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Judgment
ORDER
Per: Bidisha Banerjee, Member (Judicial)
The Court congregated through a hybrid mode.
Heard the Ld. Counsels of both the parties.
The present application has been filed by Binary Solutions Private Limited, hereinafter referred to as the ‘Applicant/Financial Creditor/FC’ against Varsace Apparels Private Limited, hereinafter referred to as the ‘Respondent/Corporate Debtor/CD’ under Section 9 of the Insolvency and Bankruptcy Code, 2016, for brevity ‘I&B Code’
4. Facts in a nutshell
Binary Solutions Private Limited (hereinafter referred to as the "Operational Creditor) is a company duly incorporated under the provisions of the Companies Act, 2013 is engaged in the business of providing comprehensive IT solutions, including but not limited to consulting, networking, training, outsourcing, and supply of a wide range of electronic and IT-related.
In the usual course of business, the Corporate Debtor approached the OC for supply of certain products, such as LED televisions, laptops and other electronic equipment for the purpose of supplying the same to their customers. Pursuant to the verbal orders placed by the Corporate Debtor from time to time, the Operational Creditor has supplied various products amounting to Rs. 4,80,52,450 to the Corporate Debtor on various dates from June, 2020 to October 2024. Against these supplies, the Operational Creditor raised appropriate tax invoices which were duly acknowledged by the Corporate Debtor.
The CD duly received and accepted all the products supplied by the OC without raising any dispute or objection with respect to the quality, quantity, or specifications of the said products. The Corporate Debtor has made payment of Rs. 2,84,07,385.00 to the Operational Creditor during the period against these supplies.
Though the purchase were made by the CD with a commitment that payment shall be made within 15 Days of receipt of materials, but it was never honoured and more than Rs. 1.00 Crore was continuously outstanding since March 2021.
Despite several requests and reminders through phone calls, the CD failed to make any payment towards the outstanding dues of Rs. 1,96,45,065/- after 20th March 2025. Consequently, the OC issued a formal demand letter dated 10.04.2025 to the Corporate Debtor. However, in the absence of any resolution or response thereto, the Operational Creditor was constrained to initiate further legal recourse by issuing a legal notice through his learned Advocate dated 22.04.2025.
In response, the Corporate Debtor, vide its letter dated 30.04.2025 acknowledged and admitted its liability to pay a principal sum of Rs. 1,96,45,065. The Corporate Debtor also agreed to pay the outstanding dues within 20 days from the date of the letter mentioned above. However, the CD failed to pay as agreed and is therefore deemed to be in default from 01.04.2025, with the default continuing as on the date hereof.
When, despite repeated requests and reminders, the Corporate Debtor failed and neglected to make payment of its admitted dues, the Operational Creditor, finding no other alternative, served a notice under Section 8 of the IBC upon the Corporate Debtor on 03.06.2025 through hand delivery and called upon the Corporate Debtor to make payment of an aggregate sum of Rs. 2,02,34,417/- (two crore two lakh thirty-four thousand four hundred seventeen) including principal and interest. The Corporate Debtor, upon receipt, did not issue any reply or notice of dispute, as it is evident that the principal sum has been dishonestly withheld.
In view of the continued default and neglect on the part of the Corporate Debtor in making payment of its legitimate dues, it is evident that the Corporate Debtor is insolvent and is liable to be sent into liquidation due to its failure to meet its financial obligations.
5. Submissions of the Ld. Counsel on behalf of the Applicant
It is submitted that the Operational Creditor, engaged in providing IT solutions and supplying electronic products, supplied goods worth ₹4,80,52,450 to the Corporate Debtor between June 2020 and October 2024 pursuant to verbal purchase orders. All invoices were acknowledged, and no dispute was ever raised. Against the above supplies a sum of Rs. 1,96,45,065.00 is still outstanding for payment by the Corporate Debtor.
