IN THE NATIONAL COMPANY LAW TRIBUNAL

COURT-III, NEW DELHI

(IB)-546(ND)/2022

Order under Section 9 of the Insolvency and Bankruptcy Code, 2016 read with
Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rules, 2016.

IN THE MATTER OF:

M/s. PARUL SHUTTERING HOUSE
Having its office at:
Gali No. 13, Kadipur Industrial Area,
Near Colonal Public School, Pataudi Road,
Gurgaon, Haryana 122001

… Applicant/Operational Creditor

Versus

M/s. MIST DIRECT SALES PRIVATE LIMITED

Having its registered office at:

Garrage No.11, Gole Market,

Central Delhi, Delhi 110001

... Respondent/Corporate Debtor

Order Pronounced On: 19.12.2023

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IB-546(ND)/2022
CORAM:
SHRI BACHU VENKAT BALARAM DAS, HON'BLE MEMBER (JUDICIAL)
SHRI ATUL CHATURVEDI, HON'BLE MEMBER (TECHNICAL)

APPEARANCES:

For Applicant : Mr. Gursat singh and Mr. Pranav Khanna, Advocates.

For Respondent : Ms. Vaishnavi Prakash, Advocate

ORDER

PER: ATUL CHATURVEDI, MEMBER (TECHNICAL)

1. This Application has been filed by M/s. Parul Shuttering House, the
Operational Creditor herein, under Section 9 of the Insolvency and
Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution
Process against M/s. Mist Direct Sales Private Limited (Corporate
Debtor), who has failed to pay the operational debt amounting to Rs.
2,10,88,375.44/- (Rupees Two Crore Ten Lakh Eighty-Eight Thousand
Three Hundred Seventy-Five and Forty-Four Paisa Only) which includes
principal amount of Rs. 1,15,092.44/-, material cost of Rs. 65,61,020/-
and total interest of Rs. 29,81,263/-. The Date of Default in the present
application is 10.02.2019.

2. The Applicant, namely M/s. Parul Shuttering House (Operational

Creditor) is a proprietorship having it’s office at Gali No.13, Kadipur
Industrial Area Near Colonal Public School, Pataudi Road, Gurgaon,
Haryana 122001 and is in the business of providing shuttering and
scaffolding equipment at various construction sites throughout the

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 territory of India and contracts with several construction companies in
furtherance of its business mandate.

3. The Respondent Company, namely M/s. Mist Direct Sales Private

Limited (Corporate Debtor) is a private limited company incorporated
under Companies Act, 1956 on 04.06.2013, [CIN-
U70100DL2013PTC253541], having its registered office at Garrage No.11,
Gole Market, Central Delhi, Delhi 110001. The Corporate Debtor has
Authorised Capital of Rs. 12,00,000/- (Rupees Twelve Lakh Only) and
Paid-up Capital of Rs. 1,00,000/- (Rupees One Lakh Only).

4. Submissions of the Operational Creditor

i. The Operational Creditor had supplied shuttering and scaffolding

material on hire-basis to the Corporate Debtor at the project sites of the
Corporate Debtor at Site: Plot No.1 Sector B143, Noida Festival City. The
Corporate Debtor miserably failed to perform its duty as per the agreed
terms and was unable to complete the payments for the services. The
Corporate Debtor unlawfully withheld the shuttering and scaffolding
material of the Operational Creditor beyond stipulated period.

ii. The Operational Creditor supplied shuttering and scaffolding material at

the project sites of the Corporate Debtor. Invoices were raised between
01.02.2019 and 01.10.2021. The said invoices aggregated to Rs.
1,28,57,474.44 which amount is in fact, reflected in the ledger account
for the period from 01.02.2019 to 01.10.2021.

iii. Corporate Debtor made its last payment on 23.08.2019. Thereafter, no

payment whatsoever has been credited in favour of the Operational
Creditor, thereby resulting in an outstanding Operational debt of Rs.

