NCLT Delhi: Section 9 Application Can’t Be Allowed If Corporate Debtor Is Inactive, Due To Default In Filing Statutory Returns

The National Company Law Tribunal (“NCLT”), Delhi Bench, comprising of Shri Bachu Venkat Balaram Das (Judicial Member) and Shri Atul Chaturvedi (Technical Member) has dismissed an application and held that any application under section 9 of Insolvency and Bankruptcy Code, 2016 (“IBC”) for initiation of Corporate Insolvency Resolution Process (“CIRP”) cannot be allowed if the Corporate Debtor is inactive, due to default in filing of statutory return for the last two years as per the Ministry of Corporate Affairs (“MCA”) portal. Background Facts United Food Private Limited (“Corporate Debtor/Respondent”) is a Private Company incorporated on 06.12.2010 under the Companies Act, 1956 with the Registrar of Companies, NCT of Delhi and Haryana. The Respondent made a default in payment of the debt to R.J. Industries (“Operational Creditor/Applicant”). The Respondent had issued certain cheques in favour of the Applicant, which have been dishonoured. On 10.08.2018, the last payment was received by the Applicant, thereafter no payment has been received from the Respondent. The total debt amounts to Rs. 3.33 Crores along with interest @ 18% per annum. On 30.04.2019 the Applicant issued a demand notice as per Section 8 of IBC. Following this, the Applicant filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) for initiating the CIRP on 16.08.2021. The NCLT dismissed the application on the grounds of inadvertent typographical error in the demand notice. The Applicant then filed an appeal to the National Company Law Appellate Tribunal (“NCLAT”). NCLAT then instructed the Applicant to file a fresh application in front of NCLT. On 20.10.2021, the Applicant issued a fresh demand notice via e-mail dated 30.10.2021 but failed to do so via speed post service. The demand notice received no reply from the Respondent, nor any dispute was raised. On 26.02.2022, the Applicant filed a fresh application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) for initiation of CIRP. NCLT Verdict. The NCLT dismissed the application and held that initiating CIRP against the Respondent is not in the interest of its stakeholders, because the Respondent has been inactive due to default in the filing of statutory returns for the last two years i.e., from 2016-2017 to 2017-2018 as per MCA portal. “It seems that there are no business opportunities left for the Corporate Debtor and the prospect of future business also seems bleak thus there seems no possibility of reviving the Company, if the Corporate Debtor is put in the CIRP for its revival/resolution. Further, this Adjudicating Authority is of the view that initiating CIRP against the Corporate Debtor is not in the interest of its stakeholders, because the Corporate Debtor is inactive. Therefore, without going into the merits of this case, as required under Section 9 of the Code, this Adjudicating Authority dismisses this application, as there is hardly any possibility of any Resolution plan likely to be received if the CIRP is initiated against the Corporate Debtor” Case Title: R.J. Industries vs United Food Private Limited. Case No.: IB-643(ND)/2022 Counsel For the Applicant : Mr. Rahul Singh, Adv. Counsel For the Respondent : ex-parte Click Here To Read/Download Order

NCLT Delhi: Section 9 Application Can’t Be Allowed If Corporate Debtor Is Inactive, Due To Default In Filing Statutory Returns

Pragya Kriti

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