CIRP admitted as corporate debtor raised dispute w.r.t. quality of goods after receiving notice to shrug off liability

Case Details: Huangyan Zhedong Rubber Auxiliary Imp./Exp. Co. Ltd. v. Dalmia Polymers LLP - [2021] 132 taxmann.com 50 (NCLT - New Delhi)

Judiciary and Counsel Details

• • Dr. Deepti Mukesh, Judicial Member and Ms. Sumita Purkayastha, Technical Member
  • Sachin Jain, Adv. for the Applicant. 
  • Kamal Ahuja, Adv. for the Respondent.

Facts of the Case

The Applicant-operational creditor supplied rubber and chemical goods to the corporate debtor company and raised invoices. In the instant case, the corporate debtor failed to make full payment.

Thus, a demand notice was issued under section 8 of the Insolvency and Bankruptcy Code, 2016. In reply, the corporate debtor raised a dispute regarding inferior goods supplied by operational creditors and disputes regarding timelines of supply causing irreparable harm to the business of the corporate debtor.

NCLT Held

It was noted that the corporate debtor raised a dispute after receipt of demand notice, and no correspondence prior in time to demand notice about disputes had been brought on record. Thus, the defence taken by the corporate debtor was an afterthought to shrug off liability and was not covered in pre-existing dispute.

In view of aforesaid, it could be concluded that there existed an operational debt and corporate debtor committed default in discharging said debt and therefore, an application filed under section 9 of the Insolvency and Bankruptcy Code, 2016 was to be admitted.

List of Cases Referred to

• • Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. [2017] 85 taxmann.com 292/144 SCL 37 (SC) (para 10).