NCLAT upholds dismissal of CIRP plea as it was time-barred and there was a pre-existing dispute between parties

Case Details: Crown Tobacco Company (P.) Ltd. v. Crale Food links (P.) Ltd. - [2021] 133 taxmann.com 61 (NCLAT- New Delhi)

Judiciary and Counsel Details

• • Anant Bijay Singh, Judicial Member and Ms. Shreesha Merla, Technical Memmber
  • Mayank Kshirsagar, Ms. Darryl Pereia, Ms. Leandra Silveira, Ms. Sonja Curzai and Dhruv Chawla, Advs. for the Appellant. 
  • Royston J. Pereira, Apoorv Shukla, Ms. Ishita Farsaiya, Kunal Cheema, Ms. Prabhleen Kaur, Advs. and Ms. Leonys Pereria for the Respondent.

Facts of the Case

In the instant case, the appellant (the operational creditor) entered into a Business Conduction Agreement (BCA) on 29-4-2010 with the respondent (corporate debtor) for operating restaurant & Lounge bar from business premises of which appellant had a valid license. The BCA was initially for 5 years which was subsequently extended for another 2 years.

On 30-9-2017 the BCA got expired by efflux of time. The corporate debtor company vacated the possession of business premises. The Monthly conducting fee and the utility bills for August and September remain unpaid. The Municipal Assessment Taxes from June 2010 to September 2017 had also not been paid.

The appellant sent a letter to the respondent Company, seeking clearance of outstanding dues. However, no response was received from the respondent. The appellant on 19-2-2018 sent a demand notice under section 8 calling upon the respondent to clear the outstanding amount.

The respondent company denied its liability to pay any outstanding amount to the appellant on grounds, of pre-existence of disputes, viz. suit pending before the Court of Small Causes and the Commercial Suit pending before the Bombay High Court.

NCLAT Held

Appellant filed a petition under section 9 on 12-3-2018 before NCLT which by impugned order dismissed the petition holding that all claims before 12-3-2015 were barred by limitation.

On appeal, the NCLAT upheld the dismissal of CIRP plea by NCLT as it was time-barred and there was a pre-existing dispute between parties. The Appellate Tribunal, finding no merit in the appeal, dismissed the same by agreeing to the reasons mentioned by NCLT.

Case Review

• • Crown Tobacco Co. (P.) Ltd. v. Crale Food Link (P.) Ltd. [2020] 120 taxmann.com 168 (NCLT-Mum.) (para 23) affirmed.

List of Cases Referred to

• • M. Ravindranath Reddy v. G. Kishan [2020] 113 taxmann.com 526 (NCL-AT New Delhi) (para 20).