The Mumbai Bench of the National Company Law Tribunal ( NCLT ) has held that the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 ( IBC, 2016 ) for initiating a Corporate Insolvency Resolution Process ( CIRP ) is not maintainable in the absence of valid proof of debt and default.
Mittal Polymers, Operational Creditor ( OC ) alleged a default of Rs.2,33,10,961/- against Suvarna Additives Limited, Corporate Debtor ( CD ) which was based on several unpaid invoices issued by the Operational Creditor during the period between 2015 and 2019 for selling and supplying goods to the Corporate Debtor. The Corporate Debtor defaulted in the payment of outstanding dues from 16.09.2019. A demand notice was issued to the Corporate Debtor, however, no reply was received and the payment for settling the outstanding dues was not made. Thus, an application was filed by the Operational Creditor for initiating CIRP against the Corporate Debtor.
It was submitted that the amount of Rs. 1,12,17,578/- was still left unpaid towards the supply of raw materials to the Corporate Debtor. The Operational Creditor is also entitled to claim interest upon the amount raised through unpaid invoices as per Sections 15 and 16 of the Micro, Small and Medium Enterprises Development Act, 2006 ( MSMED Act ).
It was argued by the Corporate Debtor that the matter was being settled with the Operational Creditor. The online reply was filed by the Corporate Debtor only after the hearing of the parties was conducted on 15.12.2023 on the grounds of lack of acquaintance with the online filing system of the tribunal.
However, the Corporate Debtor did not file any application to recall the order dated 15.12.2023 which was reserved for order. As a result, the tribunal did not consider the reply and went on to deal with the application on merits based on the submissions made by the parties.
The tribunal viewed that the bank statement produced by the Operational Creditor only suggests that it has not received any payment from the Corporate Debtor from 03.12.2019 to 19.12.2019. It was found that the only documents produced by the Operational Creditor to prove debt and default are its computation of claims and the demand notice dated 15.11.2019 which are insufficient to determine the maintainability of the present Application.
A two-member bench comprising Shri K. R. Saji Kumar (Judicial Member) and Shri Sanjiv Dutt (Technical Member) held that since no invoices were produced on record it is difficult to ascertain the veracity of its claims, the OC has not succeeded in proving existence of any operational debt due and payable to it by the CD.
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