NCLAT Delhi Upholds Dismissal Of Section 9 Petition In Absence Of Cogent Evidence To Prove Supply Of Goods

Background Facts

M/s Mahadev Trading Company ("Operational Creditor/Appellant") had supplied chemical substances such as caustic soda flakes, acid slurry, phosphoric acid etc. to M/s Supreet Chemicals Pvt. Ltd. ("Corporate Debtor/Respondent"). In respect of the supplied goods the Operational Creditor had raised invoices amounting to Rs. 2,28,72,166/-. The Corporate Debtor allegedly defaulted in payments.

The Operational Creditor had filed a petition under filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), seeking to initiate the Corporate Insolvency Resolution Process ("CIRP") against the Corporate Debtor over a default of Rs. 2,28,72,166/- with interest. The Corporate Debtor had submitted that the invoices raised by the Operational Creditor were bogus and no supporting documents such as weighing slip, challan and purchase orders were placed on record to substantiate its claim.

Further, before the Adjudicating Authority the Corporate Debtor had offered to pay the amount claimed by the Operational Creditor if the latter proves its claim with documents. The Operational Creditor had sought one month time from the Adjudicating Authority to produce documents but to no avail. Therefore, Adjudicating Authority vide an order dated 23.03.2021 had dismissed the petition on ground of lack of evidence of having supplied the alleged goods. It was observed that all the alleged invoices and transactions were not for supply but for other purposes.

Decision Of NCLAT

The Bench observed that the Adjudicating Authority had correctly dismissed the petition on the ground that the Operational Creditor had failed to lead the evidence much less cogent to prove supply of goods.

It was observed that, "We have heard Counsel for the parties and after examining the record are of the considered opinion that there is no error in the impugned order because the application filed by the Appellant was dismissed by the Adjudicating Authority on the ground that the Appellant has failed to lead the evidence much less cogent to prove supply of goods and when an opportunity was given to the Appellant before this Tribunal and the case was adjourned for a period of one month on the offer made by the Respondent that in case the Appellant produces before it documents even now to prove its case then he shall make the payment. However, the Appellant has miserably failed to produce the documents before the Respondent even within a period of one month and that too on a candid statement made by the Respondent that it would honour its liability in case the evidence is produced before it."

The Bench opined that in view of absence of any evidence to prove that goods were supplied to the Corporate Debtor, the appeal lacked merits and was accordingly dismissed.

Case Title: M/s Mahadev Trading Company v M/s Supreet Chemicals Pvt. Ltd.

Case No.: Company Appeal (AT) (Ins.) No. 149 of 2022

Counsel For Appellant: Mr. Aditya Shukla, Proxy Counsel for Mr. Atul Sharma, Adv.

Counsel For Respondent: Mr. Narendra Jain, Adv.

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