In the National Company Law Tribunal, "Chandigarh Bench, Chandigarh"

(Exercising the powers of Adjudicating Authority under the Insolvency and Bankruptcy Code, 201 6)

CP No.20912016 RT CP (IB) No.581ChdlCHD12017

Under Sections 433 (e), 434 & 439 of the Companies Act, 1956, now treated as Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016.

In the matter of:

MIS VISA DRUGS & PHARMACEUTICALS PRIVATE LIMITED,

having its Registered Office at 1, A.J.C. Bose Road, 3rd Floor (0pp.Lord

Sinha Road) B Wing, Kolkata WB 700020 through its director-cum-duly

Authorised Representative Shri Aditya Balasaria (DIN: 02228287).

Versus

MIS SWAN ALUMlNlUMS PRIVATE LIMITED

haviug its Registered Office at SCO 120-1 22, Office No.302,

Third Floor, Sector 17-C, Chandigarh 16001 7 with latest

address House No.1317, First Floor, Sector 18-C,

Chandigarh - 160018 IN

Order delivered on 04.09.2017.

Coram: HON'BLE MR. JUSTICE R.P.NAGRATH, MEMBER (JUDICIAL).

For the Petitioner: Mr.Yash Pal Gupta, Advocate

For the Respondent: Mr.Prateek Gupta, Advocate.

CP No.20912016 RT CP (IB) No.58lChdlCHDl2017

Order

The company petition was filed against the Corporate

Debtor in the Hon'ble High Court of Punjab & Haryana under Sections

433 (e) and 434 of the Companies Act, 1956 for winding up of the

company for its inability to pay the debt. The petition was filed in the

Hon'ble High Court in November, 2016. While the matter was pending

in the Hon'ble High Court, service of the respondent was not effected

and therefore, in terms of Rule 5 of the Companies (Transfer of Pending

Proceedings) Rules, 201 6, this petition was transferred to the Tribunal.

Relevant portion of rule 5 of these Rules as amended vide notification

dated 29.06.201 7 reads as under:

"5. Transfer of Pending proceedings of Winding up on

the ground of inability to pay debts. - ( I ) All petitions relating

to winding up of a company under clause (e) of Section

433 of the Act on the ground of inability to pay its debts

pending before a High Court, and, where the petition has

not been served on the respondent under rule 26 of the

Companies (Court) Rules, 1959 shall be transferred to the

Bench of the Tribunal established under sub-section (4) of

Section 419 of the Companies Act, 2013 exercising

territorial jurisdiction to be dealt with in accordance with

Part I1 of the Code:

Provided that the petitioner shall submit all

information, other than information forming part of the

records transferred in accordance with rule 7, required for

admission of the petition under sections 7, 8 or 9 of the

Code, as the case may be, including details of the

proposed insolvency professional to the Tribunal upto 1 5th

day of July, 201 7 failing which the petition shall stand

abated:

CP No.20912016 RT CP (10) No.58/Chd/CHD/2017

Provided further that any party or parties to the

petitions shall, after the 1 5th day of July, 201 7, be eligible

to file fresh applications under sections 7 or 8 or 9 of the

Code, as the case may be, in accordance with the

provisions of the Code:

Since the petition was to be treated as a petition under Sections 7, 8 or 9

of the Insolvency and Bankruptcy Code, 2016 (for short to be referred here-

in-after as the 'Code') and as per the aniended Rule 5, the information could

be filed before the Tribunal by 15.07.201 7, the matter was adjourned sine

die on 20.03.201 7.

2. The petitioner filed application as "Financial Creditor" in

Form No.1 as prescribed in Rule 4(1) of the Insolvency & Bankruptcy

(Application to Adjudicating Authority) Rules 2016 (for brevity the 'Rules'),

for initiating the insolvency resolution process under Section 7 of the Code.

It is stated that the Respondent-Corporate Debtor has now shifted its

registered office to House No.1317, First Floor, Sector 18-C, Chandigarh-

16001 8 on 15.02.201 7 as per the master data available with Ministry of

Corporate Affairs Website. 'The copy of the master data of the company is

Annexure at A-I. The master data provides for the particulars of the

address, CIN number allotted to the company, name of its

Directors/authorised signatories. It is admitted by learned counsel for the

parties that 'the Respondent-Corporate Debtor has been served at the

aforesaid addresses. 'The information thus having been given within the

time limited by the Rules, the application is to be considered under Section

7 of the Code. The respondent company was incorporated on 10.12.2004

CP No.20912016 RT CP (IB) No.58lChdlCHDl2017

with authorised share capital of ~140,00,00,000.0 (rupees one hundred and

forty crores only) and the paid up capital of t72,26,55,000/-.

