The National Company Law Appellate Tribunal (NCLAT), Chennai Bench comprising Justice M. Venugopal, Judicial Member and Ms. Shreesha Merla, Technical Member was recently hearing an appeal. The NCLAT Chennai bench upheld the admission of the application by the NCLT, finding that the alleged disputes raised by the corporate debtor were spurious and illusory, and the operational creditor was entitled to initiate the corporate insolvency resolution process against the corporate debtor.
The NCLAT judgment in Company Appeal (AT) (CH) (Ins) No. 148 of 2022 challenged the order passed by the National Company Law Tribunal (NCLT), Chennai in CP No. 5 of 2021. The NCLT admitted the application filed by M/s Clarke Energy India Pvt. Ltd., an operational creditor, under Section 9 of the Insolvency and Bankruptcy Code, 2016.
The NCLT observed that the respondent had failed to make payments as per the terms of the Memorandum of Understanding (MOU) between the parties, and the alleged disputes raised by the corporate debtor were not valid reasons to withhold payment. The debt amount claimed fell within the pecuniary limit set by the government. The NCLT also noted that the default occurred before the COVID-19 pandemic and the corporate debtor could not seek protection under Section 10A of the Code. Consequently, the NCLT initiated the corporate insolvency resolution process against the corporate debtor.
The judgment discussed the background of the case, including the agreements between the operational creditor, SAS EPC Solutions Private Limited, and the corporate debtor, as well as the disputes regarding defective spares and the non-performance of maintenance services.
The NCLAT concluded that the disputes raised by the corporate debtor were spurious and illusory, and therefore upheld the admission of the application by the NCLT.
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