NCLT Judgement on Section 3(6), 3(11), 3(12), 4, 8, 9, 9(3) (b), 9(3)(c), 9(5), 14(1), 14(2), 14(3), 14(4) of the Insolvency And Bankruptcy Code, 2016

NAME		MOBILE NO.	E-MAIL I’D
RANJEET KUMAR		8383098478, 9667769795	rk@courtkutchehry.com
JAI THAKUR		8130703334, 9355723300	jai.thakur@courtkutchehry.com
RAJEEV RANJAN		9334553249	rajiv.ranjan@courtkutchehry.com
ASHOK MISHRA		9718327746	sales@courtkutchehry.com
RAVI KUMAR			ravi.singh@courtkutchehry.com

Af Consult India Pvt. Ltd Vs. Sikkim Hydro Venture Limited, (2020) 07 NCLT CK 0031

NCLT allowed the application filed by the applicant, under Section 9 of the Insolvency and Bankruptcy Code, 2016 (for brevity 'code') read with Rules 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority), 2016 (for brevity 'the Rules') with a prayer to initiate the Corporate Insolvency process against the Corporate Debtor. While allowing the application NCLT held that it is clearly established that the default in payment of the Operational debt has occurred by the corporate debtor further there also exist a pre-existing dispute with regards the payments of invoices on grounds of substandard quality of service and improper execution of the terms of the agreement. The Hon'ble Supreme Court in "Innovative Industries Ltd. Vs. ICICI Bank and Ors. - (2017) 08 SC CK 0137" observed and held as follows:- "The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins. Default is defined in Section 3(12) in very wide terms as meaning non-payment of a debt once it becomes due and payable, which includes non-payment of even part thereof or an installment amount. For the meaning of "debt", we have to go to Section 3(11), which in turn tells us that a debt means a liability of obligation in respect of a "claim " and for the meaning of "claim ", we have to go back to Section 3(6) which defines "claim" to mean a right to payment even if it is disputed. The Code gets triggered the moment default is of rupees one lakh or more (Section 4). The corporate insolvency resolution process may be triggered by the corporate debtor itself or a financial creditor or operational creditor. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under subsection (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be. Hence, the present case is fit to be admitted as the dispute raised is with regards substandard quality and improper execution of the agreement. However, the corporate debtor has not disputed the operational debt due and payable, which is more than 1 Lac in the present case.