National Company Law Tribunal admits Section 9 application for unpaid supplies, initiates Insolvency Resolution Process

The National Company Law Tribunal, New Delhi, admitted an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, filed by M/S V.K JAIN & SONS against M/S THREE LEAVES BOOKS INTERNATIONAL PVT. LTD. for unpaid printing paper supplies. Despite the Corporate Debtor's dispute on the amount owed, the Tribunal found the application timely, within its jurisdiction, and compliant with the Code. Consequently, the Corporate Insolvency Resolution Process was initiated.

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Issues:
1. Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Process initiation.
2. Operational Creditor's claim against the Corporate Debtor for unpaid printing paper supplies.
3. Dispute regarding the amount owed and acknowledgment of debt by the Corporate Debtor.
4. Jurisdiction of the National Company Law Tribunal, New Delhi.
5. Compliance with Section 9(3)(b) of the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:

1. The application was filed by M/S V.K JAIN & SONS under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency process against M/S THREE LEAVES BOOKS INTERNATIONAL PVT. LTD. The Operational Creditor claimed to have supplied printing paper to the Corporate Debtor, with invoices totaling &8377; 26,35,381, of which a significant amount remained unpaid.

2. M/S V.K JAIN & SONS, the Operational Creditor, provided details of the material supplied to the Corporate Debtor since December 2017, along with acknowledged invoices. The Corporate Debtor issued several cheques in lieu of payment, but all were dishonored due to insufficient funds. After a notice under the Negotiable Instruments Act, a partial payment was made by the Corporate Debtor.

3. The Corporate Debtor contested the claim, alleging a pre-existing dispute and discrepancy in the claimed amount. The Corporate Debtor argued that it only received printing paper worth &8377; 12,79,752, significantly less than the claimed amount. The Corporate Debtor claimed that the Operational Creditor pursued en-cashing the cheques despite being informed of the insufficient funds.

4. The Adjudicating Authority found that the Corporate Debtor had partially admitted the liability by making a payment before denying it in a subsequent reply. The Authority also addressed the issue of pre-existence of dispute, citing a judgment that the pendency of a case under the Negotiable Instruments Act does not constitute a dispute, but an admission of debt.

5. The Tribunal determined that the application was not time-barred, had jurisdiction over the matter, and that the Operational Creditor had complied with the necessary provisions of the Insolvency and Bankruptcy Code, 2016. Consequently, the application was admitted, and the Corporate Insolvency Resolution Process was ordered to commence.

This detailed analysis covers the issues involved in the judgment comprehensively, outlining the arguments presented by both parties and the Tribunal's reasoning for its decision.

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