Om Logistics Limited vs Jindal Retail (India) Pvt Ltd

Sumita Purkayastha (Member Technical)

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') by Om Logistics Limited (for brevity 'Applicant') through Vinay Kumar, Manager (Legal and Liason) authorized vide Board Resolution dated 02.01.2019, with a prayer to initiate the Corporate Insolvency process against Jindal Retail (India) Private Limited (for brevity 'Corporate Debtor').

The Applicant is the Company incorporated on 12.10.1999 under the Companies Act 1956, with the CIN U63002DL1999PLC101942. The Applicant is engaged in the business of logistics and auxiliary transport activities; activities of travel agencies having its registered office at 130 Transport Centrering Road New Delhi 110035.

The Respondent Jindal Retail (India) Private Limted is a company incorporated on 05.12.2007 under the Companies Act, 1956 having its registered office at 6th Floor Block - C NDM - Ii Netaji Subhash Place Pitampura Delhi 110034 and CIN U51109DL2007PTC171081. It is involved in the business of manufacturing and supply of extra Virgin Olive Oil, Pure Olive Oil, Olive Pomace Oil, Pasta, Pasta Sauces, Olives.

As per the averments made in the application, the Corporate Debtor approached the Applicant for transportation of their consignments throughout India and entered in a contract dated 01.03.2016. The Applicant provided regular services to the Corporate Debtor. The Applicant had raised various invoices however, the Corporate Debtor defaulted in payment of the 24 invoices raised from 25.08.2018 to 26.12.2018 amounting to Rs. 1,97,998/-

The Applicant issued demand notice dated 17.09.2019 under Section 8 of the Code read with Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, calling upon the Corporate Debtor to pay an amount of Rs. 2,41,027/- with respect to the outstanding invoices, including an interest @24% per annum as per the invoices claimed by the Applicant. The notice was served upon the Corporate Debtor vide speed post and registered post and delivered on the address of the Corporate Debtor on 19.09.2019 as per the tracking Report and vide email dated 21.09.2019.

The Corporate Debtor sent a reply dated 03.10.2019 to Section 8 demand notice. The Corporate Debtor submitted in this reply that both the parties entered in a contract on 01.03.2016 for the year 2016-2017 and the same was not extended for further period nor there was any written contract for any extension thereof, thus it came to an end on 28.12.2017 and as such no amount is due from the Corporate Debtor. The Corporate Debtor has further submitted that an amount of Rs.2,67,520/- is due and payable by the Applicant Company as the material delivered by the Applicant as per his work was not in good shape as some of the product was received empty and some of the product was damaged. The same has been reflected in POD bearing G.R. (Goods receipt) No. 18263855 dated 13.06.2018 and 20.07.3028, G.R.No. 19064173 dated 24.08.2019 and GR.No. 19477246 dated 08.12.2019.

The Applicant filed this application dated 29.11.2019 as an Operational Creditor praying for initiation of Corporate Insolvency Resolution Process of the Corporate Debtor for its inability to pay their claim of Rs.2,41,027/- inclusive of interest 24% per annum, towards unpaid invoices for the services provided by the Operational Creditor.

Notice with respect to the application was issued to the Corporate Debtor vide order dated 19.12.2019 of the Adjudicating Authority.

The Corporate Debtor filed its reply dated 10.02.2019 and submitted that the Applicant has comprehensively failed to place on record the acknowledgement slip duly signed and remarked by the receiver of the goods as against which the dues alleged to have been claimed falsely, are outstanding. It is submitted that the Applicant has concealed and suppressed material facts qua pre-existing dispute between the Parties. It is submitted that the demand notice was received by the Corporate Debtor on 23.09.2019 and accordingly the reply was issued within 10 days as mandated under Section 8 of the IBC.

