New Delhi, April 1 The National Company Law Appellate Tribunal (NCLAT) has overturned an order by the National Company Law Tribunal (NCLT) rejecting Belgotex India's insolvency plea against Puneet India, citing a pre-existing dispute.
Allowing Belgotex India's appeal, a two-member NCLAT bench has directed the New Delhi bench of the NCLT to re-examine the matter and pass a fresh order after hearing all parties.
The appellate tribunal stated that the National Company Law Tribunal (NCLT) had committed a "patent illegality" in computing the date of default and in calculating the amount falling under Section 10A of the Code.
"We are of the considered view that the Adjudicating Authority (NCLT) has committed a 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 the Adjudicating Authority to pass an order after providing an opportunity to be 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 carpets and vinyl flooring. It is part of Belgotex International Group, which is the leading carpet and artificial grass manufacturer in Africa.
It had entered into an agreement on October 15, 2019, with its corporate debtor Puneet India, appointing it as the authorized dealer/distributor on an exclusive basis in the Delhi-NCR region for three years.
According to 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 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 appellant's case is that several invoices were raised 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), resulting in a remaining due of Rs 1.45 crore (Rs 1,45,58,946). It had issued four cheques to the operational creditor, but 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, the NCLT dismissed its plea, which was challenged before NCLAT by Belgotex India. It contended that the NCLT had passed the order without appreciating the facts, and the record and its contention were not discussed in the right perspective.
The NCLT dismissed the Section 9 petition on the grounds that an amount of Rs 53,86,399/- related 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 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 the NCLT and overturned the order.