M/s. Damodar Valley Corporation vs M/s. Srinivasa Ferro Alloys Ltd.

The Operational Creditor and the Corporate Debtor entered into a Power Purchase Agreement (hereinafter referred to as the “PPA”) dated 12.03.1996, under which the Operational Creditor supplied and delivered power to the Corporate Debtor at its factory located at Angadpur Village, Durgapur, District Burdwan, West Bengal. Pursuant to the West Bengal Electricity Regulatory Commission (hereinafter referred to as the “WBERC”) Order dated 19.06.2020, the Operational Creditor raised a final bill dated 01.01.2021 in respect of arrears for the period 2006-09, after giving due adjustments towards old dues, delayed payment surcharge (hereinafter referred to as the “DPS”), excess payment (if any), shortfall in security deposit (if any), and carrying cost. The billed amount of Rs.10,47,92,599/- was partly paid in instalments, leaving an outstanding sum of Rs.8,15,08,151/-.

Subsequently, in accordance with tariff orders of the WBERC, the Operational Creditor raised a bill dated 02.06.2022 for the period FY 2017-18 pursuant to the Tariff Order dated 05.05.2022, and a bill dated 01.07.2022 for the periods FY 2018-19 and FY 2019-20 pursuant to the Tariff Order dated 17.06.2022. Consequently, the Operational Creditor issued a notice of disconnection dated 20.06.2022, and thereafter, the electricity connection of the Corporate Debtor was disconnected on 05.07.2022.

As the outstanding amounts continued to remain unpaid, the Operational Creditor issued a Demand Notice dated 27.07.2023 under Section 8 of the Code. The Corporate Debtor, vide reply dated 14.08.2023, raised untenable grounds.

As per Part-IV of Form 5, total amount of debt, the amount claimed to be in default and the date of default are given below:

The Petition filed under Section 9 of the Code is not maintainable, as there exist genuine and pre-existing disputes between the parties prior to issuance of the Demand Notice under Section 8(1) of the Code. The Operational Creditor itself has admitted that legal proceedings were already pending before the issuance of the Demand Notice, which is evident from its affidavit/ Petition. Further, the Operational Creditor has failed to furnish the mandatory affidavit under Section 9(3)(b) of the Code affirming that no notice of dispute had been received from the Corporate Debtor in relation to the claimed operational debt. Instead, a defective affidavit was filed, thereby rendering the present Petition non-compliant with Section 9(5)(ii)(d) of the Code and liable to be rejected.

The Corporate Debtor has duly brought to the notice of the Operational Creditor, the existence of disputes within the stipulated time period prescribed under Section 8(2) of the Code. The claims sought to be enforced are already subject matter of pending proceedings before the Hon’ble High Court at Calcutta and the Appellate Tribunal for Electricity (hereinafter referred to as the “APTEL”), making them sub-judice. In these circumstances, the demand raised is arbitrary, mala fide, and premature, intended only to harass the Corporate Debtor. Accordingly, the Petition is not maintainable either in law or on facts.

Despite being aware of the aforesaid facts, the Operational Creditor made the demand and filed this Petition. The allegation that the Corporate Debtor failed or neglected to pay electricity bills on a regular basis is incorrect. The Corporate Debtor denies the existence of any outstanding dues. The claim for alleged arrears is premised on disputed and contested bills, which are the subject of pending legal proceedings. Nevertheless, the Operational Creditor has claimed a sum of Rs.20,46,53,026/-, comprising arrear bills for 2006-09, arrear dues for 2018-20, and final claim adjustments post-security deposit in the following manner:

The tariff for the period 2006-09 was determined by order dated 19.06.2022. Pursuant thereto, the Operational Creditor issued a summary statement dated 01.01.2021, wherein it specifically admitted that the Corporate Debtor was entitled to a refund of Rs.24,20,40,777/- for the said period. Despite this admission, the Operational Creditor simultaneously raised a claim towards DPS for the tariff period 2009-13. The Corporate Debtor disputed the said demand and challenged it before the Hon’ble High Court at Calcutta by filing WPA No. 4670 of 2022. The Hon’ble High Court, vide orders dated 16.03.2022 and 18.04.2022, was pleased to grant interim protection by staying the levy of DPS, and the Writ Petition is still pending adjudication. The Operational Creditor is having full knowledge of these facts and still made claim in the present proceedings.