List of Pending Invoice are given as under:
| Invoice No. | Date | Amount |
|---|---|---|
| 335 (Amount Due) | 28/02/2022 | 23,55,959.00 |
| 22 | 25/05/2023 | 28,97,879.00 |
| 697 | 29/09/2023 | 12,20,140.00 |
| 698 | 03/10/2023 | 12,20,140.00 |
| 722 | 30/10/2023 | 14,88,900.00 |
| 723 | 30/10/2023 | 14,88,900.00 |
| 724 | 31/10/2023 | 12,05,064.00 |
| 725 | 31/10/2023 | 10,04,220.00 |
| 726 | 31/10/2023 | 31,02,488.00 |
| 200 | 31/10/2024 | 36,61,375.00 |
| TOTAL | 1,96,45,065.00 |
That all the above invoices fall within the limitation period, except Invoice No. 335 dated 28.02.2022, against which 23,55,959/- remains outstanding. However, since the Corporate Debtor expressly acknowledged the total outstanding amount of Rs.1,96,45,065/- in its letter dated 30.04.2025, a fresh limitation period commenced from that date in terms of Section 18 of the Limitation Act, 1963. Asset Reconstruction Company (India) Ltd. v. Bishal Jaiswal & Anr., (2021) 6 SCC 366, holding that a written acknowledgment of debt before expiry of limitation starts a new limitation period afresh for the purpose of proceedings under the IBC.
Subsequently, the Operational Creditor issued a demand letter dated 10.04.2025 followed by a legal notice dated 22.04.2025. Both were duly served, yet no response was received from the Corporate Debtor at any stage. (Demand notice Annx E/Pg 76 of CP), (Legal notice Annx F/Pg 77 to 78 of CP).
Further it is submitted that the Corporate Debtor's letter dated 30.04.2025 expressly admits the entire outstanding principal and undertakes to pay the amount within 20 days, thereby constituting an unequivocal acknowledgment of liability In their letter dated 30.04.2025, Corporate Debtor has specifically mentioned "We have reconciled the accounts and confirm that the dues as above remain payable from our end."(2nd Para, 1 Line) (Annx G/Pg 79 to 80 of CP).
Section 8 notice was served on 03.06.2025, to which the Corporate Debtor has not raised any dispute within the prescribed 10-day period or thereafter, thereby fulfilling the mandatory precondition for filing the present Section 9 application. (Annx K/Pg 120 to 163 of CP)
The default occurred on 21.03.2025 and continues. Total amount in default: Rs. 2,02,34,417 (principal + interest @12%).
Throughout the entire business relationship and after issuance of invoices, no dispute regarding quality, quantity, or service was ever raised. Hence, the application is fully maintainable under Section 9.
List of documents attached in support of the CP:
a. Copy of the master data of the operational creditor and corporate debtor available with the MCA. (Annx A/Pg 29 to 32 of CP).
b. Copy of record of financial information in Form C record of default of NeSL. (Annx B/Pg 33 to 34 of CP).
c. Copies of all Tax Invoices along with sale Register. (Annx C/Pg 35 to 74 of CP).
d. Ledger account of the Corporate Debtor in the books of Operational Creditor for the period of 01.04.2024-31.03.2025. (Annx D/Pg 75 of CP).
e. A formal demand notice sent by the operational creditor to the corporate debtor on 10.04.2025. (Annx E/Pg 76 of CP).
f. A legal demand notice issued by the operational creditor to corporate debtor on 22.04.2025. (Annx F/Pg 77 to 78 of CP).
g. The Corporate Debtor issued a letter dated 30.04.2025 to the Operational Creditor, expressly acknowledging the outstanding dues and seeking additional time for making the payment. (Annx G/Pg 79 to 80 of CP).
h. The Bank Statements of the Operational Creditor clearly reflect the part payments made by the Corporate Debtor, confirming that a significant outstanding amount still remains unpaid (Annx H/Pg 81 to 114 of CP).
Board Resolution authorizing the person submitting this section 9 application. (Annx I/Pg 115 to 116 of CP).
j. Consent if IRP in Form 2 along with copy of this registration certificate and "AFA" (Annx J/Pg 117 to 119 of CP).
k. Copy of the demand notice under section 8 of IBC, 2016. (Annx K/Pg 120 to 163 of CP).
l. Form 1A (IAAA) proof of service to IBBI. (Annx L/Pg 164 to 165 of CP).
