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2025 Supreme(Online)(NCLAT) 400
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Hon'ble Justice Rakesh Kumar Jain (Member(Judicial)) , Hon'ble Justice Mohammad Faiz Alam Khan (Member(Judicial)) , Hon'ble Mr. Naresh Salecha (Member (Technical)) ,
Leena Salot – Appellant
Versus
RIDHAM SYNTHETICS PRIVATE LIMITED – Respondent
375/ND/2024 COMPANY APPEAL(AT)(INS)
A pre-existing dispute must be substantiated with clear evidence by the Corporate Debtor to dismiss a Section 9 application for CIRP when undisputed debt exceeds the statutory threshold.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 61(1) and Section 9 - Corporate Insolvency Resolution Process (CIRP) - Appeal against dismissal of application for initiation of CIRP - Adjudicating Authority held that there exists a pre-existing dispute concerning invoice amounts; Appellant claimed outstanding debt of Rs. 1,36,06,646.70 - Debtor denied liability citing inferior quality goods and non-delivery of materials - Court found that substantial undisputed debt above statutory threshold existed despite disputed invoices and ordered restoration of application. (Paras 1, 5, 7, 38, 65)
(B) Pre-existing Dispute - Standards for relief - The existence of genuine disputes must be established by the Corporate Debtor; mere denial is insufficient - The Appellate Tribunal noted that vague objections by the Debtor do not substantiate claims of pre-existing disputes when substantial debts are acknowledged. (Paras 54, 62)
(C) Acknowledgment of Debt - Documents relating to the acknowledgment of operational debt, including emails and GST filings, support Appellant’s claim. (Paras 55, 63)
| Table of Content |
|---|
| 1. introduction of the case and parties involved. (Para 1 , 2) |
| 2. details of claims and debts between parties. (Para 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10) |
| 3. notice issuance and debtor's response. (Para 11 , 12) |
| 4. arguments regarding the validity of the debt. (Para 13 , 14 , 15 , 16 , 17 , 18 , 19) |
| 5. (Para 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54 , 55 , 56 , 57 , 58 , 59 , 60 , 61 , 62 , 63 , 64 , 65 , 66) |
JUDGEMENT
(03.07.2025)
NARESH SALECHA, MEMBER (TECHNICAL)
1. The present This present Appeal has been filed by the Appellant under Section 61(1) of the Insolvency and Bankruptcy Code, 2016 (“Code”) against the Impugned Order dated 22.12.2023 passed by the National Company Law Tribunal, Mumbai Bench (“Adjudicating Authority”) in C.P. (I.B) No. 534/MB/2023.
2. Ridham Synthetics Private Limited, who is the Corporate Debtor, is the Respondent herein.
3. The Appellant/Operational Creditor submitted that a Petition under Section 9 of the Code, was filed for initiation of the Corporate Insolvency Resolution Process (“CIRP”) against the Respondent, on account of the Respondent’s failure to pay the outstanding operational debt amounting to Rs. 1,36,06,646.70.
4. The Appellant submitted that he operates under the Proprietorship Firm “Riddhim Textiles” and is engaged in the trade and supply of diverse textile goods, constituting the core of its commercial operations and the Respondent has been engaged in the business of trading in textiles, including cotton fabric dyeing, polyester fabric dyeing services, and viscose fabric dyeing services.
5. The Appellant submitted that the Respondent had approached the Appellant around the year 2015 with a proposal to purchase various textile materials and the Appellant and the Respondent Debtor mutually agreed to enter into a business relationship for the supply and purchase of such textile goods. The Appellant submitted that, pursuant to the business arrangement, the Respondent placed various purchase orders with the Appellant from the financial year 2015- 16 onwards and made ad hoc payments against the invoices raised. In compliance with the said orders, the Appellant duly sold and delivered the textile goods, which were received by the Respondent without any objection or dispute regarding the quality, quantity, or merchantability of the goods and accordingly, the Appellant raised the requisite tax invoices in respect of the goods supplied.
6. The Appellant submitted that, upon receipt of the goods duly supplied by the Appellant, the Respondent verified the materials and, in the event of any discrepancy in quantity or rate, raised debit notes, which were duly accounted for by the Appellant in its books of accounts. Subsequent to such adjustments, the Respondent did not raise any further dispute regarding the goods and proceeded to utilize the said goods for its business purposes. Furthermore, the Respondent availed the benefit of Input Tax Credit under the CGST Act, 2017, in respect of the GST paid by the Appellant on the supplied goods. The Respondent also made ad hoc payments towards the invoices raised, thereby clearly indicating its satisfaction with the goods supplied and unequivocally acknowledging its liability to pay the outstanding amounts under the said invoices.
7. The Appellant submitted that no notice of dispute, either with regard to the quality of the products or the invoice amounts, was raised by the Respondent within the stipulated period as per the invoices or at any subsequent time. No valid or specific dispute has ever been raised by the Respondent concerning any particular product or invoice.
8. The Appellant submitted that, after duly adjusting all ad hoc payments made by the Respondent, as well as accounting for all debit notes raised by the Respondent and debit notes pertaining to transportation charges raised by the Appellant, the total outstan
