NATIONAL COMPANY LAW TRIBUNAL NEW DELHI BENCH (COURT-II)

Company Petition No. (IB)-322(ND)2023 IN THE MATTER OF:

M/s SVS Marketing Sanitaryware Private Limited Registered office at:

717, Pournami, Nellimukal, Thuvayoor South, Pathanamthitta District, Kerala – 691551 …Applicant/Operational Creditor VERSUS M/s Kajaria Bathware Private Limited Registered office at:

J-1/B-1 (Extn.), Mohan Co-Operative Industrial Area, Mathura Road, New Delhi – 110044 … Respondent Section: 9 of the IBC, 2016 Order Delivered on: 01.12.2023 CORAM SH. ASHOK KUMAR BHARDWAJ, HON’BLE MEMBER (J)

SH. L. N. GUPTA, HON’BLE MEMBER (T)

PRESENT:

For the Applicant : Adv. Jojo Jose & Adv. Sunitha John, Adv. Anitta & Adona LLP For the Respondent : Adv. D. Bhattacharya, Adv. Deeti Ojha

ORDER

PER: SH. L. N. GUPTA, MEMBER (T)

M/s SVS Marketing Sanitaryware Private Limited (for brevity, hereinafter referred to as the ‘Applicant’/ ‘Operational Creditor’) has filed the present petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 (‘IBC, 2016’) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 with a prayer to initiate the Corporate Insolvency Resolution Process against M/s. Kajaria Bathware Private Limited (for brevity, hereinafter referred to as the ‘Respondent’).

2. The Respondent namely, M/s. Kajaria Bathware Private Limited is a Company incorporated on 22.05.2013 with CIN U26943DL2013PTC252495 under the provisions of the Companies Act, 1956 having its registered office at J-1/B-1 (Extn.), Mohan Co-Operative, Industrial Area, Mathura Road, New Delhi – 110044, which is within the jurisdiction of this Tribunal. The Authorized Share Capital of the Respondent is Rs.35,00,00,000/- and the Paid-up Share Capital is Rs.29,41,17,640/- as per the Master Data annexed. 3. It is stated by the Applicant that it was appointed as the sole distributor of the Corporate Debtor for an exclusive area as reflected in the Distributorship Agreement which was renewed from time to time. Pursuant to discontinuance/prevention of the supply of goods to the dealers, unsold stock of Rs. 3.00 crores, which was fully paid, got accumulated in the godown of the Applicant. As of 28.02.2023, there is an operational debt of Rs.7,33,64,097.88/- in the form of unsold stock, stock interest, warehouse charges, bad debt, and compensation/damages for the loss incurred due to the breach of the Distributorship Agreement by the Corporate Debtor by misusing their dominant position. The Respondent refused to make the payment even after receiving the statutory demand notice.

4. The particulars of the Operational Debt in terms of the total amount of default, and the date of default are mentioned in Part IV of the application, the relevant extracts of which are reproduced below for the sake of convenience: As per the above, the Applicant has claimed the unpaid Operational Debt of Rs.7,33,64,097.88/- excluding interest and relied upon 05.03.2020 as the date of default.

5. It is stated by the Applicant that since the Respondent did not make the due payment of its operational debt, it issued a Demand Notice dated 13.12.2022 under Section 8 of IBC 2016 that was served to the Respondent at its registered office vide speed post. The said Demand Notice was replied to by the Respondent vide letter dated 23.12.2022.

6. On issuance of the notice, the Respondent filed its reply and opposed the application on the following grounds that -

i) No Section 9(3)(b) Affidavit has been annexed with the Application by the Applicant, ii) A Distributorship Agreement dated 15.07.2016 was executed between the Respondent and Mr. Shibu M (proprietorship concern trading as “SVS Marketing”). The said Distributorship Agreement clearly prohibited Mr. Shibu M (SVS Marketing) from transferring or assigning the same or any part thereof without the prior written consent in terms of Clause 8(iii) of the Agreement (ref: page no. 99 of the application), iii) The claim of the Applicant is arising out of