil Zadoo and Chand Babu Jain. Both of us were the joint signatories of

the current A/C of the company. On 07.04.2015, Mr. Chand Babu Jain resigned from the company from the directorship and entire issued

between me and Chand Babu Jain was settled.

On 07.04.2015, Mrs. Sujata Zadoo joined as director of the company and her name was incorporated with the ROC and the same was

informed to the bank. Mr. Chand Babu Jain have no concern with the company.

The two cheuqes were presented in the bank and having the signature of one of the signatory Mr Chand Babu Jain. The said person is not

the authorized signatory as of today as he has resigned from the company on 07.04.2015.

You are requested to stop the payment of the said cheques as reason given by me above.

The corporate debtor submits that the sufficient balance was available with the bank for the payment, but it was only because of the reason signature

difference on the cheques and therefore the cheques were returned by the bank with the remark ""payment stopped by the drawer"".

The Corporate Debtor submits that the applicant had filed a complaint vide bearing no 4140 of 2016 before the court of Additional Chief

Metropolitan Magistrate, Mayo Hall, Bangalore with respect to the aforesaid cheques, which is pending as there is petition filed against the said case

in Hon'ble Karnataka High Court.

Having heard the learned counsels and the documents placed on record, it is beyond doubt that the record of the instant case reveals that the

alleged liability and the aforesaid cheques has been disputed from time to time and that the dispute was pre-existing. It is seen from the email dated

09.04.2016 that a dispute with respect to the cheques in question was clearly pre-existing and raised by corporate debtor. In addition, a complaint

before the court of Addl. Chief Metropolitan Magistrate, Mayo Hall, Bangalore was filed in 2016 much prior to the issuance of section 8 notice. The

letters written by the corporate debtor to its bank for non-clearing of the said cheques, detailing the reason of dispute manifests that there was a pre-

existing dispute.

There is force in the contention of the corporate debtor that a dispute does truly exist between the parties in terms of section 5(6)(b) in the present

case, which requires trial/investigation. Tribunal will not examine the merits of the dispute other than to see if there is in fact exist a 'real dispute'

having some substance, which is pre-existing.

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 exist 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 claim 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"".

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

again much prior to the notice served under section 8 of I & B Code. It is a fit case to reject the application under section 9 of the I & B Code.

In view of the above discussion the present application is hereby dismissed. No order as to costs. A copy of the order shall be forwarded to IBBI

for its records.