Application for initiating CIRP against R. D. Engineers admitted

Application for initiating CIRP against R. D. Engineers  admitted

This Petition, filed by the Sole Proprietor of Silicon Metal Industries, Operational Creditor/Petitioner, under section 9 of the Insolvency & Bankruptcy Code, 2016 (Code) against R. D. Engineers (India) Private Limited, Corporate Debtor, by invoking the provisions of Section 9 of the Code read with Rule 6 of Insolvency& Bankruptcy (AAA) Rules, 2016, alleged that the Corporate Debtor committed default in making payment to the extent of more than Rs. 4 lakhs

The petitioner has mainly alleged that the Corporate Debtor raised various purchase orders upon the petitioner and the petitioner supplied the said products and materials at Corporate Debtor's site. The Corporate Debtor has at all times admitted and acknowledged its liability to pay the petitioner the principal amount of Rs. 3,22,03,517/- and also the liability to pay interest @24% p.a. has been duly admitted and acknowledged by the Corporate Debtor.

On the contrary, the Corporate Debtor has refuted these submissions by stating that the petitioner had delayed supply of goods by 2 to 3 months due to which the Corporate Debtor incurred severe damages and heavy losses. The Corporate Debtor adds that the same was communicated to the petitioner and they were further informed that till the amount of damages is not crystallized and also since, the payments of the Corporate Debtor were put on hold by the third party, it was made clear that the petitioner's claimed payment is not payable to them and same has been kept on hold.

Since the said dispute was one which was raised by the Corporate Debtor after the issuance of the demand notice by the petitioner, the National Company Law Tribunal, Mumbai Bench has referred to the case of the Hon'ble NCLAT in its judgment in Ahluwalia Contracts (India) Ltd v Raheja Developers Ltd wherein it has been held that that an application under Section 9 of the I&B Code can only be rejected if the dispute in relation to the claim pre-exists the date of receipt of demand notice or invoice issued under Section 8 of the I&B Code.

The decision of the Hon'ble Supreme Court in Mobilox Innovations Pvt Ltd v Kirusa Software (P) Ltd, has also been relied upon, where in it was observed that it is important that the existence of the dispute and/or the suit or arbitration proceeding must be pre-existing-i.e. it must exist before the receipt of the demand notice or invoice, as the case may be.

The Tribunal has also opined that there is a due debt of Rs. 4,23,77,899/- (including interest) which has been accepted and confirmed several times by the Corporate Debtor. However, it is only when Section 8 Demand Notice was sent by the Operational Creditor to the Corporate Debtor, for the first time, the Corporate Debtor raised dispute regarding delays caused by the Operational Creditor in supplying material to the Corporate Debtor and also regarding the total amount of default which as per the Corporate Debtor is not Rs. 3,22,03,517/- but Rs. 2,58,42,826/-.

The Bench also noted that the Corporate Debtor has filed nothing on record to show that the Corporate Debtor has been back charged by L&T and any such penalty charges has been levied due to the delay by Operational Creditor in supplying material on time. The existing operational debt beyond the threshold limit against the Corporate Debtor and its default is also proved.

Accordingly, the application filed under section 9 of the Insolvency and Bankruptcy Code for initiation of corporate insolvency resolution process against the Corporate Debtor has been admitted and moratorium u/s 14 of I&B Code has also been declared. It is also directed that the commencement of the Corporate Insolvency Resolution Process shall be effective from the date of this order.