CIRP Bid Rejected Due to Pre-existing Dispute on Work Order | NCLAT

Case Details: Sudha Electrical vs. Leena Power-Tech Engineers (P.) Ltd. - [2025] 177 taxmann.com 308 (NCLAT- New Delhi)

Judiciary and Counsel Details

• N. Seshasayee, Judicial Member
• Arun Baroka, Technical Member
• Chandra Shekhar Yadav & Astitva Srivastava, Advs. for the Appellant
• Arvind Nayar, Sr Adv., Sinha Shrey Nikhilesh, Parth Davar, Naman Kapoor, Diskha Dadu, Ms Swastik Verma, Ms Nayan Dubey & Ms Faraaz Khan, Advs. for the Respondent

Facts of the Case

In the instant case, the appellant, an operational creditor, supplied electrical equipment, transformers, gensets, control panels and cables to the respondent, a corporate debtor. Invoices were raised for the same.

The respondent made part payment but failed to clear the balance. The appellant then issued a demand notice under Section 8 of the IBC. Since the respondent did not reply, the appellant filed an application under Section 9 to initiate CIRP.

The Adjudicating Authority dismissed the application on the ground that there was a pre-existing dispute between the parties regarding the debt and that CIRP was not maintainable in view of Section 10A.

It was noted that the respondent had admitted that the appellant had performed its contractual obligations at least partly, as otherwise no payment would have been made.

NCLAT Held

The NCLAT observed that even if the existence of debt is presumed, the appellant was required to establish that the debt had become due. Since the existence of the work order itself was in dispute, and unless this was first ascertained it would be difficult to conclude that the time for payment had arisen, the Adjudicating Authority was justified in dismissing the application.

List of Cases Reviewed

• Order of NCLT, Mumbai in C.P. (I.B) No. 515/MB/2023), dated 25.10.2024 (para 17) affirmed

List of Cases Referred to

• Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. [2017] 85 taxmann.com 292/144 SCL 37 (SC) (para 11)
• Indus Biotech Pvt. Ltd. v. Kotak India Venture (Offshore) Fund [2021] 125 taxmann.com 393/166 SCL 129 (SC) (para 15)