Merely Sending Of Summons By DLSA Can’t Be Considered A Proceeding: NCLT New Delhi

The National Company Law Tribunal, New Delhi Bench, comprising Shri P.S.N Prasad, (Judicial Member) and Dr. Binod Kumar Sinha (Technical Member), while adjudicating an application under Section 9 of Insolvency and Bankruptcy Code, 2016 (“IBC, 2016”) in Supernova Tech Craft Engineering Overseas Limited vs Valtrom Technologies Private Limited has held that merely sending summons by District Legal Services Authority cannot be considered a proceeding and it further doesn’t fall within the ambit of “suit” or “arbitration proceedings” under Section 8(2) of IBC, 2016 Background Facts M/s Supernova Tech Craft Engineering Overseas Limited (“Operational Creditor”) supplied various varieties of LED lights to M/s Valtrom Technologies Private Limited (“Corporate Debtor”) vide different invoices raised against purchase orders placed pursuant to a business agreement in March 2018. However, the Corporate Debtor stopped payments after some time due to which the Operational Creditor stopped supplying LED lights after October 2018. Legal Notices were sent by the Operational Creditor for clearing of outstanding amount. Some cheques were issued by the Corporate Debtor against the pending dues but they got dishonored upon presentation. This constrained the Operational Creditor to send a Demand Notice dated 03.09.2019 for payment of a total sum of Rs. 34,18,857. It was contended by the Corporate Debtor that the Operational Creditor has raised a dispute pertaining to part amount claimed in the petition vide a Legal Notice 13.09.2018. The Corporate Debtor replied to the aforesaid Legal Notice vide a Reply dated 03.10.2018 and raised a dispute regarding the inferior quality of the goods supplied. It was submitted that the Operational Creditor had assured the Corporate Debtor to take back goods of inferior quality and the material currently with the Corporate Debtor is the inferior quality material which is supposed to be taken back by the Operational Creditor. It was further submitted that the Operational Creditor has already initiated recovery proceedings and the Corporate Debtor had received 2 letters from New Delhi District Legal Services Authority summoning the Corporate Debtor to appear before it and make submissions. Findings of the Tribunal It was observed by the Tribunal that the Corporate Debtor had not furnished any evidence like Emails or any other mode of communication in support of the contention that the goods were of defective quality. Further no document had been submitted vide which the Corporate Debtor had asked the Operational Creditor to take back the inferior quality goods and this request was refused by the Operational Creditor. It was further observed that the 2 letters dated 27.07.2019 and 03.08.2019 by the New Delhi District Legal Services Authority are merely summons to the Corporate Debtor to appear and make submissions. However, no further step has been undertaken by the New Delhi District Legal Services Authority. Mere sending of a Legal Notice by the New Delhi District Legal Services Authority cannot be considered as a proceeding. It further doesn’t fall within the category of suit or arbitration proceedings as mentioned under Section 8(2) of IBC, 2016. With the aforesaid observations, the Tribunal admitted the petition. Case: Supernova Tech Craft Engineering Overseas Limited vs Valtrom Technologies Private Limited Case No. COMPANY PETITION IB (IBC)/334(ND)/2020 Counsels for the Applicants Adv. Amrita Mishra and Adv. Vishal Sharma Counsel for the Respondent Click Here To Read/Download Order

Merely Sending Of Summons By DLSA Can’t Be Considered A Proceeding: NCLT New Delhi

Udai Yashvir Singh

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