3. The petitioner company was incorporated on 07.07.2008

and filed the company petition before the Hon'ble High Court on the basis

of the resolution of the Board of Directors Annexure P-I attached with the

record of the Hon'ble High Court in the company petition. The petitioner

has named Harish Taneja as the Interim Resolution Professional (IRP) with

registration No.lBBI/lPA-002IlP-N00088/2017-18110229, in order to comply

with the requirement of clause (b) of sub-section (3) of Section 7 of the

Code. The proposed IRP has also been given the written communication in

Form No.2 at Annexure A-2, dated 01.06.2017 giving all the necessary

particulars and the same is found to be in order.

4. The Respondent-Corporate Debtor is said to have taken

advance of t10,00,000/- from the petitioner on 10.1 1.2012, but did not

return thereafter despite repeated demands. For this, the petitioner has

served a demand notice Annexure P-5, dated 11.08.2016. The petitioner

has also relied upon the balance sheet of the respondent company as on

05.12.2013 Annexure P-4 duly signed by two of ,the Directors of the

respondent. On the last page of balance sheet, Annexure P-4, contains the

detail of the unsecured loans/advances as on 05.12.201 3 signed by two of

the Directors of the respondent company. One of the person mentioned in

this list of unsecured creditor is Visa Drugs & Pharmaceuticals Private

Limited (the petitioner herein) for whom, an amount of t10,00,000/- was fl due.

CP No.209/2016 RT CP (IB) No.58/Chd/CHD/2017

5. The petitioner sent copy of this application to the

respondent Corporate Debtor at both the addresses by registered post,

which the "Financial Creditor" is required under sub-rule (3) of Rule 4 of the

Rules and the same was delivered to the Corporate Debtor on 21.07.201 7

for which, no dispute has been raised on behalf of the Respondent-

Corporate Debtor.

6. When the matter was listed on 24.07.2017, appearance

was made on behalf of the respondent Corporate Debtor. It was, however,

noted that while sending copy of the application ,filed in NCLT Form No.1,

the petitioner had not sent the entire paper book filed in the Hon'ble High

Court containing the necessary Annexures along with the said application.

The petitioner was directed to despatch the copy of application along with

the entire paper book of the petition, which was filed before the High Court

containing documentslAnnexures by registeredlspeed post and to file an

affidavit stating the compliance. The affidavit dated 27.07.2017 of the

Authorised Representative of the petitioner was filed stating that to comply

with the directions issued by this Tribunal, the copy of entire paper book

was supplied to the counsel opposite as well as the same was sent to the

Corporate Debtor by speed post at the registered office on 25.07.2017. 'The

postal receipt dated 25.07.2017 with the track report of the post office

showing the delivery of the item to the respondent on 26.07.2017 and

learned counsel for respondent has not disputed that the compliance was

made.

7. The respondent Corporate Debtor has filed the objections

& opposing the prayer made in the instant petition. It is stated that there were

in all 10 named shareholders of the Respondent-Corporate Debtor

including MIS Golchha Markbuild Pvt. Ltd, Silver Ark Enterprises Pvt. Ltd.

and Ashok Kumar Aggarwala etc. upto the year 201 3. Those shareholders

were in-charge of the respondent company.

8. On 18.02.201 3 a Memorandum of Understanding (for short

MOU) was entered into between the respondent company through its

director Ashok Kumar Aggarwala on the one hand and MIS Jupiter Strips

Pvt. Ltd. on the other, whereby the first party to the agreement agreed to

sell its entire shareholding in the company to MIS Jupiter Strips Pvt. Ltd. for

a total sale consideration of ~8,70,00,000/-. The first party, as per the MOU

had agreed to pay all the liabilities towards the bank, secured and

unsecured loans to all the outsider creditors, creditors for expenses and

labour and statutory liabilities. Copy of the MOU dated 18.02.2013 is at

Annexure R-I .

9. In terms of the MOU dated 18.02.2013 the creditors of the

respondent company including the petitioner are deemed to have paid their

dues. In furtherance of the MOU, a share purchase agreement was

executed on 06.12.2013 to reflect the final transfer of business to MIS

Jupiter Strips Pvt. Ltd. The first party in this agreement are the erstwhile

shareholders of the respondent and the amount of the creditors having

been paid, the transfer of business was effected. 'That share purchase

qgreement is at Annexure R-2.

