Debts Arising From Different Work Orders Can Be Clubbed To Satisfy The Minimum Threshold Under IBC: NCLT Mumbai Reiterates

The National Company Law Tribunal, Mumbai Bench, comprising Shri Kishore Vemulapalli (Judicial Member) and Shri Prabhat Kumar (Technical Member), while adjudicating an application under Section 9 of Insolvency and Bankruptcy Code, 2016 (“IBC”) in Wam India Private Limited Vs SN Engineering Services Pvt. Ltd. has held that debts arising from different work order(s) can be clubbed to satisfy the minimum threshold under IBC. Background Facts SN Engineering Services Pvt. Ltd (“Corporate Debtor”) issued purchase orders to Wam India Private Limited (“Operational Creditor”) which dispatched goods on the basis of the purchase orders along with invoices. The Corporate Debtor did not raise any objection with respect to the services and invoices provided by the Operational Creditor and made time to time part-payments. The invoices stipulated that they would become payable within a period of 90 days and in case of default, interest @ 18% p.a. was to be attracted on the pending invoices and/or two outstanding invoices. Email correspondences were exchanged between the parties wherein the Operational Creditor regularly followed up on the outstanding debt and the Corporate Debtor kept assuring that the debt would be cleared at the earliest. A meeting between the representatives of the parties was held on 28.11.2018 to discuss the outstanding amount of Rs.1,35,73,702/-at that time. Despite of several requests, the Corporate Debtor failed to clear the outstanding debt and resultantly, the Operational Creditor issued a Demand Notice on 03.03.2020. No reply to the Demand Notice was given by the Corporate Debtor. Nevertheless, the Corporate Debtor reached out to the Operational Creditor to discuss the matter after receiving the notice. In the meeting held on 16.03.2020, it was discussed that the Corporate Debtor would clear the entire outstanding debt based on a payment schedule agreed between the parties. Despite the meeting, the Corporate Debtor failed to clear the outstanding debt. Hence the Operational Creditor filed the present petition claiming an amount of Rs.1,43,33,765 as on 30.06.2020 comprising of a principal outstanding amount of Rs. 1,08,04,672/- and Rs. 35,29,093/- as aggregate interest. On the Contrary, the Corporate Debtor contended that there were issues regarding the quality of material supplied, huge delays in the clearance of materials and frequent stoppages of supply of goods. Observations of the Tribunal The Tribunal observed that there is no dispute regarding the debt and there is an admission of liability in the meetings, correspondences and part-payments by the Corporate Debtor. The Corporate Debtor had submitted that it has paid a sum of Rs 62,80,326 since the meeting held on 28.11.2018, however, the books of account with the Operational Creditor showed that a sum of Rs. 1,30,30,264.76 was due from the Corporate Debtor on the date of the meeting and a sum of Rs. 1,08,04,673.76 is shown as receivable in the ledger account as on 15.12.2021. Thus the contention that Rs 62,80,326 has been repaid since the meeting is incorrect. The Tribunal further reiterated that debts arising from different work order(s) can be clubbed to satisfy the minimum threshold. Reliance was placed on the NCLT judgment of M/s. A2 Interiors Products Pvt. Ltd. Vs. M/s. Ahluwalia Contracts (India) Ltd. (2021) SCC online NCLT 438, wherein it was held that a single application can be filed by the Operational Creditor for various claims arising out of separate work orders. With the aforesaid observations, the Tribunal admitted the petition and initiated Corporate Insolvency Resolution Process against the Corporate Debtor. Case:Wam India Private Limited Vs SN Engineering Services Pvt. Ltd. Case No. CP (IB) No.1152/MB-IV/2020 Counsels for the Applicants: Adv. Nausher Kohli a/w Mr. Rushil Mathur, Counsel for the Respondent :Adv. Viral Vora ClickHere To Read/Download Order

Debts Arising From Different Work Orders Can Be Clubbed To Satisfy The Minimum Threshold Under IBC: NCLT Mumbai Reiterates

Udai Yashvir Singh

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