There is no legally enforceable right in favour of the Operational Creditor to recover any amount towards arrear charges for the relevant period, in view of the binding orders of the Hon’ble High Court. On the contrary, the Operational Creditor has itself acknowledged a refund of Rs.24,20,40,777/- as payable to the Corporate Debtor. Its failure to adjust or refund the said sum before seeking to raise further demands clearly reflects malafide intent of the Operational Creditor. The wrongful withholding of this refund has caused serious financial stress to the Corporate Debtor.

The Operational Creditor is fully aware that there are pending litigations before various forums in connection with arrear dues for the tariff periods 2017-18, 2018-19, and 2019-20. Despite this, the Operational Creditor has raised the present demand, showing scant regard for the judicial orders passed by different forums, including the Hon’ble Supreme Court, on the issue of arrear charges. The tariff for the period 2017-18 was determined by tariff order dated 05.05.2022, while the tariff for 2018-19 and 2019-20 was determined by tariff order dated 17.06.2022.

The Damodar Valley Power Consumers’ Association (hereinafter referred to as the “DVPCA”) and several other consumers challenged the tariff order dated 05.05.2022 before the Hon’ble APTEL. Initially, APTEL by order dated 06.06.2022 granted interim protection to one consumer, Inox Air Products Pvt. Ltd., by staying the payment of arrear charges, subject to payment of current tariff. Subsequently, in similar appeals filed by DVPCA and Dinman Polypacks Pvt. Ltd., the Hon’ble APTEL passed orders dated 21.06.2022 and 01.07.2022, respectively, clarifying that the order of stay would extend to all consumers, including those, who had not approached the Hon’ble APTEL. The Hon’ble High Court of Calcutta, in a batch of Writ Petitions, vide order dated 16.03.2023, held that the APTEL order dated 01.07.2022 would be binding on all consumers including consumers, who had not approached. This order was assailed before the Hon’ble Division Bench of the Calcutta High Court, but no stay was granted, and the matter remains pending.

In parallel proceedings, several appeals concerning the arrear dues for 2017-18 remain pending before the Division Bench of the Hon’ble Calcutta High Court. Both the Operational Creditor and groups of consumers have filed separate appeals, and the issue is sub judice. In addition, the Corporate Debtor filed WPA No. 17116 of 2022 before the Hon’ble High Court at Calcutta, inter alia, challenging the jurisdiction of the WBERC in passing the tariff order dated 17.06.2022 for the FY 2018-19 and 2019-20. On the same issue, other consumers had also filed Writ Petition, which are pending before the Hon’ble High Court at Calcutta. In these proceedings, by order dated 02.08.2022, the Hon’ble Single Judge directed that the Operational Creditor shall not take any coercive steps on the basis of the impugned arrear demands. This order has been extended from time to time and continues to remain in force. In these circumstances, the Operational Creditor cannot make any claim to recover the arrear charges.

The final claim demanded by the Operational Creditor arises from the bill dated 04.08.2022. At the time of issuance of the Demand Notice, the matter concerning this bill was already pending adjudication before the Learned Ombudsman. Further, an order has since been passed by the Ombudsman after the issuance of the Demand Notice, which is annexed as Annexure-8 of the Counter. The Corporate Debtor has specifically highlighted that the bill dated 04.08.2022 is arbitrary, whimsical, and beyond jurisdiction. Despite being aware of the pendency of such proceedings, and despite actively participating therein, the Operational Creditor has proceeded to issue the Demand Notice and filed the present Petition, with the sole intention of harassing the Corporate Debtor.

The Operational Creditor has claimed a sum of Rs.20,46,53,026/-. However, the Corporate Debtor is entitled to a refund of Rs.24,20,40,777/-on account of excess payments, which gives rise to a valid and subsisting counterclaim for the differential sum of Rs.3,73,87,751/-. In these circumstances, not only is the claim of the Operational Creditor disputed, but the Corporate Debtor has an affirmative right to recover excess amounts wrongfully withheld.

