Insolvency proceedings against public sector undertakings are impermissible when pre-existing disputes regarding debt exist and the undertaking performs sovereign functions.

ORDER

1. The present Petition was filed on 26.04.2023 under section 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC/Code”) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016, by RECAP VENTURES PRIVATE LIMITED (“Operational Creditor/Petitioner”) seeking to initiate Corporate Insolvency Resolution Professional Process (“CIRP”) against ITI LIMITED (hereinafter referred to as “Corporate Debtor/Respondent”) on the ground that the Corporate Debtor has committed a default in payment of an outstanding amount of Rs. 6,15,13,466 (Rupees Six Crore Fifteen Lakhs Thirteen Thousand Four Hundred Sixty-Six Only) between 20.03.2019 and 11.09.2019 including interest as per MSMED Act and award passed by the MSME Facilitation Council on 30.11.2022. The Record of Default in Form D issued by NeSL is also filed with the Petition. An Affidavit U/s 9(3) (b) regarding there being no pre-existing Dispute and Demand Notice under Section 8 (1)/Form 3 are also submitted.

2. Relevant brief facts of the case are as follows:

a) The Petitioner/Operational Creditor Recap Ventures Private Limited, is a company incorporated under the Companies Act, 2013, having Authorised capital of Rs.10,00,000 & Paid-Up Capital of Rs. 10,00,000 and registered under the MSMED Act, 2006. It is engaged in the business of manufacturing Centralised Control & Monitoring System (CCMS) boxes and related software.

b) The Respondent, ITI LIMITED is a Union Government-owned company incorporated under the Companies Act, 1913, having Authorised capital of Rs.35,00,00,00,000 & Paid-Up Capital of Rs. 9,60,88,69,000 and its registered office at ITI Bhavan, Dooravaninagar, Bangalore – 560016 and is a public sector undertaking in the telecommunications technology segment established as a departmental factory in 1948. The company has manufacturing facilities in Bengaluru, Naini, Rae Bareli, Mankapur and Palakkad along with a Research & Development Centre in Bengaluru and 25 Marketing, Services & Projects (MSP) Centers in India, which are located at Bengaluru, Bhubaneshwar, Chennai, Hyderabad, Kolkata, Lucknow, Mumbai, New Delhi and 17 other places spread across the country. Moreover, besides offering the telecom turnkey solutions and customized support, ITI has a dedicated Network System Unit for executing turnkey projects for installation and commissioning of telecommunication networks. The company aims to upgrade and invest in the technology, through the acquisition of technology from strategic partners with a specific focus on high growth industry segments. The company operates a Data Centre at Bengaluru and currently expanding the same to offer cloud-based services to government institutions/departments, banks etc.

c) On 13.08.2018, ITI Limited (“Corporate Debtor”) was awarded a contract for implementing smart energy controls for street lighting systems across all gram panchayats in Andhra Pradesh by Energy Efficiency Services Limited (EESL), a PSU under the Ministry of Power, for the Andhra Pradesh Government’s smart energy project. Subsequently, one of its consortium partners, M/s SPowerZ Solutions Pvt. Ltd. requested the Corporate Debtor to the engage M/s. Recap Ventures Pvt. Ltd. as a technology partner and supplier of CCMS boxes to the Corporate Debtor as per specifications stated in the Tender document floated by Energy Efficiency Services Limited.

d) On 16.02.2019 the Corporate Debtor, issued a Purchase Order, to the Operational Creditor for the supply, installation, commissioning, and maintenance of 22,500 Single Phase CCMS boxes for a total amount of Rs.59,64,72,300/- (Rupees Fifty-Nine Crore Sixty-Four Lakhs Seventy- Two Thousand and Three Hundred Only).