M/S Shah Paper Mills Ltd vs M/S Shree Rama Newsprint & Papers Ltd.
CP(IB) 251 of 2019 with I.A. /123(AHM)2023
Coram: Hon’ble Member Mr. Shammi Khan (Judicial Member) & Hon’ble Member Mr. Kaushalendra Kumar Singh (Technical Member)
Forum: National Company Law Tribunal Ahmedabad Division Bench
Date of Decision: October 18, 2023
Conclusion
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Facts & Background:

  • M/s. Shah Paper Mills Ltd., the Operational Creditor, was the Applicant.
  • M/s. Shree Rama Newsprint & Papers Ltd., the Corporate Debtor, was the Respondent.
  • M/s. Shah Paper Mills Ltd. filed an application under Section 9 of the Insolvency and Bankruptcy Code (IBC) against M/s. Shree Rama Newsprint & Papers Ltd. for the non-payment of ₹55,23,253/- along with 18% interest.
  • The Adjudicating Authority NCLT Ahmedabad rejected the application on 20.07.2022, citing a serious dispute regarding the actual amount payable. However, the NCLAT set aside the rejection on 21.12.2022 and directed the application to be admitted within 1 month and proceed further in accordance with the law.
  • During the hearing before the Adjudicating Authority NCLT, the Corporate Debtor expressed readiness to pay the entire amount claimed. Therefore, the matter was adjourned.
  • On 03.01.2023, the Respondent issued two demand drafts of ₹55,23,253/- which the Applicant refused. Subsequently, on 16.01.2023, the Respondent transferred the sum via RTGS in two tranches; however, the Applicant returned the amount.
  • The Corporate Debtor filed an application to record the subsequent events and seek dismissal of the insolvency petition on the ground that the entire payment was made but returned by the Operational Creditor.
  • The Hon’ble NCLAT permitted the Adjudicating Authority to consider subsequent events following its earlier order dated 21.12.2022.
  • The Adjudicating Authority NCLT reopened CP(IB) No. 251 of 2019 for a fresh hearing and directed the matter to be placed before the Regular Bench on 06.03.2023.
  • The Operational Creditor challenged the order dated 15.02.2023, and the Hon’ble NCLAT, vide its order dated 12.04.2023, directed that the scope of the said order be confined to I.A. No. 123 of 2023 with no fresh hearing required in CP(IB) No. 251 of 2019.
  • Hence, this Adjudicating authority, NCLAT, proceeds to consider I.A. No. 123 of 2023.

Main Issue:

  1. Whether the application filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016 was justified?
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