NCLT rightly admitted plea filed u/s 9 as corporate debtor failed to adhere to MOU for payment of outstanding amount

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  • Last Updated on 7 December, 2022

plea filed u/s 9

Case Details: Palaparty Abhishek v. Binjusaria Ispat (P.) Ltd. - [2022] 145 173 (NCLAT-Chennai)

Judiciary and Counsel Details

    • Venugopal M., Judicial Member & Kanthi Narahari, Technical Member
    • Virender Ganda, Sr. Counsel & Bhaskar, Adv. for the Appellant.
    • Avinash Krishnan Ravi, Adv. for the Respondent.

Facts of the Case

In the instant case, the respondent raised invoices for the supply of goods, sold and delivered to the corporate debtor. An MoU was entered between the parties, and as per the MoU the corporate debtor/appellant agreed to repay the outstanding amount. However, the corporate debtor failed to adhere to the terms of MoU. Further the cheques issued by the corporate debtor were dishonoured.

Consequently, the respondent issued a demand notice and the corporate debtor, in reply to the notice stated that the MoU and the blank cheques were taken forcibly from the appellant. On default in making payment and dishonoured of cheques, the respondent filed a company petition under sections 433, 434 and 439 of the Companies Act, 1956 before the High Court for winding up of the corporate debtor.

However, the said application was transferred to the NCLT from the High Court. Thereafter, the respondent filed a fresh application under section 9 before NCLT for initiation of CIRP. The NCLT admitted the application on the grounds that the corporate debtor executed an MoU and cheques were given as part of the MoU were dishonoured by the corporate debtor, and that the corporate debtor had not made out any case with respect to the allegations that the MoU was taken under coercion and, therefore there was a debt on the part of the corporate debtor.

Subsequently on appeal, the appellant submitted that the corporate debtor never accepted the debt claimed by the respondent and that the MoU and blank cheques were obtained from the corporate debtor under coercion to use it against the corporate debtor.

The appellant further contended that the petition filed before the NCLT was time barred as per Notification dated 7-12-2016 issued by the Ministry of the Corporate Affairs and that the application had to be filed within 60 days and, therefore, the impugned order admitting the application filed by respondent was erroneous and the same was to be set aside.


The Hon’ble NCLAT held that there was no coercion as alleged by the corporate debtor and the corporate debtor failed to adhere to MoU and cheques issued were also dishonoured. Further, debt and default had been proved and the NCLT was correct in admitting application filed under section 9.

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