Therefore, this Petition is not maintainable under Section 9(5)(ii)(d) of the Code, as there exists a genuine and substantial pre-dispute regarding the operational debt. Multiple Writ Petitions and appeals are pending before the Hon’ble High Court at Calcutta, APTEL, and the Hon’ble Supreme Court on the issues of tariff determination and arrear charges. The Hon’ble High Court, by order dated 16.03.2023, has explicitly held that arrear charge recovery cannot be enforced against consumers, who have challenged the tariff orders. Hon’ble APTEL, by its order dated 17.10.2022, stayed the tariff orders dated 05.05.2022 and 17.06.2022, and the Hon’ble Supreme Court has upheld this protection. Further, in WPA No. 17116 of 2022, the Hon’ble High Court has restrained the Operational Creditor from taking any coercive steps for recovery of arrear charges, and this order continues to remain in force.

In the present case, multiple litigations, including proceedings before the Hon’ble High Court, Hon’ble APTEL, and Hon’ble Supreme Court, establish that the claims of the Operational Creditor are disputed and sub-judice. Therefore, the demand raised by the Operational Creditor is in clear disregard of binding judicial orders and is premature, speculative, and unenforceable.

The present Petition is nothing but an abuse of process intended to coerce the Corporate Debtor into making payments that are not legally due. The Hon’ble Supreme Court has repeatedly disapproved such misuse of insolvency as a debt recovery tool, including in Transmission Corporation of Andhra Pradesh v. Equipment Conductors and Cables Ltd, Civil Appeal No. 9597 of 2018 and Vidarbha Industries Power Ltd. v. Axis Bank Ltd. 8 SCC 352 (2022), emphasizing that the IBC cannot be used as a coercive mechanism.

The claims and averments raised by the Corporate Debtor in its Counter are wholly untenable, misleading, and not maintainable. The Corporate Debtor has deliberately suppressed material facts and sought to present selective information to mislead this Adjudicating Authority.

The debt due and payable by the Corporate Debtor to the Operational Creditor is based on true facts. Despite repeated reminders, the Corporate Debtor has avoided payment and is now taking the defence of pre-existing dispute by way of feeble and misguided arguments. By disregarding binding orders of various forums, the Corporate Debtor is in contempt of these authorities and cannot seek the cover of the said orders to evade the liability.

The interim orders relied upon by the Corporate Debtor do not bar payment of ongoing energy bills; rather, they were conditional upon continued payment of current dues, which the Corporate Debtor has failed to honour. Further, the Corporate Debtor is not even a party in all such proceedings to seek such protection. The reliance placed on WPA No. 4670 of 2022 is equally misplaced, as the interim order therein cannot absolve the Corporate Debtor from its clear liability under the bill dated 01.01.2021 for Rs. 10,47,92,599/-, which remains unpaid.

The contention raised by the Corporate Debtor is unsustainable and without legal basis. A bare perusal of the Bill dated 01.01.2021 (Annexure D, Page 65 of Volume I) clearly demonstrates that the said bill comprises several components, including unpaid dues till April 2010, net unpaid amounts since May 2010, and the DPS billed and adjusted for the net arrear claims for the period 2009-2013. The Corporate Debtor’s challenge in WPA No.4670 of 2022 was confined only to the DPS component relating to the 2010-13 dues (component E in the said Bill), amounting to Rs.1,48,12,354/-. The balance components of the bill remain unchallenged and unpaid. Further, vide order dated 24.01.2022, the Hon’ble Calcutta High Court has entitled the Operational Creditor to raise bills as arrears from its consumers based on tariff orders passed by the WBERC.

The orders dated 16.03.2022 and 18.04.2022 passed in WPA No. 4670 of 2022 make it evident that the issue before the Hon’ble High Court was only with respect to the legality of DPS levied by the Operational Creditor. No blanket protection was granted to the Corporate Debtor from paying ongoing electricity dues. There is no stay on the recovery of regular energy charges, which remain undisputed. However, the Corporate Debtor has defaulted repeatedly in paying its energy bills, ultimately leading to disconnection of power supply on 05.07.2023.

