New Delhi, The National Company Law Appellate Tribunal (NCLAT) has set aside an NCLT order rejecting Belgotex India‘s insolvency plea against Puneet India on the ground of a pre-existing dispute.
Allowing the Belgotex India appeal, a two-member NCLAT bench has remanded the matter back to the New Delhi bench of NCLT, directing it to pass a fresh order after hearing all the parties.
The appellate tribunal said a “patent illegality has been committed” by the National Company Law Tribunal (NCLT) in computing the date of default as well in computation of the amount falling under the period as provided under Section 10A of the Code.
“We are of the considered view that the Ld. Adjudicating Authority (NCLT) has committed manifest illegality in rejecting the application moved by the appellant/applicant (Belgotex) under Section 9 of the Code, and therefore, the impugned judgment may not withstand the test of law and is hereby set aside. Consequently, the appeal is allowed,” said NCLAT.
“The matter is remanded back to Adjudicating Authority to pass an order a fresh after providing an opportunity of being heard to the parties,” said the bench comprising Justice Mohd Faiz Alam Khan and Naresh Salecha, in its order.
Belgotex is a leading manufacturer of carpet and vinyl flooring. It is part of Belgotex International Group, which is Africa’s leading carpet and artificial grass manufacturer.
It had entered into an agreement on October 15, 2019, with its corporate debtor Puneet India, appointing it as the authorised dealer/distributor on an exclusive basis in the Delhi-NCR region for three years.
As per the terms of the agreement, Puneet India was required to clear the invoices of Belgotex within the credit period as mentioned in the purchase order, not exceeding 40 days from the date of dispatch of goods made from the Indian warehouse and within 90 days in case of dispatch of goods being made post-import of the products from outside India.
The case of the appellant is that several invoices were raised by it and out of the total outstanding amount of Rs 2.41 crore (Rs 2,41,30,811), Puneet India made a payment of only Rs 95.71 lakh (Rs 95,71,865), thus a sum of Rs 1.45 crore (Rs 1,45,58,946) remained due. It had issued four cheques to the operational creditor, however, all these cheques were dishonoured.
As the payment was not made, Belgotex India served a notice in May 2020 and filed an insolvency plea under Section 9 as an operational creditor before NCLT.
However, NCLT dismissed its plea, which was challenged before NCLAT by Belgotex India. It contended that NCLT has passed the order without appreciating the facts, and the record and its contention were not discussed in the right perspective.
Section 9 petition was dismissed by NCLT on the ground that an amount of Rs. 53,86,399/- with regard to various invoices falls under the exclusion period of Section 10A of the Code and also that there is a pre-existing dispute between the parties and further there is an inconsistency in the amount of debt as stated in the notice under Section 8 of the Code.
However, the appellate tribunal NCLAT did not agree with the findings of NCLT and set aside the order.