10. As per the terms of the share purchase agreement, the first

party i.e. the then shareholders of the respondent were to close all the bank

accounts in the name of the company. on 09.12.2013. It was for the

CP No.20912016 RT CP (IB) No.58lChdlCHDl2017

shareholders of respondent company referred to as the first party in the

agreement, to clear all the previous liabilities and unsecured loans including

the amount in respect of the petitioner, if any. The payment of the amount

was a precondition to the transfer of the business and the same has been

acted upon. The dues, if any, to the petitioner is stated to have been paid

by virtue of MOU, dated 18.02.2013 and the share purchase agreement

dated 06.12.2013. It was further stated that the amount having been

advanced by the petitioner to the respondent on 10.12.2012, the petition

,filed in the Hon'ble High Court on 07.1 1.2016 was also barred by limitation.

11. It was further stated that the petitioner cannot rely upon the

acknowledgement in the nature of balance sheet dated 05.12.201 3 as the

same was only signed by the erstwhile directors of the respondent and even

on the very next day itself the share purchase agreement was executed on

06.12.2013. It was further stated that so called amount of the creditors as

per the balance sheet dated 05.1 2.2013 is not even reflected in the balance

sheet of the respondent company for the year ending 31.03.2016. Copy of

the said balance sheet is Annexure R-3.

12. I have heard the learned counsel for the parties and

carefully perused the record.

13. The petitioner has filed this application in the prescribed

form as required by sub-rule (1) of rule 4 of the Rules and thus there is

compliance of sub-section (2) of Section 7 of the Code.

14. Under sub-section (3) of Section 7 of the Code, the

& "Financial Creditor" is to furnish the following along with the application:-

"a) record of the default recorded with the information

utility or such other record or evidence of default as

may be specified;

6) the name of the resolution professional proposed to

act as an interim resolution professional; and

c) any other information as may be specified by the

Board. "

15. The information utility has not been established so far, and

the question for determination of the default rests on the documents on

record relied upon by the petitioner. The amount was credited in the

account of the Respondent-Corporate Debtor on 10.11.2012 by the

petitioner as reflected in the statement of account of the petitioner and that

of respondent maintained in the State Bank of India, which is part of

Annexure P-3. The balance sheet Annexure P-4 also shows the name of

the petitioner as one of the unsecured creditor to the tune of ?10,00,0001-

as on 5.12.2013.

16. Learned counsel for the respondent referred to paragraph

6 of the MOU, wherein the first party i.e. the then shareholders of

respondent company agreed to pay all the existing liabilities towards the

banks, secured and unsecured loans, all outsider creditors, creditors for

expenses, labour and statutory liabilities such as ESI, EPF etc. and the

certificateslletters to that effect should be handed over to the second party

i.e. MIS Jupiter Strips Pvt. Ltd. The total sale consideration was fixed

keeping in view the above factors, the value of entire business, the plot,

@."I" shed, transformer and all other assets of the company.

17. The share purchase agreement was executed between all

the shareholders of the Respondent-Corporate Debtor as the first party, MIS

Jupiter Strips Pvt. Ltd. as the second party and the "Corporate Debtor" MIS

Swan Aluminiums PI-ivate Limited on 06.12.201 3. This agreement clearly

says that Authorised and paid up share capital of the respondent-company

was 73 crores divided into 30,00,000 equity shares of 7101- each and the

first party, held the 100% shareholding of the respondent. As per clause 2

of the agreement, Annexure R-3 at page 26 of reply, the sale price of

30,00,000 equity shares was determined at 71 ,40,42,9601-. The total sale

consideration for the rights in the company along with its business, land,

buildiug, plant and machinery as reflected in MOU dated 18.02.2013 was

agreed at 78,70,00,0001-.

18. As per clause 3 of the agreement, the first party stated that

it has received the entire sale consideration as full and final payment as

arrived at in the MOU dated 18.02.2013 and nothing was outstanding on

account of the sale consideration of 100% shareholding of the company

and transferred 100% of the controlling interest in the company along with

the business, land, building etc.

19. The learned counsel for petitioner, however, laid emphasis

on clause 4 of the agreement, wherein the first party, namely; the then

shareholders undertook that there was no other liability of the company at

,that time existing till 06.12.2013 except the unsecured loan of

71,81,00,0001- payable and that there was no other liability of the company.

