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In the Matter of M/s. Murgabharthi v/s M/s. Seven Eleven Business Services Private Limited

    CP/725/(IB)/CB/2017

    Decided On, 22 February 2018

    At, National Company Law Tribunal Chennai

    By, THE HONOURABLE MR. K. ANANTHA PADMANABHA SWAMY
    By, JUDICIAL MEMBER & THE HONOURABLE MR. S. VIJAYARAGHAVAN
    By, TECHNICAL MEMBER

    For the Petitioner: V.G. Suresh Kumar, Advocate. For the Respondent: Ex-Parte.



Judgment Text

K. Anantha Padmanabha Swamy, Member (J)

1. Under Consideration is a Company Petition filed by M/s. Murgabharthi (in short, ‘Petitioner/Financial Creditor’) against M/s. Seven Eleven Business Services Private Limited (in short, ‘Respondent/Corporate Debtor’) under section 7 of the Insolvency and Bankruptcy Code 2016 (In short, ‘IB Code 2016’) r/w Rule 4 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity, ‘IB Rules 2016’).

2.Before proceeding with this matter, it would be appropriate to make a note of background facts for the purpose of determination of this petition.

3.The petitioner is Financial Creditor whereas the Respondent/Corporate Debtor is a Company registered under the Companies Act, 1956 and engaged in the business of purchase and sale of all kinds of ferrous and non-ferrous scrap import and export of all kinds of scrap, participation in government tenders and auction, building/ factory demolition and disposal and real estate activates manufacturing and dealing in all kinds of paper and boards such other related products etc.

4.Shri. V.G Suresh Kumar, the learned counsel appearing on behalf of the Petitioner/FC submitted that the Respondent/CD approached the petitioner and expressed its requirements. The proposal was for the financial Creditor in January 2012 to invest in taking part in lands public Auction to be conducted by the State Bank of India, Monteith Road Branch, Chennai of a property situate at Ramanthapuram Dist, admeasuring 205.12 acres. Thereafter based on the assurance given by the Corporate Debtor, the Financial Creditor has given a sum of Rs. 49,99,999/- through Demand Draft drawn on Axis Bank, Radhakrishnan Road Branch, bearing No. 467348 favouring SBI, SAMB on 28.01.2012 as part of his share in buying the property. The Financial Creditor was informed that the property had been purchased in the auction for a sum of Rs. 66,00,000/- but the same was registered in the name of Corporate Debtor. Thereafter, as there was no payment as agreed to by the Corporate Debtor. The Financial Creditor had issued a legal notice dated 26.10.2012 to the CD in relation to the dues payable by the CD and demanding payment settlement of Rs. 49,99,999/-. Further it was submitted that the Corporate Debtor has replied on 02.11.2012 and has accepted liability but as no payment was forthcoming from the Corporate Debtor. The Financial Creditor filed a Criminal petition in the Hon’ble High Court of Madras in Crl.OP. No. 30624 of 2012 and same was ordered on 18.02.2012.

5. Thereafter, the Corporate Debtor on negotiations, entered into a Memorandum of Understanding with the Financial Creditor on 09.10.2013, wherein the CD had agreed to sell the property purchased in the auction and settle the Financial Creditor claim. The Corporate Debtor failed and neglected to pay any amount, the financial creditor again issued Statutory Notice through their Advocate letter dated 07.10.2015 calling upon the CD to make payment of an amount of Rs. 49,99,999/- along with 18% interest p.a within 21 days from the receipt of notice but the Corporate Debtor has not given any reply to that notice dated 07.10.2015.

6. In view of the failure of the CD to make payment of the amount due to the FC upon demand notice dated 07.10.2015 within three weeks thereof, the CD was deemed to be unable to pay its debts in terms of section 433(e) r/w sections 434 of the Companies Act, 1956 and the Financial Creditor had filed a winding up Petition under section 433(e) r/w sections 434(1 )(a) and 434(1 )(b) of the Companies Act, 1956 before the Hon’ble High Court of Madras which has been transferred to this tribunal pursuant to the Companies (Transfer of Pending Proceedings) Rules, 2016. Now, pursuant to the Central Government notification number GSR 119(E) dated 07.12.2017 the matter was renumbered as TCP No. 64/IB/CB/2017.

7.At this juncture the Corporate Debtor entered appearance before the Adjudicating Authority and admitted the liability towards the Financial Creditor. The Corporate Debtor has offered to repay the principal Amount a sum of Rs. 50,00,000/- invested by Petitioner/FC. Both the parties had entered into a compromise and filed a joint memo dated 13.10.2017 whereby the respondent had tendered ten post-dated cheques drawn on the Karur Vyasya Bank Limited, Maipakkam Branch, Chennai towards payment of the sum of Rs.50,00,000/-. In view of the compromise memo this Adjudicating Authority had ordered to close the matter vide order dated 13.10.2017.