The Corporate Debtor itself executed a written undertaking dated 12.08.2021 agreeing to pay Rs.10,47,92,599/- (entire principal due under the Bill dated 01.01.2021) in 36 monthly instalments, while also committing to pay ongoing bills. However, after payment of 8 instalments, the Corporate Debtor defaulted on the balance, leaving Rs.8,15,08,151/-outstanding, which forms part of the present demand. A detailed statement of instalment payments is annexed as Annexure E.

There exists no pending dispute in relation to the bill dated 01.01.2021. The entire bill amount as raised therein remains valid and recoverable. The Corporate Debtor cannot take cover under any interim orders or pending proceedings to evade its liability to pay the electricity dues, which were raised periodically and subsequently defaulted upon. Each of the interim orders relied upon by the Corporate Debtor were conditional on the continued payment of current dues. Having failed to comply with such obligations, the Corporate Debtor is not entitled to invoke such orders to avoid its responsibility to settle outstanding energy bills.

In respect of the bill dated 02.06.2022 raised for an amount of Rs.7,74,03,361/-, the Corporate Debtor seeks to evade its liability by relying upon orders dated (a) 06.06.2022 in IA No. 896 of 2022 in DFR No. 229 of 2022 & IA Nos. 895 & 894 of 2022, (b) 21.06.2022 in IA No. 923 of 2022 in Appeal No. 244 of 2022 & IA No. 922 of 2022, and (c) 01.07.2022 in IA No. 989 of 2022 in DFR No. 256 of 2022 & IA Nos. 988 & 987 of 2022. Additionally, reliance is also placed by the Corporate Debtor on the orders of the Hon’ble Calcutta High Court dated 16.03.2023 in the batch of matters pending before it.

With respect to proceedings before the Hon’ble APTEL, it is submitted that Inox Air Products Private Limited had challenged the WBERC Tariff Order dated 05.05.2022 determining provisional tariff for FY 2017-18. In its challenge, it sought a stay on the recovery of arrear dues, with the condition that current dues at prevailing rates would continue to be paid. Hon’ble APTEL, vide its order dated 06.06.2022 in IA No. 896 of 2022 in DFR No. 229 of 2022 & IA Nos. 895 & 894 of 2022, stayed recovery of arrear dues for FY 2017-18, based on the said condition. Thereafter, a group of consumers of the Operational Creditor known as DVPCA (of which the Corporate Debtor is not a member) filed similar appeals against the same tariff order. Vide order dated 21.06.2022 in IA No. 923 of 2022 in Appeal No. 244 of 2022 & IA No. 922 of 2022, a similar stay was granted. On 01.07.2022, the stay on recovery of arrears was extended to all similarly placed consumers of the Operational Creditor and a blanket “in rem” order was passed.

However, the protection sought to be claimed by the Corporate Debtor under the above proceedings is untenable. The “in rem” order was vacated vide order dated 22.08.2024 and vide order dated 07.10.2024. Thereafter, individual members of DVPCA were made parties to the proceedings. Additionally, the additional affidavit filed by DVPCA furnishing details of its members before the Hon’ble APTEL in Appeal No. 244 of 2022 is also annexed as Annexure I. Further, on 17.01.2025, the Hon’ble APTEL directed that 50% of the arrear dues be paid in cash and the remaining 50% be secured by way of Bank Guarantee. A copy of the order dated 17.01.2025 is annexed as Annexure J.

With respect to proceedings before the Hon’ble Calcutta High Court, a group of consumers challenged the single year tariff for FY 2017-18 and the subsequent two-year tariff for FY 2018-19 and 2019-20. They contended that a single-year tariff order was violative of the Multi-Year Tariff (hereinafter referred to as the “MYT”) framework under the Electricity Act, 2003 and the WBERC Tariff Regulation No. 48 dated 25.04.2011. This challenge, however, was rejected, and the tariff orders were upheld vide order dated 17.02.2023. A copy of the said order in WPA No. 9857 of 2022 is annexed as Annexure K.

Another arrear bill dated 01.07.2022 was issued based on the WBERC Tariff Order dated 17.06.2022. A copy of the relevant extract of the tariff order is filed as Annexure N.