CP No.20912016 RT CP (IB) No.58/ChdlCHD/2017

20. The interpretation of the question basically has been

discussed by the learned counsel for the parties to the following term of the

agreement as page 29 of the paper book of reply:-

" The First Party has obtained Certificate from the State

Bank of India, SCO 14, Sector 10, Panchkula that the total

Bank liability of M/S SWAN ALUMlNlUMS PRIVATE

LIMITED on the date of signing of this Agreement is

46,24,00,000/- (Rupees Six Crores and Twenty Four

Lakhs Only) upto December 6, 2013. The Second Party

will transfer the amount of 46,24,00,000/- (Rupees Six

Crores and Twenty Four Lakhs Only) directly to the Bank.

Once the old Management has resigned and the new

management has taken-over and the names of new

Directors is reflected on the website of Ministry of

Corporate Affairs. This amount will be adjusted/deducted

from the total sale consideration of 48,70,00,000/- (Rupees

Eight Crore Seventy Lakh only). Further the First Party

undertakes that there is no other Liability with any other

BanWfinancial institution.

That the First Party shall close all the bank accounts

in the name of the Company with all banks on gth day of

December, 2013 for the clearance of previous liabilities

and unsecured loans, etc., and shall not operate any bank

account thereafter. The First Party shall provide

certificates and upto date statement from the bankers of

the Company stating therein that banking account of the

Company with them has been closed by the gth day of

December, 20 13. The First Party also undertakes that it

will not open any bank account in future also in the name

of the COMPANY. The upto date Bank Statements of the

Company as on 06.12.201 3 is attached as Annexure IV. "

CP No.20912016 RT CP (IB) No.581ChdlCHD12017

21. Learned counsel for the petitioner, however, made the

specific reference to clause 12 of the agreement at page 32 of the reply,

wherein the first party i.e. the then shareholders of the Respondent-

Corporate Debtor, to which the respondent is also a party, confirming the

balance sheet as on 05.1 2.201 3 to be true and correct, which, therefore,

according to the learned COI-~nsel amounts to an acknowledgement of the

debt.

22. The fact of the matter is that such a contest could be made

in the petition filed by the other unsecured creditors who were the

members of the respondent at that time and party to the agreement, but

so far as the petitioner is concerned, he was neither a shareholder nor a

party to the MOU or share purchase agreement and there is no evidence

forthcoming on behalf of the respondent that the petitioner's financial

debt, which the respondent owed to him was paid. In view of the

admission of the existing liability in the share purchase agreement, to

which the respondent was also a party. Even the Jupiter Strips Pvt. Ltd.,

which is controlling the respondent now, was also a party to the

agreement and, therefore, the learned counsel for respondent was

unable to challenge the plea of the petitioner being a "Financial Creditor".

23. In case, the other shareholders were liable to clear the

dues of the other unsecured creditors, the petitioner cannot be made to

suffer on that account. The petitioner thus, falls within the term 'financial

creditor', as defined in sub-section (7) of Section 5 of the Code, which

means any person to whom a 'financial debt' is owed and includes a

person to whom such debt has been legally assigned or transferred.

CP No.20912016 RT CP (IB) No.581ChdlCHD12017

24. The term 'financial debt' is defined in sub-section (8) of

Section 5 of the Code, which reads as under:

" 'financial debt' means a debt along with interest, if any,

which is disbursed against the consideration for the time

value of money and includes -

a) money borrowed against the payment of interest;

b) any amount raised by acceptance under any

acceptance credit facility or its de-materialised

equivalent;

c) any amount raised pursuant to any note purchase

facility or the issue of bonds, notes, debentures,

loan stock or any similar instrument;

d) the amount of any liability in respect of any lease or

hire purchase contract which is deemed as a

finance or capital lease under the Indian Accounting

Standards or such other accounting standards as

may be prescribed;

e) receivables sold or discounted other than any

receivables sold on non-recourse basis;

f ) any amount raised under any other transaction,

including any forward sale or purchase agreement,

having the commercial effect of a borrowing;

g) any derivative transaction entered into in

connection with protection against or benefit from

fluctuation in any rate or price and for calculating the

value of any derivative transaction, only the market

value of such transaction shall be taken into

account;

h) any counter-indemnity obligation in respect of a

guarantee, indemnity, bond, documentary letter of

credit or any other instrument issued by a bank or

financial institution;

CP No.20912016 RT CP (IB) No.58lChdlCHD12017

i) the amount of any liability in respect of any of the

guarantee or indemnity for any of the items referred

to in sub-clauses (a) to (h) of this clause. "

The definition of the term has a very connotation and covers the

transaction under which the petitioner advanced the amount and he has

been described as 'unsecured creditor' in the balance sheet, which is

acknowledged in the share purchase agreement itself, in which the

respondent and Jupiter Strips Pvt. Ltd. are also the parties.

