Back
NCLT Ahmedabad Initiates CIRP Against Mercury Trade Links for Unpaid Rs 2.70 Crore Debt
The has admitted a corporate insolvency petition filed by , rejecting the debtor's plea of a over the quality and timeliness of agricultural supplies. A division bench comprising Judicial Member Mrs. Chitra Hankare and Technical Member Dr. V. G. Venkata Chalapathy delivered the order on , initiating the under .
A Debt of Rs 2.70 Crore: The Supply Chain Dispute
Between April and December 2024, Fettech Commercial Enterprises supplied agricultural produce—including vegetables—to Mercury Trade Links under invoices that allowed a 90-day credit period. Against total supplies worth Rs 4.41 crore, Mercury Trade Links paid only Rs 1.71 crore, leaving an outstanding principal amount of Rs 2.70 crore. The last invoice was raised on , making the debt due on .
After repeated reminders, Fettech issued a in Form 3 and Form 4 on , which was delivered on . Mercury Trade Links neither replied to the notice nor made any payment. The operational creditor then approached the NCLT under , seeking to recover the unpaid .
Debtor’s Defence: Allegations of Inferior Quality and Delayed Supply
Mercury Trade Links contested the petition on multiple grounds. It alleged that there were pre-existing disputes concerning delayed supply and inferior quality of goods. The corporate debtor claimed that credit notes had been issued regarding quality issues and that a reconciliation of accounts would reduce the liability below Rs 2 crore. It further argued that such commercial disputes could not be summarily decided in proceedings under the IBC.
Additionally, the debtor questioned the creditor’s authority to file the petition, pointing to different board resolutions authorizing the and the petition. It also cited financial difficulties due to unseasonal rains and losses in agricultural trade, emphasizing that it was a with no secured financial creditors and that initiating CIRP would adversely affect dependent parties.
In response, Fettech Commercial Enterprises filed an affidavit asserting that the goods were received without any dispute and that the debtor had produced no documentary evidence to support its allegations. The creditor also clarified that the agricultural produce was exempt from GST under .
Court’s Verdict: No Evidence of
The NCLT examined the invoices, , and pleadings and concluded that the goods had been supplied and received, with invoices providing for payment within 90 days. The bench noted that the outstanding debt of Rs 2.70 crore exceeded the statutory threshold prescribed under for initiating CIRP.
Crucially, the tribunal observed that the had been served but Mercury Trade Links neither replied to it nor produced any documentary proof of a . The plea for reconciliation was raised only after the and filing of the insolvency petition, which the court found unacceptable.
The bench recorded: “ ...we are satisfied that there exists an of Rs.2,70,00,000/- and that a has occurred. The debt is due and payable, the has been served to the CD and no genuine has been established by the Corporate Debtor. ”
CIRP Initiated: Manish Bhagat Appointed as IRP
Admitting the petition, the NCLT ordered the commencement of the Corporate Insolvency Resolution Process against Mercury Trade Links. A under was imposed, prohibiting the institution of suits, transfer of assets, and enforcement of security interests. The tribunal appointed Mr. Manish Kumar Bhagat as the and directed him to take charge of the corporate debtor’s assets, manage it as a , and invite claims from creditors.
The operational creditor was directed to pay Rs 2,00,000 in advance to meet the initial CIRP costs. The order also directed the to update the master data of the corporate debtor on the , noting the admission of the insolvency application. The IRP has been empowered to seek police assistance if required and to report progress to the tribunal periodically.
The decision reinforces the NCLT’s stance that a vague allegation of a dispute, unsupported by documentary evidence, cannot defeat a when the existence of debt and is clearly established.