6. Submissions of the Ld. Counsel on behalf of the Respondent
It is submitted that the non-payment was not deliberate, not dishonest, and not mala fide, but purely the result of unavoidable financial difficulties, which were duly communicated to the Operational Creditor.
That the Corporate Debtor has been undergoing financial strain owing to market slowdown and delayed payments from its own customers.
A substantial portion of the alleged claim pertains to invoices prior to March 2021, which are clearly time-barred under Article 137 of the Limitation Act, 1963. List of Invoices are given as under:-
| Invoice No. | Date | Amount |
|---|---|---|
| G0600 | 23.09.2020 | 42,15,225.00 |
| G0057 | 03.06.2020 | 58,170.00 |
| G0052 | 02.06.2020 | 2,88,780.00 |
That the alleged operational debt of Rs. 1,96,45,065/- and interest computation of Rs. 5,89,352/- are false and inflated. Interest @ 12% p.a. is unilateral, arbitrary and unsupported by any contract.
It is a settled principle that the IBC is not a substitute for recovery proceedings. The objective of the Code is revival and resolution of insolvency, not debt recovery. The present petition is a disguised attempt at recovery and is thus not maintainable.
Details of Statutory and Government Dues are as under:
Name of the Govt Authority | Amount of Dues | Remarks |
|---|---|---|
West Bengal Provident Fund | 21,508.00 | NA |
West Bengal ESI Corporations | 1404.00 | NA |
West Bengal Professional Tax | 1340.00 | NA |
| GST-Tax | 59,61,855.00 | NA |
| GST Penalty | 60,11,885.00 | NA |
It is submitted that in view of the facts this Hon'ble Tribunal may be pleased to dismiss the petition filed under Section 9 as being misconceived, not maintainable and barred by limitation, the alleged invoices being time-barred and the claimed operational debt being disputed, inflated and unsupported by any admitted liability.
ANALYSIS AND FINDINGS
8 In the present case, it is an admitted position that the Operational Creditor supplied electronic goods such as LED televisions, laptops, and other equipment to the Corporate Debtor in the ordinary course of business. Section 5(21) of the Insolvency and Bankruptcy Code, 2016 defines “operational debt” as a claim in respect of the provision of goods or services, including employment, or a debt arising under any law payable to the Government.
We find that the invoices raised by the Operational Creditor were duly acknowledged by the Corporate Debtor. The receipt and acceptance of goods without any demur regarding quality, quantity, or specifications stands admitted. The outstanding principal amount of Rs. 1,96,45,065/- far exceeds the minimum threshold prescribed under the I&B Code.
At this juncture we would refer to the decision of the Hon’ble Supreme Court in Consolidated Construction Consortium Ltd. v. Hitro Energy Solutions Pvt. Ltd., reported in (2022) 7 SCC 471, which has held that claims arising from supply of goods and services squarely fall within the definition of operational debt.
In view of the documentary evidence placed on record and the admitted transactions between the parties, it stands clear that the operational debt well above the statutory threshold exists.
Under Section 3(12) of the IBC, “default” means non-payment of debt when whole or any part of the amount has become due and payable and is not paid. Significantly, the CD, vide letter dated 30.04.2025, expressly admitted the outstanding principal amount of Rs. 1,96,45,065/- and undertook to pay the same within 20 days. Such an admission constitutes clear evidence of default. The Hon’ble Supreme Court in Innoventive Industries Ltd. v. ICICI Bank, reported in (2018) 1 SCC 407, has held that once default is established, the Adjudicating Authority must admit the application unless it is incomplete.
Further, the Corporate Debtor failed to make any payment even after issuance of the demand notice under Section 8 of the IBC. The continued non-payment establishes that the Corporate Debtor has committed and continues to be in default. Accordingly, this Tribunal holds that default in payment of operational debt is clearly established.
Though the Corporate Debtor has contended that certain invoices pertain to the year 2020, in the present case, the Corporate Debtor, vide its letter dated 30.04.2025, unequivocally acknowledged the outstanding principal amount of ₹1,96,45,065/-, stating that the accounts had been reconciled and that the dues remained payable. and are therefore time-barred. Hence, there is a valid acknowledgment of liability within the meaning of Section 18 of the Limitation Act, 1963.
