₹5.86 Crore Default Triggers CIRP Over Unpaid Operational Dues: NCLT Admits Insolvency Plea [Read Order]

The National Company Law Tribunal (NCLT), Ahmedabad Bench, has admitted an insolvency petition, initiating the Corporate Insolvency Resolution Process(CIRP) over unpaid operational dues. Also found that the corporate debtor defaulted on payments amounting to ₹5.86 crore, including contractual interest, even after service of a statutory demand notice under Section 8 of the Insolvency and Bankruptcy Code (IBC), 2016.

The petition was filed by Piyush Pharmachem (India) Pvt. Ltd., an operational creditor engaged in the supply of chemicals and solvents, claiming default of ₹5.86 crore (including contractual interest at 18% per annum).

The counsel for Shiva Dyestuff Pvt. Ltd. opposed the petition and contended that the petition was filed as a recovery mechanism, not for insolvency. Also, disputes existed regarding the quality of chemicals supplied, allegedly causing production losses exceeding ₹4.8 crore, and the payments made after the demand notice were not properly adjusted.

NCLT Reviews Adani Group’s Composite Scheme to Consolidate GreenHydrogen Ecosystem Under Single Entity

They also relied on Supreme Court and NCLAT precedents including Mobilox Innovations v. Kirusa Software and S.S. Engineers v. Hindustan Petroleum, to argue that insolvency proceedings cannot substitute for recovery suits.

On the other hand, the creditor countered that no dispute was raised before the statutory demand notice, making the debtor’s defence weak. also the debtor had acknowledged liability through emails and account confirmations, and GST returns were subsequently filed, and aggregation of invoices was permissible under Section 9.

Upon reviewing the petition, replies, rejoinder, and supporting documents, the bench comprising Shammi Khan(Judicial member ), Sanjeev Sharma(Technical member) satisfied that the claim arose from the supply of goods and constituted an operational debt under Section 5(21) of the IBC.

The tribunal noted that the Corporate Debtor had committed default in payment of the said debt, with dues remaining unpaid beyond the agreed credit period, and the application met all requirements under Sections 8 and 9 of the IBC, including proper service of demand notice and filing of requisite documents.

The tribunal observed that Procedural objections regarding GST returns and electronic record certification were found insufficient to defeat the claim at the admission stage.

Based on the findings, the NCLT ordered the appointment of an Interim Resolution Professional (IRP) from the panel maintained by the Insolvency and Bankruptcy Board of India (IBBI).

Accordingl,y the petition was admitted

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates