Operational Creditor's Application Dismissed for Insufficient Debt Amount & Procedural Errors

The Tribunal dismissed the Section 9 application under the Insolvency and Bankruptcy Code due to non-compliance with the prescribed threshold amount and ambiguity in clubbing debt amounts. The Operational Creditor's petition for unpaid invoices against the Corporate Debtor, totaling Rs. 7,78,708, was rejected as it included a previous debt withdrawn from another entity and fell short of the minimum default amount specified post a certain date. The judgment emphasized timely filing and strict adherence to legal procedures, ultimately leading to the application's dismissal on March 31, 2022.

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Issues:
Application under Section 9 of IBC for unpaid invoices against Corporate Debtor, Clubbing of debt amounts in the application, Compliance with threshold amount for Section 9 application, Delay in filing insolvency proceedings.

Analysis:
The judgment pertains to an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by an Operational Creditor against a Corporate Debtor for unpaid invoices totaling Rs. 7,78,708. The Operational Creditor supplied Flexible Packing materials to the Corporate Debtor, who made delayed payments and eventually stopped paying altogether. A Demand Notice was served, but the Corporate Debtor did not respond within the stipulated time. The Operational Creditor then filed the petition for insolvency proceedings.

The Tribunal noted that the Operational Creditor had previously withdrawn a case involving a debt of Rs. 6,00,000 from a different entity. The Operational Creditor combined this amount with the current claim, leading to ambiguity regarding the actual debt amount being pursued. Additionally, a Gazette Notification by the Government specified a minimum default amount of Rs. 1 crore for Section 9 applications post a certain date, which the current claim did not meet.

The Tribunal emphasized the importance of timely filing of insolvency proceedings and highlighted the requirement for the Operational Creditor to adhere to the prescribed procedures. Quoting relevant sections of the IBC, the Tribunal referenced previous NCLAT decisions to support its ruling. The judgment cited cases where the threshold limit for Section 9 applications was upheld, emphasizing the need for strict compliance with the law.

Ultimately, the Tribunal dismissed the application, citing non-compliance with the threshold amount specified in the notification and the ambiguity surrounding the debt amounts clubbed together in the petition. The judgment concluded that the application failed on both counts and was therefore dismissed without costs on March 31, 2022.

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