Rs. 2.11 Crore Default Held Sufficient under IBC: NCLT Admits S. 9 Petition against Trivenimudrai Projects Ltd [Read Order]

In a recent ruling, the National Company Law Tribunal (NCLT), Mumbai Bench, has admitted an insolvency petition under Section 9 of the Insolvency andBankruptcy Code (IBC), 2016, against Trivenimudrai Projects Ltd. for non‑payment of ₹2.11 crore.

The dispute started from two hire work orders issued by Rajkeshari Projects Ltd. to the operational creditor for the supply of construction‑aid materials at Neyveli, Tamil Nadu. Rajkeshari failed to pay hire charges or return the materials, prompting the creditor to raise invoices and later approach the MSMEFacilitation Council.

During those proceedings, Trivenimudrai Projects Ltd. acknowledged that it had used the materials and proposed to settle the dues. A tripartite MOU‑cum‑Settlement Agreement dated 24 April 2024 was executed among the creditor, Rajkeshari, and Trivenimudrai.

Under it, Trivenimudrai agreed to pay ₹92.65 lakh by 15 May 2024, failing which the creditor could recover the entire outstanding amount jointly and severally from both companies. When no payment was made, the creditor issued a statutory notice under Section 8 IBC and subsequently filed the present petition seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against Trivenimudrai Projects Ltd.

Counsel for the creditor contended that Trivenimudrai had admitted liability through the MOU and defaulted on payment. The failure to honour the settlement entitled the creditor to recover the full dues of ₹2.11 crore, exceeding the ₹1 crore threshold under Section 4 IBC. The creditor argued that the MOU created a binding obligation and that the debtor’s subsequent denial was an afterthought.

Represented by its director, Trivenimudrai Projects Ltd. argued that there was no privity of contract between it and the creditor. The original work orders were placed by Rajkeshari Projects Ltd., and Trivenimudrai’s involvement was limited to assisting in settlement. It claimed that the MOU was conditional and never acted upon, as Rajkeshari failed to transfer the work orders or deliver materials.

The debtor maintained that the alleged default arose from a settlement agreement, not from the supply of goods or services, and therefore did not constitute an “operational debt” under Section 5(21) IBC.

The Bench comprising Nilesh Sharma (Judicial member) and Sameer Kakar (Technical member) observed that Trivenimudrai had expressly acknowledged liability in the tripartite MOU and agreed to pay ₹92.65 lakh by 15 May 2024. The failure to make payment rendered the entire outstanding amount recoverable.

The tribunal held that the MOU was not merely a settlement proposal but a binding acknowledgement of debt, and the default under it constituted an operational default. It rejected the debtor’s contention of “no privity of contract,” noting that the materials were used by Trivenimudrai and that the liability was joint and several with Rajkeshari.

The NCLT admitted the insolvency petition, declared a moratorium under Section 14 IBC, and appointed an Interim Resolution Professional (IRP) to take charge of Trivenimudrai Projects Ltd. and commence the CIRP.

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