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A Decree passed by Civil Court in case of goods supplied is an Operational Debt | Date of default is the date of decree | Interest provided by Civil Court from the date of filing the suit till the Decree and thereafter until payment is made, cannot be clubbed together to reach the threshold limit of Rs. 1 cr. under Sec. 4 of IBC – Honey Yarn Vs. Welldone Exim Pvt. Ltd. – NCLT New Delhi Bench

In this important judgment, Hon’ble NCLT held that:

(i) The amount arising out of invoices from the goods supplied by Operational Creditor is an Operational Debt, which has now been crystalized pursuant to Court Decree.
(ii) The Decree Holder cannot be excluded from the purview of Operational Creditor under Section 5(20) of the Code.
(iii) The Date of Default shall be the Date of the Decree and therefore, the present application is not barred by limitation.
(iv) The interest provided by the Civil Court acts as compensation in favour of the Applicant and is to be charged against the Respondent for the period starting from the date of filing the suit until the decree, and thereafter until payment is made.
(v) The Interest as provided by the Civil Court vide Decree dated 28.04.2023 cannot be clubbed together to reach the threshold limit of Rs. 1,00,00,000/-.

A Decree passed by Civil Court in case of goods supplied is an Operational Debt | Date of default is the date of decree | Interest provided by Civil Court from the date of filing the suit till the Decree and thereafter until payment is made, cannot be clubbed together to reach the threshold limit of Rs. 1 cr. under Sec. 4 of IBC – Honey Yarn Vs. Welldone Exim Pvt. Ltd. – NCLT New Delhi Bench Read Post »

Where the findings/conclusions rendered in Arbitral Award are based on no evidence and/or are perverse on the face of it, the same renders the award vulnerable to challenge under Section 34 of Arbitration and Conciliation Act, 1996 – Trans Engineers India Pvt. Ltd. Vs. Otsuka Chemicals (India) Pvt. Ltd. – Delhi High Court

Hon’ble Delhi High Court held that while scrutinising an arbitral award on the touchstone of Section 34 of Arbitration and Conciliation Act, 1996, it is impermissible to embark upon re-appreciation of factual findings rendered by an arbitral tribunal. However, the law is equally well-settled that where the findings/conclusions rendered in the arbitral award are based on no evidence and/or are perverse on the face of it, the same renders the award vulnerable to challenge.

Where the findings/conclusions rendered in Arbitral Award are based on no evidence and/or are perverse on the face of it, the same renders the award vulnerable to challenge under Section 34 of Arbitration and Conciliation Act, 1996 – Trans Engineers India Pvt. Ltd. Vs. Otsuka Chemicals (India) Pvt. Ltd. – Delhi High Court Read Post »

Operational Creditor is not entitled for benefit of Section 14 of the Limitation Act where the Suit filed by Operational Creditor was withdrawn on its own application without any liberty to institute a fresh suit – GRI Towers India Pvt. Ltd. Vs. Inox Wind Ltd. – NCLAT New Delhi

Hon’ble NCLAT held that:
(i) Suit was withdrawn without any liberty from the Court to institute a fresh proceeding and termination of suit cannot be held on ground of defect of jurisdiction on cause of like nature.
(ii) The proceedings under IBC are not proceedings for recovery of contractual dues, as is apparent from the facts of the present case the Operational Creditor has initiated proceeding for recovery of its contractual dues arising out of contract between the parties. Suit for recovery of dues was already filed by the Operational Creditor which was withdrawn by the Operational Creditor.
(iii) It is, however, relevant to notice that withdrawal of the suit was not on the ground contended by the Operational Creditor nor any liberty was granted by the Civil Court to institute a fresh suit nor Operational Creditor at any point of time resorted to the proceeding of arbitration which according to the Operational Creditor was reason for withdrawal of suit.
(iv) Upheld decision of the NCLT Chandigarh Bench.

Operational Creditor is not entitled for benefit of Section 14 of the Limitation Act where the Suit filed by Operational Creditor was withdrawn on its own application without any liberty to institute a fresh suit – GRI Towers India Pvt. Ltd. Vs. Inox Wind Ltd. – NCLAT New Delhi Read Post »

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