The Corporate Debtor challenged the said tariff order by filing WPA No. 17114 of 2022 with WPA No. 17116 of 2022 before the Hon’ble High Court. While the matter remains pending, the order dated 02.08.2022 itself clarified that although no coercive action could be taken, the Corporate Debtor was mandated to continue paying current electricity charges, failing which the interim protection would automatically stand vacated. The Corporate Debtor defaulted even on current dues, and therefore, cannot rely upon the said order.

The bill dated 04.08.2022 pertains to unpaid electricity dues which, after adjustments of security deposits and part payments, still left an outstanding balance of Rs.1,68,90,455/-. A perusal of this bill shows that as of 31.07.2022, the dues for consumption up to June 2022 totalled Rs.18,46,26,116/-, demonstrating persistent non-payment by the Corporate Debtor. Even after adjustments, arrears remained outstanding. Additionally, the Ombudsman’s order dated 14.12.2023, relied on by the Corporate Debtor, was in fact passed in favour of the Operational Creditor, confirming the charges levied.

The Affidavit filed by the Operational Creditor complies fully with Section 9(3)(b) of the Code. Although certain litigations are pending, these do not relate to the demanded amounts against this Corporate Debtor. The Corporate Debtor has further concealed material facts, particularly its failure to comply with orders already binding upon it.

The Corporate Debtor is in contempt of several orders of the Hon’ble Calcutta High Court and the Hon’ble APTEL by failing to pay arrears as directed. The Corporate Debtor made part payments for arrears of 2006-09, with the last being on 15.03.2022. This itself establishes subsisting arrears.

The bill dated 01.01.2021, annexed as Annexure D, reflects that Rs.24,20,40,777/- was already adjusted under “Net Principal Arrear for 2006-09” before the bill was raised. Post adjustment, Rs.8,15,08,151/-remains outstanding. Thus, the Corporate Debtor is not entitled to any refund. Its reliance on WPA No. 4670 of 2022 is untenable, and its non-compliance with the instalment schedule under orders dated 16.03.2022 and 18.04.2022 of the Hon’ble High Court places it in contempt and it cannot be interpreted to mean that there is a blanket embargo on the right of this Operational Creditor to seek legal remedy.

A bare reading of the above orders establishes that the Hon’ble APTEL recognized the hardship caused to the Operational Creditor by the initial stay, as reflected in its direction for consumers to pay 50% arrears to the Operational Creditor. With the stay now vacated or modified, the Corporate Debtor’s reliance on interim protection is untenable. Its persistent default renders its defence baseless, and the present Petition be admitted into the CIRP.

During the course of hearing, it was observed that the present subject matter of the Petition is confined to a limited issue, as agreed upon by both counsels, namely, the existence of a pre-existing dispute specifically, whether any suit or writ petition, including the said WPA No. 4670 of 2022, has been filed by the Corporate Debtor in relation to the claim amount under consideration in the present Petition. In this matter, the amount claimed in Part-IV of the Petition pertains to four claims, cumulatively amounting to Rs.20,46,53,026/-. The four claims are extracted below:

During the course of hearing, on a specific query, the Counsel for the Corporate Debtor clarified that the contentions raised in WPA No. 4670 of 2022 are in respect of the unpaid arrear bill from 2006-09 i.e., the first claim set out in Part-IV of the petition and none of the contentions raised in the Writ Petition relate to other three claims in Part-IV. The Counsel for the Operational Creditor submitted that even after excluding the disputed claim i.e., 1^st claim in the Part-IV, the Petition is maintainable, since the other three claims is more than the threshold limit. The Counsel further submitted that the maintainability of a Section 9 Petition is not vitiated merely because one of the claims is disputed or sub judice, provided that the remaining undisputed claims, when considered independently, meet or exceed the statutory threshold as prescribed under the IBC. The counsel for the Operational Creditor relied on a judgment in a similar matter, where the Corporate Debtor was admitted into CIRP, specifically referring to the decision of the Hon’ble NCLAT, New Delhi in Mrs. Leena Salot, Proprietor of Riddhim Textiles vs. Ridham Synthetics Pvt. Ltd., Company Appeal (AT) (Ins) No. 375/2024 & IA No. 1278/2024 dated 03.07.2025, as reproduced below:

The Counsel for the Operational Creditor further relied upon the judgment asserting that the facts of the present case are in pari materia with those in the following matter, wherein the Corporate Debtor was admitted into CIRP, specifically referring to the decision of the NCLT, Kolkata Bench in Damodar Valley Corporation vs. M/s. Jai Venketesh Concast Pvt. Ltd., CP (IB) No. 243/KB/ 2023 dated 19.06.2025, as reproduced below:

Despite having been granted several opportunities, the Counsel for the Corporate Debtor failed to advance or substantiate any contrary legal proposition to rebut the position relied upon by the Operational Creditor.