It is submitted that the applicant provided transportation services by transporting the Olive Oil stored at various warehouses of the Corporate Debtor to Delhi. As a matter of practice upon delivery of the consignment, the Applicant's delivery personnel issued goods receipt (GR) to the personnel of the Corporate Debtor. Such consignment was inspected by the personnel of the Corporate Debtor in the presence of the delivery personnel to see if the Goods are complete in number and/or not damaged. In case the goods were short or got damaged in transit, then the personnel of the Corporate Debtor made a specific endorsement in this regard on the goods receipt (GR), one copy was kept by the Corporate Debtor and the other endorsed copy was handed over to the personnel of the Applicant. The Applicant raised invoices(s) on the Corporate Debtor, each invoice comprised of three documents i.e. Tax invoice, Goods Receipt and E waybill however, the Applicant in the present Application has only annexed the invoices and not the other documents to conceal the dispute between the parties. Copy of the GR (goods receipt) have been annexed.

It is submitted by the Corporate Debtor that the Applicant has rested its case on the contract dated 01.03.2016, which was valid for a period of one year and the Applicant has failed to place on record any document whereby the said contract was ever extended or renewed. Further it is submitted that except the issuance of the Demand Notice dated 17.09.2019, there has been no demand made by the Applicant upon the Corporate Debtor.

The date of default is 05.01.2019 as mentioned in Part IV of the Form 5 and the present application is filed on 29.11.2019. Hence the application is not time barred and filed within the period of limitation.

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

In "Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software (P) Limited- 2017 1 SCC OnLine SC 353", the Hon'ble Supreme Court analysed the meaning of dispute with respect to Operational Creditors and observed:

"33. The scheme under Sections 8 and 9 of the Code, appears to be that an operational creditor, as defined, may, on the occurrence of a default (i.e., on non-payment of a debt, any part whereof has become due and payable and has not been repaid), deliver a demand notice of such unpaid operational debt or deliver the copy of an invoice demanding payment of such amount to the corporate debtor in the form set out in Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Form 3 or 4, as the case may be (Section 8(1)). Within a period of 10 days of the receipt of such demand notice or copy of invoice, the corporate debtor must bring to the notice of the operational creditor the existence of a dispute and/or the record of the pendency of a suit or arbitration proceeding filed before the receipt of such notice or invoice in relation to such dispute (Section 8(2)(a)). What is important is that the existence of the dispute and/or the suit or arbitration proceeding must be pre-existing - i.e. it must exist before the receipt of the demand notice or invoice, as the case may be "

"34. Therefore, the adjudicating authority, when examining an application under Section 9 of the Act will have to determine:

(iii) Whether there is existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute?"

If any one of the aforesaid conditions is lacking, the application would have to be rejected. Apart from the above, the adjudicating authority must follow the mandate of Section 9, as outlined above, and in particular the mandate of Section 9(5) of the Act, and admit or reject the application, as the case may be, depending upon the factors mentioned in Section 9(5) of the Act."

From the aforesaid decision, it is clear that as per Section 8(2)(a) within a period of 10 days of the receipt of such demand notice or copy of invoice, the corporate debtor must bring to the notice of the operational creditor the existence of a dispute. Be that as it may, on appraisal of the arguments advanced by the Ld. Counsels, it emerged that there were disputes existing to the logistics services provided by the Operational Creditor wherein the Corporate Debtor has submitted that the material which the Operational Creditor was to deliver at various location was not in good shape as some of the product was received empty and some of the product were damaged. The same issue has been reflected in G.R. (Goods receipt) No. 18263855 dated 13.06.2018 and 20.07.3028, G.R. No. 19064173 dated 24.08.2019 and GR.No. 19477246 dated 08.12.2019 which is prior to issuance of Demand Notice dated 17.09.2019. Therefore a pre-existing dispute raised by the Corporate Debtor is established which does not entitle the Operational Creditor to seek Insolvency Resolution of the Corporate Debtor.

In view of the above, this Bench is of the view that the prayer for initiating Corporate Insolvency Resolution process against the Corporate Debtor is not sustainable.

Petition is therefore rejected.