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2023 (8) TMI 799 - AT - Insolvency and BankruptcyMaintainability of petition - initiation of CIRP - amount exceeding Rs.1 crore was due for payment to the Operational Creditor - undisputed debt which had become due and payable - operational debt was barred by Section 10A of IBC or not - HELD THAT - From a plain reading of the communications, there arises no doubt that the Corporate Debtor had acknowledged the outstanding amount which was due and payable to the Operational Creditor. Not only was the outstanding amount acknowledged but an assurance had also been given by Corporate Debtor to clear the said amount and make extra payment towards old outstanding dues. Pre-existing disputes - HELD THAT - The rider subject to the claims lodged is a very generic statement without any specific reference to past disputes and thus devoid of plausibility. Objections in terms of claims lodged , if relatable to existing disputes, should have been brought to the pointed notice of the Operational Creditor which has clearly not happened in the present case - when the Corporate Debtor had admitted the outstanding debt and agreed to pay the same, it amounts to clear acknowledgment of debt being due and payable and belies the existence of any dispute. Whether the debt arising out of the invoices fell during the period which attracts the bar of Section 10A of IBC? - HELD THAT - There are no hesitation in observing that in the present case, all requisite conditions necessary to trigger CIRP under Section 9 stands fulfilled with operational debt having been acknowledged and default committed thereto and there being no real pre-existing disputes discernible from given facts. The Adjudicating Authority has rightly admitted the application of the Operational Creditor filed under Section 9 of IBC - at the impugned order does not warrant any interference. There is no merit in the Appeal. The Appeal is dismissed.
Issues Involved:
1. Whether an amount exceeding Rs.1 crore was due for payment to the Operational Creditor and whether such amount was an undisputed debt which had become due and payable. 2. Whether the said operational debt was barred by Section 10A of IBC. Summary: Issue 1: Amount Due and Undisputed Debt The appeal arose from the order dated 03.11.2022 by the National Company Law Tribunal (NCLT), Mumbai Bench-IV, which admitted a petition under Section 9 of the Insolvency and Bankruptcy Code (IBC) and initiated the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The Corporate Debtor, Nik-San Engineering Company Ltd., had a business relationship with Sterling Enamelled Wires Pvt. Ltd., the Operational Creditor, which supplied materials for transformer manufacturing. The Operational Creditor issued a demand notice under Section 8 of IBC on 14.08.2021 for Rs. 2,07,11,209/- and filed a Section 9 application when the amount remained unpaid. The Corporate Debtor admitted receiving the Section 8 demand notice but claimed pre-existing disputes regarding the quality of goods. The Adjudicating Authority, however, found that the Corporate Debtor had acknowledged the debt in communications dated 23.07.2021 and 13.05.2021, thereby establishing clear debt and default. The Tribunal noted that the Corporate Debtor's acknowledgment of debt and promise to pay negated the existence of any pre-existing disputes. Issue 2: Bar under Section 10A of IBC The Corporate Debtor argued that the debt fell within the period barred by Section 10A of IBC, as the default occurred between 25.03.2020 to 24.03.2021. However, the Tribunal found that only two out of four purchase orders referenced a 90-day Letter of Credit (LC) payment term. The invoices under the first two purchase orders, which did not stipulate a 90-day LC, were sufficient to meet the threshold limit of Rs.1 crore for filing an insolvency application. Therefore, the Tribunal concluded that the debt was not barred by Section 10A of IBC. Conclusion: The Tribunal upheld the Adjudicating Authority's decision, stating that all conditions for triggering CIRP under Section 9 were fulfilled, with the operational debt acknowledged and no real pre-existing disputes. The appeal was dismissed with no order as to costs.
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