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 1,15,46,092.44/-. The said principal amount is still pending and has not
yet been paid by the Corporate Debtor.

iv. As per the policy of Operational Creditor and also in general business
operations of the shuttering and scaffolding business, any delay in
clearance of outstanding amount would attract an interest at 24% per
annum. There is a total outstanding amount of Rs. 1,45,27,355.44/-
(Rupees One Crore Forty-Five Lakhs Twenty-Seven Thousand Three
Hundred Fifty-Five and Forty-Four Paisa Only) along with interest. There
were shuttering and scaffolding material that was not returned by the
Corporate Debtor to the Operational Creditor and was present at the
project site of the Corporate Debtor, which caused further loss to the
Operational Creditor.

v. The Operational Creditor has time and again reminded the Corporate
Debtor through various oral reminders to pay the said outstanding
amount but the same has not been paid. The liabilities of the Corporate
Debtor in the books of the Operational Creditor has reached over Rupees
Two Crore, including interest and material cost. The Operational
Creditor had engaged in telephonic conversations, with the Corporate
Debtor, all in aid of, and in the belief that the outstanding liabilities of
the Corporate Debtor would stand resolved. However, apart from feeble
assurances, and minimal communications, nothing concrete was ever
forthcoming from the Corporate Debtor.

vi. The Operational Creditor issued demand notice under Section 8 of the
Insolvency and Bankruptcy Code, 2016 on 16.12.2021. The Corporate
Debtor sent a reply dated 24.12.2021. There are 32 invoices which have
been sent along with Demand Notice under Section 8 of IBC, 2016 to the

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 Corporate Debtor by the Operational Creditor which are dated between
01.02.2019 to 01.10.2021.

5. Submissions of the Corporate Debtor

i. The Corporate Debtor admittedly procured the shuttering materials from

the Operational Creditor on hire purchase basis and the Operational
Creditor maintained a running account with the Corporate Debtor. The
Operational Creditor raised monthly invoices for the services rendered
and the Corporate Debtor used to make the payment on time-to-time
basis against the said invoices.

ii. On 07.12.2019, the Corporate Debtor’s project namely 'Festival City',

where the Operational Creditor supplied shuttering materials, was
deregistered by Uttar Pradesh Real Estate Regulatory Authority
pursuant to which the company was not allowed to do any further
construction at the said project site. The Corporate Debtor informed the
Operational Creditor about the said developments and cleared all
pending dues. The Corporate Debtor further requested the Operational
Creditor to remove its shuttering material from the project site however
the Operational Creditor itself kept delaying the removal of the
shuttering material process. The Operational Creditor finally removed
the material on 05.02.2021, after settlement of all disputes.

iii. The Operational Creditor has tried to arm-twist and harass the
Corporate Debtor by filing various frivolous and false complaints before
the Micro and Small Enterprise Facilitation Council (MSEFC), Haryana
and lodged a police complaint at PS sector-10A, Gurgaon and has now
approached this Hon'ble Tribunal in order to recover the alleged dues.

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 iv. The invoices of the Operational Creditor have already been cleared and
yet they choose not to remove the material from the Corporate Debtor’s
project site is and the Operational Creditor is now attempting to illegally
enrich itself through its wrongdoing. The concerned claim amount has
been disputed before the Haryana Micro and Small Enterprise
Facilitation Council ("MSEFC") by the Petitioner itself under Section 18
of the Micro, Small and Medium Enterprises Development Act, 2006
(“MSME Act”). Further the Operational Creditor herein has previously
filed an FIR bearing Complaint No. 165-5P dated 30.12.2020 before the
Sector 10 A Gurgaon PS against the Corporate Debtor in reference to
this very dispute. This issue was raised by the Corporate Debtor in its
reply to the Demand Notice dated 24.12.2021.

v. The Operational Creditor included total 11 invoices which are barred by

Section 10A of the IBC, 2016 for the period 10.04.2020 to 10.03.2021
amounting to Rs. 51,11,118 (Rupees Fifty-One Lakh Eleven Thousand
One Hundred and Eighteen only) which are mentioned below:

S.No Invoice Number and Invoice Invoice

Date Amount Due Date
1. 1066/1APR2020 483734 10-Apr-20
2. 1089/1JUN2020 452525 10-Jun-20
3. 1126/1JUL2020 468130 10-Jul-20
4. 1147/1AUG2020 483734 10-Aug-20
5. 1163/1SEP2020 483734 10-Sep-20
6. 1183/1OCT2020 468130 10-Oct-20
7. 1219/1NOV2020 483734 10-Nov-20
8. 1251/DEC/2020 468130 10-Dec-20
9. 1280/1JAN2021 483734 10-Jan-21
10. 1293/1FEB2021 483734 10-Feb-21

