Siddhi Metal Corporation vs Relco Extrusion Private Limited

H.V. Subba Rao, (Judicial Member)

The above Company Petition is filed by M/s Siddhi Metal Private Limited, (hereinafter called as "Operational Creditor") against Ralco Extrusion Private Limited. (hereinafter called as "Corporate Debtor") U/sec. 9 of Insolvency and Bankruptcy Code (hereinafter called the "Code") for ordering Initiation of Corporate Insolvency Resolution Process (CIRP) against the corporate debtor for resolution of an "Operational Debt" of an amount of Rs. 12,69,386/- being the amount due from the corporate debtor for supply of aluminum Scrap Tread by "Operational Creditor" under the invoices referred to in the company petition.

i. The corporate debtor has filed an affidavit in reply of one Mr. Om Prkash Salecha opposing the above company petition contending that the corporate debtor has paid all the outstanding amounts to the operational creditor except the amount due under the last invoice dated 30.04.2015 as it was of substandard quality and could not be consumed by the corporate debtor. It is further mentioned that out of the said goods received under invoice dated 30.04.2015, a substantial portion/quantity of goods was of poor quality. The goods received by the corporate debtor was weighed 14,250 tons approximately which was purchased at the rate of Rs. 147.75/kg plus 5% Sales Tax totaling to an amount of Rs. 11,94,558.75 inclusive of tax. That out of the above-mentioned goods weighing approximately 7.7 tons is lying with them. The photos of the poor quality of goods are attached herewith and marked as Exhibit A.

ii. The corporate debtor further mentioned that intimation was made within five days of the receipt of the scrap material from the Operational Creditor i.e. on 04.05.2015 regarding poor quality of scrap/goods and requesting them to look into the said matter on urgent basis. However, no reply was received from operational creditor. Subsequently letter dated 11.05.2015 was addressed to Operational Creditor to look into the said matter so as to finalize whether goods were to be consumed or returned. It was also mentioned in the said letter regarding visit of one of the persons of the operational creditor who acknowledged and stated that the material is faulty and that the said representative was to negotiate with the owners of the Operational creditor and finalise the same. Thereafter another letter dated 01.06.2015 and 10.06.2015 were sent to operational creditor to look into the matter and respond and it was mentioned and pointed out to operational creditor that the goods will be kept aside until the resolution of the issue.

In the light of the above pleadings, the only issue that needs to be decided in the company petition is :-

Whether there is a pre-existing dispute between the parties.

Before going into the issue of pre-existing dispute, this tribunal upon perusing the record prima facie feels that the above claim is barred by limitation according to the own averments mentioned in the above company petition. The petitioner clearly mentioned in the demand notice dated 14.08.2018 to the effect that as per the ledger account of the corporate debtor maintained by the operational creditor for the period from 01.04.2014 to 31.03.2015, an amount of Rs. 12,69,386/- is outstanding from the corporate debtor. The operational creditor further mentioned in the demand notice that the corporate debtor has confirmed the statement of account by way of signing a confirmation letter dated 01.04.2015 for the financial year 01.04.2014 to 31.03.2015. No subsequent confirmation of balance by the corporate debtor was filed by the operational creditor. Therefore, the petitioner has to file the above company petition within 3 years from 01.04.2015 i.e. on or before 31.03.2018. The above company petition being filed on 13.08.2019 is clearly barred by limitation.

The next issue is with regard to the pre-existing disputes. In order to substantiate the plea of pre-existing dispute between the parties, the corporate debtor has filed four letters dated 04.05.2015, 11.05.2015, 01.06.2015, 10.06.2015, 21.08.2018, 09.03.2018 at page No. 46 to 51 to their reply time and again intimating the operational creditor about the inferior quality of the goods. It is important to observe here that all the above referred letters /correspondence relied upon by the corporate debtor are much prior to the demand notice issued by the operational creditor which will clearly amounts to pre-existing dispute as per law.

In view of the above observations and findings this tribunal is of the considered opinion that there are no merits in the above company petition and the same is liable to be dismissed on both the grounds of limitation and pre-existing dispute.

Accordingly, the above company petition is dismissed.