NCLT Mumbai Admits Bagalkot Cement And Industries Ltd. Into Insolvency

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Mrs. Lakshmi Gurung (Judicial Member) and Shri Charanjeet Singh Gulati (Technical Member), while adjudicating a petition filed in Vyshali Energy Private Limited v M/s. Bagalkot Cement and Industries Ltd., has initiated Corporate Insolvency Resolution Process (“CIRP”) against M/s. Bagalkot Cement and Industries Ltd., a Kanoria Group company. Mr. Atul Gala has been appointed as the Interim Resolution Professional (“IRP”). Background Facts M/s. Bagalkot Cement and Industries Ltd. (“Corporate Debtor”) belongs to the Kanoria Group and is engaged in the business of cement production. The Corporate Debtor had acquired the cement division of Bagalkot Udyog Ltd., after the latter was declared sick company. Vyshali Energy Private Limited (“Operational Creditor”) and the Corporate Debtor entered into an 'Energy Purchase Agreement' dated 10.04.2017 (“Agreement”) for the sale and supply of energy by the Operational Creditor to the Corporate Debtor. The Corporate Debtor failed to make payments against the invoices raised by the Operational Creditor. Consequently, the Operational Creditor addressed a Demand Notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) demanding a sum of Rs. 7,42,50,734/-. The Operational Creditor filed a petition under Section 9 of IBC, seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor. NCLT Verdict The Bench noted that the Corporate Debtor had acknowledged to pay old dues to the Operational Creditor in the correspondences between them. Post receipt of Demand Notice, the Corporate Debtor had initiated Arbitral Proceedings by sending Notice invoking arbitration on 17.03.2022. Therefore, such subsequent arbitral proceedings would not come under the ambit of pre-existing disputes. “In light of the above correspondence from Corporate Debtor it is clear that Corporate Debtor has acknowledged to pay old dues. Further, it is noticed that Arbitration Proceeding were initiated on 17.03.2022 by way of issue of Arbitration Invocation Notice by the Corporate Debtor whereas the Demand Notice under Section 8 of the Code was issued by the Operational Creditor on 02.03.2022. Therefore, the Corporate Debtor only invoked the arbitration clause or raised dispute between the parties after the date of issuance of Demand Notice dated 02.03.2022 under Section 8 of the Code. Therefore, the Arbitration proceeding so initiated or pending cannot be termed as pre-existing dispute in terms of ‘clause d’ of subsection 5 of Section 9 read with ‘clause a’ of subsection 2 of Section 8 of the Code.” The Bench further noted that Operational Creditor has been raising the invoices from 2017 onwards and has received regular payments against invoices for last 3 years without any dispute. The Corporate Debtor raised dispute for the first time in its response to the Demand Notice. It was observed that the minimum threshold limit of Rs. 1 Crore under IBC is met and debt has been proved. Accordingly, the Bench admitted the petition and initiated CIRP against the Corporate Debtor. Mr. Atul Gala has been appointed as the Interim Resolution Professional. Case Title: Vyshali Energy Private Limited v M/s. Bagalkot Cement and Industries Ltd. Case No.: C.P.(IB)-724(MB)/2022 Counsel For Applicant: Ms. Rohini Menon, Advocate Counsel for Respondent: PCS Nithish Bangera Click Here To Read/Download Order

NCLT Mumbai Admits Bagalkot Cement And Industries Ltd. Into Insolvency

Pallavi Mishra

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

NCLT Mumbai Admits Bagalkot Cement And Industries Ltd. Into Insolvency

Pallavi Mishra

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

This is a premium content
Available exclusively to
Our subscribers