Tribunal dismisses insolvency application against company for non-supply of goods - Payment not 'Operational Debt'

The National Company Law Appellate Tribunal rejected an application under Section 9 of the Insolvency and Bankruptcy Code against M/s A.S. Iron & Steel (I) Pvt. Ltd. The Appellant claimed non-supply of goods despite payment, alleging no pre-existing dispute. The Tribunal found the payment for goods, without actual supply, did not constitute 'Operational Debt,' leading to dismissal of the appeal. The Appellant was allowed to seek relief in the Competent Jurisdiction. The appeal was dismissed without costs.

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Issues: Application under Section 9 of I&B Code rejected; Pre-existing dispute; Operational Debt determination

The judgment by the National Company Law Appellate Tribunal, New Delhi involved the rejection of an application under Section 9 of the Insolvency and Bankruptcy Code against a Corporate Debtor, M/s A.S. Iron & Steel (I) Pvt. Ltd. The Appellant claimed to have paid Rs. 74,32,326 for goods that were not supplied, arguing the absence of a pre-existing dispute.

The Appellant contended that they made the payment for goods that were not supplied by the Corporate Debtor, thus initiating the Section 9 application. The Respondent, representing the Corporate Debtor, argued that the goods were supplied back in 2014, raising a limitation defense. However, the Tribunal did not delve into the question of whether the goods were supplied, focusing instead on the lack of goods or services provided by the Appellant to the Respondent.

It was established that the Appellant, Roma Infrastructures India Pvt. Ltd., did not supply any goods or services to the Respondent but had made an advance payment of Rs. 74,32,326 for goods. Consequently, the Tribunal determined that this payment did not qualify as an 'Operational Debt,' rendering the Section 9 application non-maintainable, leading to the dismissal of the appeal.

The Tribunal clarified that its order did not prevent the Appellant from seeking appropriate relief in the court of Competent Jurisdiction. The appeal was dismissed with the mentioned observations, and no costs were awarded in the matter.

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