8. Thereafter the counsel for Financial Creditor has filed a Company Petition CP/725/IB/2017, submitting that the respondent has failed to make any payments to the Applicant in accordance with the compromise memo dated 13.10.2017. It is further submitted that the first three cheques issued by the CD for sum of Rs. 4,00,000/-, Rs, 5,00,000/- and Rs. 5,00,000/- totaling to Rs. 14,00,000/- was presented by the petitioner/FC, the same was retuned as dishonoured for the reason 'Funds Insufficient' and as 'dishonoured'.

9. It is submitted that the respondent has intentionally disregarded the terms of compromise memo recorded by this Adjudicating Authority. The Financial Creditor has prayed for initiation of Corporate Insolvency Resolution Process against the Respondent/CD under the provisions of the IB Code, 2016.

10. Before proceeding with the matter, it is necessary to mention herein that the Respondent has not caused appearance on three occasions vide order dated 15.01.2018, 25.01.2018, 13.02.2018. The Respondent neither gave a reply or filed any counter nor caused appearance before this Adjudicating Authority in spite of several notices. In the Circumstances, the respondent is proceeded Ex-pate vide order dated 13.02.2018. The petitioner/FC has also placed on record proof of sending notices along with track delivery, which was returned unserved with endorsement 'Person moved'. The Applicant/OC has filed an affidavit and bank statement under section 9(3)(b)and 9(3)(c) of I & B Code. The Petitioner has complied with all the requirements as stipulated under the provisions of the I&B Code, 2016 for the purpose of initiating Corporate Insolvency Resolution Process.

11. After hearing submissions of the counsel for the petitioner/FC and having perused the record, this Adjudicating Authority is satisfied that the petitioner has clearly made out his case by establishing that the Corporate Debtor has defaulted the payment of financial debt. Also, the petitioner has proved by placing overwhelming evidence viz. legal notice, financial transactions, dishonoured cheques and Bank statements that default has occurred which the Corporate Debtor was responsible to pay. Therefore, we are of the opinion that the petitioner has established clearly that the amount in default committed by the corporate debtor is genuine and is supported by the documentary evidence placed before this Adjudicating authority. In the circumstances, having satisfied with the submissions put forth by the learned counsel for the petitioner, we hereby admit the instant petition.

12. Therefore, the instant petition is admitted and we order the commencement of the Corporate Insolvency Resolution Process which shall ordinarily be completed within 180 days, reckoning from the day this order is passed.

13.We appoint Shri. Karthigeyan Srinivasan, as Interim Resolution Professional (IRP) proposed by the Operational Creditor. There is no disciplinary proceedings pending against the IRP and his name is reflected in IBBI website. The IRP is directed to take charge of the Respondent/Corporate Debtor’s management immediately. He is also directed to cause public announcement as prescribed under Section 15 of the I&B Code, 2016 within three days from the date the copy of this order is received, and call for submissions of claim in the manner as prescribed.

14.We declare the moratorium which shall have effect from the date of this Order till the completion of corporate insolvency resolution process for the purposes referred to in Section 14 of the I&B Code, 2016. We order to prohibit all of the following, namely :

(a) The institution of suits or continuation 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) Transferring, 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 (54 of 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.

15. The supply of essential goods or services of the Corporate Debtor shall not be terminated or suspended or interrupted during moratorium period. The provisions of Sub-section (1) of Section 14 shall not apply to such transactions, as notified by the Central Government.

16. The IRP shall comply with the provisions of Sections 13 (2),15, 17& 18 of the Code. The directors, Promoters or any other person associated with the management of Corporate Debtor are directed to extend all assistance and cooperation to the IRP as stipulated under Section 19 and for discharging his functions under Section 20 of the

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I&B Code, 2016. Accordingly, the application is admitted. 17.The IRP is further directed to protect and preserve the value of the property of the Corporate Debtor as a going concern as a part of its obligation imposed under section 20 of the IB Code 2016 and perform all his duties strictly in accordance with the provisions of the IB Code 2016. 18. The Petitioner/FC as well as the Registry is directed to send the copy of this Order to IRP so that he could take charge of the Corporate Debtor’s assets etc. and make compliance with this Order as per the provisions of I&B Code, 2016. 19. The Registry is also directed to communicate this Order to the Financial Creditor and the Corporate Debtor. 20. The address details of the IRP are as follows: - Shri. Karthigeyan Srinivasan Regn. No:(IBBI/IPA-001/IP-P00402/2017-2018/10720) No. 10 B1, Prathosh, Kathikeyapuram 1st Cross Street, Madipakkam, Chennai-600091. E-Mail: kartv.iver@vahoo.com Phone No. 9940172982
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