NCLT Allahabad: Operational Creditor's Insolvency Application Admitted

The National Company Law Tribunal, Allahabad Bench, admitted the Operational Creditor's application under Section 9 of the Insolvency & Bankruptcy Code, 2016 against the Corporate Debtor for initiating Corporate Insolvency Resolution Process. The Tribunal found the application compliant with IBC provisions, confirmed the default notice delivery, and appointed an IRP, declaring a moratorium. The Corporate Debtor's claims of payments to related entities were dismissed due to lack of evidence, and the Operational Creditor's evidence supported the outstanding dues claim, leading to the admission of the application for further resolution process.

---

---

Issues:
Initiation of Corporate Insolvency Resolution Process under Section 9 of IBC, 2016 based on default amount and date. Dispute regarding outstanding dues between Operational Creditor and Corporate Debtor. Existence of mutual set off agreement or privity of contract between entities. Compliance with Section 8 and 9 of IBC, 2016 for initiating CIRP. Admittance of the application and appointment of IRP.

Initiation of Corporate Insolvency Resolution Process:
The Operational Creditor filed an application under Section 9 of the Insolvency & Bankruptcy Code, 2016 against the Corporate Debtor for the initiation of Corporate Insolvency Resolution Process due to a claimed default amount of Rs. 65,36,488/- as on 09.09.2016. The Operational Creditor provided evidence of unpaid invoices and a demand notice to the Corporate Debtor, who claimed the amount was already paid to related entities of the Operational Creditor. Affidavit under Section 9(3)(b) and 9(3)(c) of IBC, 2016 was also submitted.

Dispute Regarding Outstanding Dues:
The Operational Creditor argued that a compromise agreement was not fulfilled, and the management of the entities involved was distinct with no mutual set off agreement. The Corporate Debtor contended that payments were made to related entities based on instructions from the Operational Creditor's director, thus claiming an excess payment. The Operational Creditor emphasized the absence of evidence supporting the Corporate Debtor's claim and presented the Corporate Debtor's balance sheet showing the outstanding amount.

Existence of Mutual Set Off Agreement:
The Corporate Debtor asserted that payments were set off against the supply made by the Operational Creditor to related entities. However, the Tribunal found the Corporate Debtor's claim unsubstantiated due to lack of evidence. The Operational Creditor's balance sheet indicated the outstanding amount, raising doubts about the Corporate Debtor's claim. A compromise agreement further indicated the Corporate Debtor's liability towards the Operational Creditor.

Compliance with Section 8 and 9 of IBC, 2016:
The Tribunal confirmed the delivery of the default notice under Section 8 and the filing of an affidavit under Section 9(3)(b) of IBC. The debt fell due on 08.09.2017, and the application was filed within the limitation period. The application met the requirements of IBC, 2016, and the outstanding amount exceeded the threshold limit, with no existing dispute as per Sections 8 & 9.

Admittance of the Application and Appointment of IRP:
After reviewing submissions from both parties and the records, the Tribunal found the application complete and compliant with relevant provisions of IBC, 2016. Therefore, the application was admitted, declaring a moratorium, appointing an IRP, and issuing necessary directions for the Corporate Insolvency Resolution Process. The Tribunal set conditions for the admission, including the deposit by the Operational Creditor and scheduled a progress report filing for a future date.

This detailed analysis covers the issues involved in the legal judgment delivered by the National Company Law Tribunal, Allahabad Bench, regarding the initiation of Corporate Insolvency Resolution Process under Section 9 of IBC, 2016 based on a disputed default amount and date, the existence of a mutual set off agreement, compliance with relevant sections of IBC, 2016, and the subsequent admittance of the application with the appointment of an IRP.

---