National Company Law Tribunal, Kolkata: In a petition preferred by the Operational Creditor seeking initiation of insolvency process against the Corporate Debtor on default in payment, a division bench comprising of Ms. Bidisha Banerjee, J., and Mr. Balraj Joshi* (Technical Member), admitted the Operational Creditor’s application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) for Corporate Insolvency Resolution Process (CIRP), established a moratorium under Section 14 of the IBC and appointed an IRP.
Case Overview
The instant matter involves a petition filed by, Director of Aldous Commodities Private Limited (Operational Creditor), under Section 9 of the IBC, along with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The petition seeks to initiate the CIRP against Aanchal Ispat Limited (Corporate Debtor).
The total amount of debt claimed by the Operational Creditor is Rs. 2,56,04,955, which includes an outstanding principal sum of Rs. 1,82,39,863 and interest amounting to Rs. 73,65,132, calculated at 18% per annum until December 5, 2020. Notably, no specific date of default is mentioned in the Section 9 petition.
Operational Creditor’s Contentions
The Operational Creditor contended that the Operational Creditor issued invoices totaling Rs. 7,43,94,643, which the Corporate Debtor received without dispute. The Corporate Debtor made partial payments towards the invoices, including issuing post-date cheques. However, one of these cheques was dishonored due to insufficient funds.
After the Operational Creditor raised the issue, the Corporate Debtor acknowledged the error and promised to rectify it. They continued making on-account payments, reducing the outstanding amount to Rs. 2,22,39,863. The Corporate Debtor also claimed that their sister concern would make a payment of Rs. 1.40 crores on their behalf.
The Corporate Debtor sent an email confirming the payment of Rs. 1.40 crores from their sister concern. The Operational Creditor received Rs. 10,00,000 as part payment. In total, the Operational Creditor received Rs. 5,61,54,780 as part payments but still had an outstanding amount of Rs. 1,92,39,863.
Corporate Debtor’s Contentions
The Corporate Debtor claimed that the application is not maintainable due to a pre-existing dispute between the parties, and therefore, it should be rejected under Section 8(2)(a) read with Sections 5(6) and 9(5)(ii)(d) of the IBC.
Furthermore, the Corporate Debtor asserts that the Operational Creditor concealed facts intentionally. It was also argued that the application is barred by Section 10-A of the IBC, as the date of default falls within the suspension period of Section 10A. The Corporate Debtor disputes the revised date of default provided by the Operational Creditor. The Corporate Debtor claimed that the Operational Creditor issued communications admitting a pre-existing dispute, which should result in the dismissal of Section 9 application.
NCLT’S Analysis
The NCLT observed that there exist actual due payable from the Corporate Debtor to the Operational Creditor which establishes an Operational debt and issuance of Cheques of the like amount and subsequent bouncing of the cheques is a default on the part of the Corporate Debtor. The NCLT admitted the Operational Creditor’s application, finding that a default occurred when post-dated cheques issued by the Corporate Debtor bounced, indicating liability.
The NCLT rejected the Corporate Debtor’s arguments about a pre-existing dispute and the applicability of Section 10-A of the IBC as the evidence indicated a change in the Corporate Debtor’s stance over time. The NCLT held that the Corporate Debtor failed to prove a pre-existing dispute to justify the rejection of the application.
Additionally, the NCLT noted that the Operational Creditor attempted to mislead by withholding relevant documents, further justifying the admission of the application.
The NCLT appointed an Interim Resolution Professional (IRP) and imposed a moratorium, following standard procedures for insolvency cases.
NCLT’s Decision
The NCLT admitted the Operational Creditor’s application for insolvency against the Corporate Debtor, citing a clear default in payment. The case will proceed with the appointment of an IRP and the initiation of the CIRP.
[Aldous Commodities (P) Ltd. v. Aanchal Ispat Ltd., C.P (IB) No.1518/KB/2020, order dated 12-09-2023]
*Judgment by Balraj Joshi (Technical Member)
Advocates who appeared in this case :
Mr. Abhrajit Mitra, Sr. Adv. with Mr. D. N. Sharma, Ms. Nairanjana Ghosh and Mr. Saptarshi Kar, Counsel for the Operational Creditor
Mr. Ratnanko Banerji, Sr. Adv. with Mr. Jishnu Chowdhury, Ms. Urmila Chakraborty and Mr. Pranav Sharma, Counsel for the Corporate Debtor