Petitioner Fails To Prove Existence Of Debt In Section 7 Petition, NCLT Ahmedabad Imposes A Cost Of Rs. 2 Lakhs

The National Company Law Tribunal (NCLT), Ahmedabad Bench, comprising of Mrs. Chitra Hankare (Judicial Member) and Dr. Velamur G Venkata Chalapathy (Technical Member), while adjudicating a petition filed in G.L.E. India Solar Private Limited v Bright Solar Limited, has imposed a cost of Rs. 2 Lakhs on a Petitioner, who failed to prove existence of debt for the purpose of initiating CIRP under Section 7 of IBC against the Respondent. Background Facts G.L.E. India Solar Pvt. Ltd. (“Financial Creditor”) contended that it’s parent company had entered into a Business Agreement with Bright Solar Limited (“Corporate Debtor”), which was called off by the Corporate Debtor while invoking force majeure clause. Further, a loan agreement was also executed between the Parties, whereby the Financial Creditor had provided loan facility to the Corporate Debtor. Thereafter, on 20.09.2021 a Credit Transfer Agreement for this loan was executed by the parent company namely M/s Ningbo Green-Light Energy Group Co. Ltd. (“Ningbo”) for Rs. 2,80,65,305/-, which was given as loan to the Corporate Debtor, and the debt was assigned by Ningbo to the Financial Creditor. The Corporate Debtor allegedly failed to repay the loan. The Financial Creditor filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”), seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor for an alleged debt of Rs. 4,02,37,377. NCLT Verdict The Bench noted that the alleged business agreement was not placed on record by the Financial Creditor. It was concluded that the Corporate Debtor had not entered into any agreement or loan agreement with the Financial Creditor. Further, the agreement entered into between Ningbo and the Corporate Debtor was for development of Solar PV rooftop system alone. “There is nothing on record to show that M/s. Ningbo is the financial creditor. There was dispute regarding payment made by M/s. Ningbo and respondent debtor so the agreement was also cancelled during covid projection. Moreover, when the MoU with M/s. Ningbo is terminated by the corporate debtor, it cannot transfer right to recover loan by the applicant company. The respondent also submitted that he was not having knowledge of credit transfer agreement dated 20.09.2021 and was not a party to the same. Therefore, as per Section 130(1) of the Transfer of Properties Act, 1882 it cannot be validly transferred.” It was held that the documents on record do not show disbursal of loan amount to the Corporate Debtor. Since the existence of debt could not be proved by the Financial Creditor, the Bench dismissed the petition for not being maintainable. Additionally, a cost of Rs. 2 Lakhs has been imposed upon the Financial Creditor. “There also appears dispute regarding payment of amount, if any, by the applicant or any other company. The applicant could not furnish record of NeCL default recorded with the Information Utility or any other record to show default. No existence of default is ascertained from the evidence on record. In such circumstances, the application deserves to be dismissed and the application is not maintainable. The application is filed without any concrete evidence hence, it is necessary to impose cost upon the applicant…The application is dismissed with cost of Rs. 2 lacs to be paid through online payment in www.mca.gov.in under miscellaneous fee.” The petition has been dismissed. Case Title: G.L.E. India Solar Private Limited v Bright Solar Limited Case No.: CP(IB)/66/NCLT/AHM/2022 Counsel For Petitioner: Mr. Pranav Thakkar, Advocate Counsel for Respondent: Mr. Vishal Dave, Advocate a.w Mr. Nipun Singhvi, Adv. Click Here To Read/Download Order

Petitioner Fails To Prove Existence Of Debt In Section 7 Petition, NCLT Ahmedabad Imposes A Cost Of Rs. 2 Lakhs

Pallavi Mishra

Tags