25. The other contention of the learned counsel for the

respondent was that the instant petition is barred by limitation, as the

amount was transferred in the name of the respondent company in 2012,

whereas the company petition was filed in November, 2016 before the

Hon'ble High Court of Punjab and Haryana. The learned counsel for

petitioner, however, contended that there is an acknowledgement of the

outstanding amount of liability as shown in the balance sheet prepared

upto 05.12.2013 and therefore, the petition, which was filed in

November, 2016 before the Hon'ble High Court is within limitation. In

the share purchase agreement dated 06.12.2013 Annexure R-2 the

correctness of this balance sheet is also admitted.

26. With regard to the plea of limitation, the Hon'ble National

Company Law Appellate Tribunal has held in "Neelkanth Township

and Construction Pvt. Ltd. Vs. Urban Infrastructure Trustees

Limited" Company Appeal (AT) (Insolvency) No.44 of 2017, decided

I\, on 11.08.2017, that the plea of claim being barred by limitation under

the Code, is not based on law. It was further held that there is no

CP No.20912016 RT CP (IB) No.58lChdlCHDl2017

provision under the Code to suggest that the law of limitation, 1963 is

applicable to I & B Code. The Honlble Appellate Tribunal further held

that the IB code, 201 6 is not an Act for recovery of money claim, it relates

to initiation of Corporate Insolvency Resolution Process.

27. In view of the above, the aforesaid contention, therefore,

cannot be accepted.

28. Since there is a default committed by the respondent as

proved from the aforesaid discussion and the application being complete

in all respect, the resolution professional has also been proposed, the

instant petition deserves to be admitted. Sub-section (5) of Section 7 of

the Code reads as under:

" Where the Adjudicating Authority is satisfied that-

(a) a default has occurred and the application under

sub-section (2) is complete, and there is no

disciplinary proceedings pending against the

proposed resolution professional, it may, by order,

admit such application; or

(b) default has not occurred or the application under

sub-section (2) is incomplete or any disciplinary

proceeding is pending against the proposed

resolution professional, it may, by order, reject such

application:

Provided that the Adjudicating Authority shall,

before rejecting the application under clause (b) of sub-

section (5), give a notice to the applicant to rectij/ the

defect in his application within seven days of receipt of such

notice from the Adjudicating Authority. '"

29. In view of the above, the instant petition is admitted and

the moratorium is declared for prohibiting all of the following as provided

in section 14(1) of the Code:-

(a) the institution of suits or cor~tinuation of pending suits or

proceedings against the corporate debtor including

execution of any judgment, decree or order in any court of

law, tribunal, arbitration panel or other authority;

(b) transferrirrg, encumbering, alienating or disposing of by the

corporate debtor any of its assets or any legal right or

beneficial interest therein;

(c) any action to foreclose, recover or enforce any security

interest created by 'the corporate debtor in respect of its

property including any action under the Securitisation and

Reconstruction of Financial Assets and Enforcement of

Security Interest Act, 2002;

(d) the recovery of any property by an owner or lessor where

such property is occupied by or in the possession of the

corporate debtor.

30. It is further directed that the supply of essential goods or

services to the Corporate Debtor, if continuing, shall not be terminated

or suspended or interrupted during moratorium period. The provisions of

sub-section (1) shall however not apply to such transactions as may be

notified by the Central Government in consultation with any financial

sector regulator.

3.1 . That the order of moratorium shall have effect from the

date of this order till completion of the corporate insolvency resolution

process or until this Bench approves the resolution plan under sub-

section (1 ) of Section 31 or passes an order for liquidation of Corporate

Debtor under Section 33 as the case may be.

32. The matter is adjourned to 14.09.201 7 for passing formal

order to appoint Interim Resolution Professional with further directions.

Copy of this order be communicated to both the parties.

('FnlP.IPagrath) Member (Judicial)

Adjudicating Authority

September 04,201 7 Ashwani

CP No.20912016 RT CP (IB) No.58lChdlCHDl2017