IBC Laws - Adjudicating Authority exercising summary jurisdiction cannot determine the claim amount of Operational Creditor and initiate the CIRP - Vertex Cranes & Hoists India Ltd. v. Rotodyne Engineering Services Pvt. Ltd.

Adjudicating Authority exercising summary jurisdiction cannot determine the claim amount of Operational Creditor and initiate the CIRP – Vertex Cranes & Hoists India Ltd. v. Rotodyne Engineering Services Pvt. Ltd. – NCLT Hyderabad Bench

December 28, 2023

Hon’ble NCLT Hyderabad Bench held that when the operational creditor did not fix the problems as per the terms and conditions of the agreement, the corporate debtor was within its right to withhold the payment. Such defects were pre-existing before the receipt of the demand notice by the corporate debtor. The dispute was also genuine one and the standard of determining ought not to be equated with the doctrine of preponderance of probability. The Bench also held that besides the pre-existing disputes bar the filing of the present application, the operational creditor is also unable to prove the exact amount due from the corporate debtor. This Authority exercising summary jurisdiction cannot determine the claim amount and initiate the CIRP.

PDF & Print

(2023) ibclaw.in 1060 NCLT

IN THE NATIONAL COMPANY LAW TRIBUNAL
Hyderabad Bench

Vertex Cranes & Hoists India Ltd.
v.
Rotodyne Engineering Services Pvt. Ltd.

CP No. 148/9/HDB/2020
Decided on 07-Dec-23

Coram: Shri Rajeev Bhardwaj (Judicial Member) and Shri Sanjay Puri (Technical Member)

Add. Info:

Corporate Debtor: Rotodyne Engineering Services Pvt. Ltd.

For Appellant(s): Mr. T.Sujan Kumar Reddy, Ms. G,Sumathi, Advocates

For Respondent(s): Mr. Mayur Mundhra

Brief about the decision:

Section 9 r/w Section 8 of the IBC lays down the procedure and formalities for initiation of CIRP by an operational creditor. These provisions require a strict proof of debt and default.(p15)
The operational creditor has issued two notices dated 19.07.2019 and 20.12.2019 without explaining properly why need arose to issue fresh notice. Learned Counsel for the operational creditor has tried to say that after issuance of first notice dated 19.07.2019, corporate debtor has paid certain amount, but the amounts claimed in both the notices are the same. Accordingly, first notice dated 19.07.2019 is to be taken as date of default.(p17)
Reply to this notice was given by the corporate debtor on 17.08.2019, wherein it was pointed out that the amount was withheld because the operational creditor did not rectify the defects brought to its notice vide email dated 9.02.2019. Therefore, it is clear that the shortcomings pointed out by the corporate debtor were in the knowledge of the operational creditor prior to the issuance of the demand notice dated 19.07.2019. (p17)
When the operational creditor did not fix the problems as per the terms and conditions of the agreement, the corporate debtor was within its right to withhold the payment. Such defects were pre-existing before the receipt of the demand notice by the corporate debtor. The dispute was also genuine one and the standard of determining ought not to be equated with the doctrine of preponderance of probability.(p11)
Besides the pre-existing disputes bar the filing of the present application, the operational creditor is also unable to prove the exact amount due from the corporate debtor. This Authority exercising summary jurisdiction cannot determine the claim amount and initiate the CIRP.(p12)
As a result, Company Petition No. CP(IB) No.148/9/HDB/2020 is dismissed.(p13)

Judgment/Order:

Click here for Judgment

Click on below button to search similar judgments:

Case Laws Portal

Join WhatsApp Channel

Bare Acts/Legal Contents

Follow for daily updates:

