Zaara Enterprises Venture Private Limited Vs Dhanraj Agencies Private Limited

D. Arvind, Member (Technical)

This Court is congregated through a blended mode.

Heard. Ld. Counsel for the parties.

This application under Section 9 of Insolvency and Bankruptcy Code, 2016, for brevity IBC, has been preferred by Zaara Enterprises Venture Private Limited, (hereinafter referred as “Applicant or Operational Creditor or “OC”) to initiate Corporate Insolvency Resolution Process (hereinafter called as “CIRP”) of Dhanraj Agencies Private Limited, the Corporate Debtor (hereinafter called as “CD”). This Application has been preferred to seek following reliefs, inter alia: -

(a) To allow and admit the present application in order to enable the operational creditor to initiate the Corporate Insolvency Resolution Process of the Corporate Debtor.

(b) To appoint any person as this Adjudicating Authority, deem fit, as the Interim Resolution Professional, as the operational creditor has not proposed any person.

Briefs facts of the case are as under: -

4.1. The applicant is engaged in the business of interior and civil solutions which includes drawing, design, execution, manufacturing and supply of furniture apart from rendering management consultancy services.

4.2. In the month of December 2020, the Corporate Debtor approached the Operational Creditor for executing interior and electrical work of the showroom owned by the Corporate Debtor. On mutual agreement, both the parties agreed to the terms and conditions of the work order. Accordingly, the Operational Creditor sent an email dated 13.01.2021 along with the work orders in respect of interior and electrical work etc. for getting the documents signed. It is the claim of the Operational Creditor that though the Corporate Debtor had verbally accepted the said work orders did not reply to the email of the Operational Creditor and did not sign the work orders.

4.3. The Operational Creditor thereafter started work and started issuing tax invoices against the work executed at the project site. However, the Corporate Debtor never settled the tax invoices on time despite acknowledging the receipt of tax invoices.

4.4. It is the claim of the OC that the scope of work mutually agreed was duly completed on time and the same was communicated through an email dated 12.07.2021 to the Corporate Debtor.

4.5. Thereafter, the Operational Creditor started following up with the Corporate Debtor for seeking outstanding payment but the Corporate Debtor neither replied to the emails nor made payments to the Operational Creditors against the Invoices raised.

4.6. As per the ledger of the Corporate Debtor in the books of Operational Creditor a sum of Rs. 1,17,74,349/- is outstanding to be paid.

4.7. Hence, this application has been filed under Section 9 of IBC.

Ld. Counsel for the Applicant: -

5.1. Ld. Counsel for the applicant submits that the total defaulted amount is Rs. 1,17,74,349/-.

5.2. He took us through the invoices raised by Operational Creditor on Corporate Debtor which are in page nos. 62 to 65 of the application and the amount due was Rs. 3,68,22,185/- out of which Operational Creditor received payment for Rs. 2,50,47,836/- leaving Rs. 1,17,74,349/- to be paid, which is without including interest at the rate of 24% as per clause mentioned in Invoices .

5.3. He submits that despite several follow up through emails and phone, the outstanding payment was never made and therefore, a notice under Section 8 of IBC 2016 was sent to the Corporate Debtor on 18.08.2022 and till date no reply has been received.

5.4.  While no reply was received under Section 8 IBC, the Corporate Debtor has responded to the Operational Creditor vide his email dated 11th July 2022 alleging deficiency in work executed apart from alleging delay in execution and the said email is in page no. 66 of the application.

5.5. The claim of the Corporate Debtor is disputed by the Operational Creditor claiming that there was no deficiency in work and OC has met deadlines mutually agreed.

5.6. He submits that default is more than threshold limit specified by the IBC and claims that there are no pre-existing disputes except the allegations made by the Corporate Debtor in his email dated 11.07.2022 which are factually incorrect. If at all Corporate Debtor disputed the amount in default on account of deficiency in service, he would have replied to the notice issued under Section 8 of IBC which he failed to do. Therefore, he submits that it is a fit case for admission.

Ld. Counsel for the Respondents: -

6.1. Ld. counsel for the respondent submit that there are pre-existing disputes which is evident from the email written by the Corporate Debtor to Operational Creditor on 11.07.2022. The said email communicated deficiency in service, not meeting the timeline, improper and in complete work authorised etc. He submits that no response by Operational Creditor to this email of Corporate Debtor has been placed on record.

6.2. The Ld. Counsel submits that through an email dated July 12th, 2021, the Operational Creditor communicated about the completion of project to which the Corporate Debtor has replied through an email on 14.07.2021 stating that significant amount of work remains to be completed.

6.3. Ld. Counsel submits that after exchange of several emails and phone calls, the Corporate Debtor wrote a final email on 11.07.2022 as stated above.

6.4.  Ld. Counsel submits that the notice under Section 8 of IBC alleged to have been issued by Operational Creditor was never received by Corporate Debtor.  Operational Creditor has not placed any proof of service on record. He submits that if Corporate Debtor would have received the notice certainly reply would have been made. Therefore, the question of no response to Section 8 notice does not arise. In view of above, he submits that the application filed is not maintainable and liable to be dismissed.

6.5. The rival contentions were noted, and the case laws relied by them were considered.

Analysis and Findings: -

7.1. We find that both the parties have agreed for executing interior and furnishing one of the showrooms of the CD in Calcutta. In this context, several work orders signed only by Operational Creditor and not counter signed by Corporate Debtor have been placed in the application from page no. 40 to 49.

7.2. Operational Creditor has raised several invoices amounting to Rs. 3,68,22,185/- starting from 07.01.2021 to 13.06.2022 (Copies of Invoices are on record) and out of the said amount, Operational Creditor admits receipt of Rs. 2,50,47,836/- leaving Rs. 1,17,47,349/-to be paid.

7.3. We find that the Operational Creditor has claimed completion of work as per unexecuted work orders without any deficiency. The Corporate Debtor claims that there are series deficiency in the work claimed to have been completed. We have seen exchange of correspondence in this regard in the application as well as in reply to the application.

7.4. We particularly note an email sent by Corporate Debtor on 11.07.2022, which is in page no. 67 to 68 of the application levelling several complaints regarding improper, poor and incomplete work done by the Operational Creditor and this communication is much before the date of issue Notice under Section 8 of IBC.

7.5. We find no response to this email on record. We also find that Operational Creditor has not placed any record of proof of service with reference to notice issued under Section 8 of IBC and consequently nonresponse to this notice by the CD cannot be taken as a ground for admission of default.

7.6. In view of the above observations and findings we find that there are pre-existing disputes between Corporate Debtor and Operational Creditor on the work executed by the Operational Creditor and consequently, the application being C.P. (IB) No. 326/KB/2022 filed under Section 9 is not maintainable and accordingly dismissed.

7.7. This order is issued in accordance with Section 60(5) read with Section 9 of IBC.

7.8. No costs.

The Registry of this Adjudicating Authority is directed to send e-mail copies of the order forthwith to all the parties and their Learned Counsel for information and for taking necessary steps. Further, a copy of the order shall be served upon the Insolvency and Bankruptcy Board of India (IBBI) for their record and also upon the Registrar of Companies (ROC), West Bengal, Kolkata by all available means.

Certified copies of this order, if applied for with the Registry of this Adjudicating Authority, be supplied to the parties upon compliance with all requisite formalities.