At this juncture we would refer to the decision of the Hon’ble Supreme Court in Asset Reconstruction Company (India) Ltd. v. Bishal Jaiswal & Anr., reported in (2021) 6 SCC 366, has authoritatively held that a written acknowledgment of debt, if made before expiry of limitation, gives rise to a fresh period of limitation for the purpose of proceedings under the IBC. Consequently, the limitation period stood extended from 30.04.2025, and the present application, having been filed thereafter, is within limitation.
Further we find that no dispute regarding quality, quantity, pricing, or breach of contract was raised at any time prior to the issuance of the demand notice dated 03.06.2025. Even after receipt of the Section 8 notice, the Corporate Debtor failed to issue any reply or notice of dispute within the prescribed statutory period. The test for existence of a dispute has been laid down by the Hon’ble Supreme Court in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd., reported in (2018) 1 SCC 353, wherein it was held that the dispute must be real and not spurious, hypothetical, or illusory.
The contentions regarding financial hardship, market slowdown, or delayed payments from customers do not constitute a “dispute” under the IBC. Therefore, we find no pre-existing dispute exists between the parties.
In view of the above it is, accordingly, hereby ordered as follows:-
The application bearing CP (IB) No. 191/KB/2025 filed by Binary Solutions Private Limited (Operational Creditor), under section 9 of the Code read with rule 6 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiating CIRP against Varsace Apparels Private Limited, the Corporate Debtor, is admitted.
There shall be a moratorium under section 14 of the IBC. iii. The moratorium shall have effect from the date of this order till the completion of the CIRP or until this Adjudicating Authority approves the resolution plan under sub-section (1) of section 31 of the IBC or passes an order for liquidation of Corporate Debtor under section 33 of the IBC, as the case may be. iv. Public announcement of the CIRP shall be made immediately as specified under section 13 of the Code read with regulation 6 of the Insolvency & In the National Company Law Tribunal, Kolkata Bench (Court- I) C.P (IB) 123/KB/2023 Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
Ms. Rachna Jhunjhunwala, having Registration number IBBI/IPA-001/IP-P00389/2017-18/10707, email: egress.rac@gmail.com, Mobile no. 9831141167 is hereby appointed as Interim Resolution Professional (IRP) of the Corporate Debtor to carry out the functions as per the Code subject to submission of a valid Authorisation of Assignment in terms of regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professional) Regulations, 2016.
During the CIRP period, the management of the Corporate Debtor shall vest in the IRP or the RP, as the case may be, in terms of section 17 of the IBC. The officers and managers of the Corporate Debtor shall provide all documents in their possession and furnish every information in their knowledge to the IRP within one week from the date of receipt of this Order, in default of which coercive steps will follow. There shall be no future opportunities in this regard.
The Interim Resolution Professional is expected to take full charge of the Corporate Debtor, its assets and its documents without any delay whatsoever. He is also free to take police assistance in this regard, and this Court hereby directs the concerned Police Authorities to render all assistance as may be required by the Interim Resolution Professional in this regard.
The IRP/RP shall submit to this Adjudicating Authority periodical report with regard to the progress of the CIRP in respect of the Corporate Debtor.
The Operational Creditor shall deposit a sum of Rs. 2,00,000/-(Rupees Two lakh only) with the IRP to meet the expenses arising out of issuing public notice and inviting claims. These expenses are subject to approval by the Committee of Creditors (CoC).
In terms of section 9(5)(a) of the Code, Court Officer of this Court is hereby directed to communicate this Order to the Operational Creditor, the Corporate Debtor and the IRP by Speed Post, email and WhatsApp immediately, and in any case, not later than two days from the date of this Order.
Additionally, the Operational Creditor shall serve a copy of this Order on the IRP and on the Registrar of Companies, West Bengal, by all available means for updating the Master Data of the Corporate Debtor. The said Registrar of Companies shall send a compliance report in this regard to the Registry of this Court within seven days from the date of receipt of a copy of this order.
CP (IB) No. 191/KB/2025 to come up on 02.03.2026 for filing the progress report.
A certified copy of this order may be issued, if applied for, upon compliance with all requisite formalities.