Download Mobile App

Subscribe Daily Email Newsletter

Chapter	Topic	Content
CH-2: General & Definitions
		Short Note on Insolvency and Bankruptcy Code, 2016 (IBC, 2016)
		Dispute and Existence of a Dispute
		Operational Debt and Operational Creditor
		Persons who may initiate Corporate Insolvency Resolution Process(CIRP)
		Analysis provisions of Limitation Act, 1963 with respect to Insolvency and Bankruptcy Code, 2016
CH-3: CIRP
	Topic-1 : CIRP Application & Withdrawal
		Analysis of Minimum amount of default under Section 4 of IBC
		Procedure of filing application by Financial Creditor before NCLT under Section 7 of the IBC
		Procedure of filing application by Operational Creditor before NCLT under Section 8 & 9 of the IBC
		Initiation of CIRP by corporate applicant under Section 10 of the IBC
		Analysis of withdrawal of CIRP proceeding pursuant to settlement under Section 12A of Insolvency and Bankruptcy Code, 2016 (IBC)
	Topic-2 : Declaration of moratorium and public announcement
		Declaration of moratorium and public announcement [Section 13, 14 & 15 of the IBC]
		All about the Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 including judicial pronouncements
	Topic-3 : Appointment and tenure of IRP & RP
		Appointment and tenure of Interim Resolution Professional and Resolution Professional [Section 16, 22 & 27 of the IBC]
		Role of an Interim Resolution Professional and Resolution Professional
	Topic-4 : Management of affairs by IRP
	Topic-5 : Receive and collate all the claims submitted by creditors
	Topic-6 : Committee of creditors and meetings
		Constitution of Committee of Creditors under Section 21 of IBC
		Role of Committee of Creditors & It’s Commercial Wisdom
		Analysis of provisions on Authorised Representative under IBC
		Meetings & Voting of the Committee of Creditors under Section 24 of the IBC
	Topic-7 : RP to conduct the CIRP and manage the operations
		Resolution Professional to conduct the CIRP and manage the operations of the Corporate Debtor
		Insolvency Resolution Process Costs & Essential supplies
		To identify preferential transactions under Sec. 43 of the Code in any CIRP, step to be taken by a Resolution Professional
	Topic-8 : CIRP and Resolution Plan
		Information Memorandum, Expression of Interest, Request for Resolution Plans & Resolution Plans
		Role of the prospective resolution applicant
		Persons not eligible to be Resolution Applicant [Sec. 29A of IBC]
		Submission and approval of the Resolution Plan
		Liability for prior offences under Section 32A of the IBC
CH-4 : Liquidation Process
	Topic-1 : Initiation of Liquidation
	Topic-2 : Appointment & Remuneration of Liquidator
		Appointment & Remuneration of Liquidator under Sec. 34 of IBC
		Powers and duties of Liquidator under Sec. 35, 37 of IBC
	Topic-3: Liquidation Estate
	Topic-4: Public announcement, Preliminary report, Early dissolution and Progress reports under Liquidation
	Topic-5: Claims under Liquidation
	Topic-6: Preferential, undervalued and Extortionate Credit Transactions
		Preferential, Undervalued and Extortionate Credit Transactions under Sec. 43, 44, 45, 46, 47, 48, 49, 50, 51 of IBC
		To identify preferential transactions under Sec. 43 of the Code in any CIRP, step to be taken by a Resolution Professional
	Topic-7: Secured Creditor in Liquidation Proceedings
	Topic-8: Realisation of Assets in Liquidation Proceedings
	Topic-9: Proceeds of Liquidation and Distribution of Proceeds
CH-5 : Personal Guarantor
		Chapter VIII Indemnity and Guarantee of Indian Contract Act, 1872
		All about Personal Guarantor under IBC Part-I
		All about Personal Guarantor under IBC Part-II
		Insolvency Resolution Process Regulation
		Bankruptcy Process for PG Regulation
		IRP Application to AA Rules
		Bankruptcy Process Application to AA Rules

Adjudicating Authority exercising summary jurisdiction cannot determine the claim amount of Operational Creditor and initiate the CIRP – Vertex Cranes & Hoists India Ltd. v. Rotodyne Engineering Services Pvt. Ltd. – NCLT Hyderabad Bench

Related Posts