NCLT New Delhi Rejects Section 9 Application For Initiation Of CIRP Against G.S.P. Power Systems Private Limited

The National Company Law Tribunal (NCLT), New Delhi bench comprising Shri Rahul Bhatnagar (Technical Member) and Shri P.S.N. Prasad (Judicial Member), has rejected an application under section 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC, 2016”) seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against G.S.P. Power Systems Private Limited.

Mahindra & Mahindra was a vendor providing support services to Reliance Jio in setting up Jio’s infrastructure. GSP Power Systems Pvt. Ltd (“Corporate Debtor”) was a sub-vendor of Mahindra & Mahindra and its only role was to disburse the payments. Connecting People of India (“Operational Creditor”) was engaged by Mahindra & Mahindra in April 2018 for executing Jio’s infrastructure services. Connecting People of India had to execute the project as instructed by Mahindra. Thereafter, it would have to raise invoices in the name of an entity mentioned by Mahindra and based on such invoice Mahindra would ask its sub-vendor to issue Purchase Order.

Disputes arose when GSP Power Systems stopped making payments alleging that Mahindra & Mahindra were not paying them adequately. Thereafter, the COVID-19 Pandemic took place and Connecting People of India raised invoices for the completed work in October 2020. On failure to receive the payments, Connecting People of India issued a Demand Notice in December 2020. Although the GSP Power Systems replied to the Demand Notice, it failed to appear before the Tribunal despite several notices and hence was declared ex-parte.

The Tribunal observed that the amount of default was Rs. 4,15,08,378.56 and the date of defaults were stated to be 05.11.2020 and 25.11.2020. Since the dates of default were after 25^th March 2020, the petition was barred by Section 10A of IBC, 2016. Thus the Tribunal dismissed the application vide an ex-parte order.

Case Name

Connecting People of India vs G.S.P. Power Systems Private Limited.

Case No.

COMPANY PETITION IB (IBC)/ 89(ND)/2022

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