NCLAT Upheld Section 9 Plea as Corporate Debtor Delayed Payments and Had Acknowledged Outstanding Debt to Operational Creditor

Case Details: Nandamuri Meenalatha v. Quality Steels and Wire Products - [2023] 154 taxmann.com 185 (NCLAT-Chennai)

Judiciary and Counsel Details

• • M. Venugopal, Judicial Member & Shreesha Merla, Technical Member
  • P.H. Arvindh Pandian, Sr. Adv. & Avinash Krishnan Ravi, Adv. for the Petitioner.
  • Arjun Suresh, Adv. for the Respondent.

Facts of the Case

In the instant case, the Corporate Debtor and Respondent Operational Creditor entered into a contract for supply of structural steel to Corporate Debtor. Consequently, the supplies were made and corporate debtor made part payments.

Later, the Corporate Debtor issued an e-mail to Respondent by which payment schedule was provided for balance amount to be paid to Respondent. Since, the Corporate Debtor failed to follow said payment schedule, Respondent filed a petition under section 9 and same was admitted by National Company Law Tribunal (NCLT) vide impugned order.

The Appellant/erstwhile director of Corporate Debtor preferred the instant appeal as an aggrieved party in respect of said order. Further, it was noted that in said e-mail, corporate debtor had admitted its liability with regard to sums due and payable to respondent and as such it was an acknowledgement of debt.

NCLAT Held

Subsequently, the National Company Law Appellate Tribunal (NCLAT) observed that, since debt and default committed by corporate debtor were established by Respondent, outstanding debt was due and payable in law by corporate debtor to respondent.

Thus, the NCLAT held that the NCLT rightly admitted section 9 petition and instant appeal was to be dismissed.

List of Cases Reviewed

• • Quality Steels and Wire Products v. Vantage Machine Tools (P.) Ltd. [2023] 154 taxmann.com 184 (NCLT – Amaravati) (para 96) affirmed [See Annex].
  • Secretary, Irrigation Department, Govt. of Orissa v. G.C. Roy [1992] 1 SCC 508 (para 75) followed.

List of Cases Referred to

• • Innoventive Industries Ltd. v. ICICI Bank Ltd. [2017] 84 taxmann.com 320/143 SCL 625 (SC)
  • Steel Konnect (India) (P.) Ltd. v. Hero Fincorp Ltd. [2017] 85 taxmann.com 265 (NCLAT)
  • Sanjeev Kumar v. Aithent Technologies (P.) Ltd. [2021] 123 taxmann.com 88 (NCLAT)
  • Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. [2017] 85 taxmann.com 292/144 SCL 37 (SC)
  • K. Kishan v. Vijay Nirman Company (P.) Ltd. [2018] 97 taxmann.com 495/150 SCL 110 (SC)
  • Sherbahadur D. Yadav v. Rohan Dyes and Intermediates Ltd. [Comp. App (AT) (Ins.) No. 472 of 2021, dated 31-1-2022]
  • Siddharth Nahata v. Billets Elektro Werke (P.) Ltd. [2017] 88 taxmann.com 162/145 SCL 146 (NCLAT)
  • Neeraj Jain v. Cloudwalker Streaming Technologies (P.) Ltd. [2020] 114 taxmann.com 589 (NCLAT)
  • Pitti Coal Company v. Mahalaxmi Continental Ltd. [2022] 138 taxmann.com 241 (NCLAT)
  • A.D. Electro Steel Co. (P.) Ltd. v. Anil Steels [2017] 87 taxmann.com 26/144 SCL 448 (NCLAT)
  • P.M. Mahendran v. Tharuvai Ramachandran Ravichandran [Comp. App (AT) (Ins.) No. 642 of 2019, dated 22-11-2019]
  • Prashant Agarwal Member of Suspended Board of Bombay Rayan Fashions Ltd. v. Vikash Parasrampuria [2022] 145 taxmann.com 340/[2023] 175 SCL 502 (NCLAT – New Delhi)
  • Suzlon Synthetics Ltd. v. Stressed Asset Stabilization Fund [2022] 145 taxmann.com 594/[2023] 175 SCL 422 (NCLAT-New Delhi)
  • Union of India v. Raman Iron Foundry AIR 1974 SC 1265
  • Alok Shankar Pandey v. Union of India [2007] 74 SCL 198 (SC)
  • Secretary, Irrigation Department, Govt. of Orissa v. G.C. Roy [1992] 1 SCC 508.