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 11. 1332/1MAR2021 351799 10-Mar-21
Total 51,11,118

vi. The interest amount of Rs. 28,81,263/- (Rupees Twenty-Eight Lakh

Eighty-One Thousand Two Hundred Sixty-Three Only) and material loss
of Rs. 65,61,020/- (Rupees Sixty-Five Lakhs Sixty-One Thousand and
Twenty Only) cannot be included in the operational debt amount as
there exists no written agreement for payment of interest or inclusion of
payment of material cost in the written contract. The material loss does
not fall within the definition of debt within the meaning of Section 3(11)
of IBC and such consequential loss, if any, cannot be included within
the scope of the operational debt.

vii. The Debt claimed by the Petitioner does not meet the threshold under
Section 4 of IBC. The breakdown of the actual amount of debt claimed
is stated hereunder:
Particulars Amount Claimed
(In rupees)
Total Amount claimed as Operational Debt as 2,10,88,375.44/-
per form 5
Amount of claims barred as per 10 A (-) 51,11,118/-
Amount of interest ineligible due to non- (-) 28,81,263/-
existence of agreement/interest clause
Amount of alleged losses ineligible to be (-) 65,61,620/-
defined as debt as per law
Alleged remaining actionable claim 65,34,374.44/-

viii. The Operational Creditor in the Part-4 of the Section 9 application stated
that the date of default is 10.02.2019 and have filed the present Petition

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 only on 12.03.2022 and there is unexplained delay of 30 days beyond a
period of 3 years in filing of the present Petition.

6. Analysis and Findings

i. We have heard the Ld. Counsel appearing for both parties and also
perused the documents on record.

ii. The first and foremost question to be adjudicated, is whether the invoices
raised by the Applicant are barred by Section 10A of the Code.

iii. As per Section 10A of the IBC, 2016 and the MCA Notifications dated
24.09.2020 and 22.12.2020, no application for CIRP may be filed for
defaults occurring between 25.03.2020 to 24.03.2021. It is evident from
the records that the Applicant raised 11 invoices from the period
10.04.2020 to 10.03.2021, which fall within the suspension period
envisaged under Section 10A of the Code.

iv. In the case of any default amount as claimed before this Adjudicating
Authority, if the part-default occurred during the period of Section 10 A of
the Code, 2016, then the whole of the claim as claimed to be in default in
the very Statutory Demand Notice and Section 9 Application, shall be liable
to be discarded, irrespective of the fact that by taking out the invoices
which falls under the excluded period (25.03.2020-24.03.2021), the claim
otherwise meet the minimum threshold as provided under Section 10A of
the Code, 2016.

v. This Adjudicating Authority cannot delve into the exercise of segregating

the claim of the Applicant in the default during the Section 10A period and
default post Section 10A period when the statutory Demand Notice itself
was issued including the debt which had fallen due, and was defaulted by

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 the Corporate Debtor during the Shadow Period as provided under Section
10A of the Code, 2016.

vi. Accordingly, in the light of the facts discussed and the law, this
Adjudicating Authority is of the view that the present application is not
maintainable.

7. Order

In view of the above facts and circumstances and the foregoing discussion,
we are satisfied that the present petition fails to fulfill the criteria laid down
under Section 9 of the Code and therefore, is inadmissible. It is
accordingly, hereby ordered as follows: -

i. The Application bearing IB-546/ND/2022 filed by the Applicant under

Section 9 of the Code r/w Rule 6 of the Adjudicating Authority Rules
for initiating CIRP against the Respondent is hereby dismissed.

ii. We make it clear that any observations made in this order should not
be construed as expressing opinion on merits.

iii. The Registry is directed to send a copy of this order to the Insolvency
and Bankruptcy Board of India for their record.
No order as to costs.

Sd/- Sd/-
(ATUL CHATURVEDI) (BACHU VENKAT BALARAM DAS)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)

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