The Operational Creditors has claimed Rs.20,46,53,026/-, the details and the date of default of which as mentioned in the Petition, are as below:

With regard to claim at (i), it is noted that pursuant to the WBERC Traffic Order dated 19.06.2020, the Operational Creditor had prepared the bill dated 01.01.2021 for the period of FY 2006 to 2009 amounting to Rs.10,47,92,599/- and the Corporate Debtor, by an undertaking dated 12.08.2021, agreed to pay Rs.10,47,92,599/- in 36 instalments. However, the Corporate Debtor, defaulted after payment of only eight instalments and therefore, the outstanding amount as on 15.03.2022 remained Rs. 8,15,08,151/- as detailed below:

With regard to (ii) and (iii), the claim pertains to the bills i.e. 02.06.2022 and 01.07.2022 respectively.

With regard to claim at (iv), the claim pertains to bill dated 04.08.2022.

We note that the present Petition was filed on 27.11.2024 i.e. within three years of the bills for the claims at (i) to (iv) and the issue of limitation has not been contested by either party.

Therefore, we are of the considered view that the Petition has been filed within the limitation period.

A perusal of the record reveals that the Operational Creditor issued a Demand Notice dated 27.07.2023 in Form-3, the relevant extract of which is reproduced below:

Although, no proof of service of the Demand Notice has been filed by the Operation Creditor, however, the reply to the demand notice has been given by the Corporate Debtor on 14.08.2023 (Annexure- I at Page no-179-216 of the Petition).

In view of the above, we consider that the Demand Notice was served.

The Corporate Debtor has taken the shelter of pre-existing disputes and referred the judgement of the Hon’ble Supreme Court in the matter of Mobilox Innovations Private Ltd vs Kirusa Software Private Ltd (2018) 1 SCC 353, wherein, the Hon’ble Supreme Court was pleased to hold, inter alia, as follows:

We note that the Operational Creditors has claimed Rs.20,46,53,026/-, the details and the date of default of which are as below:

With regard to unpaid arrear bill for 2006-09, the Corporate Debtor in its Counter, has submitted the copy of WPA No. 4670 of 2022 filed before Hon’ble High Court of Calcutta by Corporate Debtor on 14.03.2022, in which it has prayed for the following reliefs:

It is noted that pursuant to the WBERC Traffic Order dated 19.06.2020, the Operational Creditor had prepared the bill dated 01.01.2021 for the period of FY 2006 to 2009 amounting to Rs.10,47,92,599/- The relevant extract of above bill is reproduced below:

The Corporate Debtor, by an undertaking dated 12.08.2021, agreed to pay Rs.10,47,92,599/- in 36 instalments. However, the Corporate Debtor, defaulted after payment of only eight instalments and therefore, the outstanding amount as on 15.03.2022 remained Rs.8,15,08,151/- as detailed below:

However, we note that the WPA No. 4670 of 2022 relates to unpaid arrear bill including DPS for 2006-09 for which the Corporate Debtor, by an undertaking dated 12.08.2021, agreed to pay Rs.10,47,92,599/- in 36 instalments and after paying 8 instalments have filed the WPA before the Hon’ble High Court of Calcutta, which is although prior to issuance of the demand notice and pending litigation before the Hon’ble High Court of Calcutta, the Corporate Debtor defaulted the payment of remaining instalments and future bills and also the Corporate Debtor has acknowledged the debt by giving an undertaking, which may amount to a binding contract between the parties. Therefore, the pendency of the litigation cannot be taken as a pre-existing dispute.

With regard to arrears of 2017-18 and 2018-20, the Corporate Debtor in its Counter, has stated that Writ Petition WPA No.17116 of 2022 was filed challenging the jurisdiction of WBERC in passing the Tariff Order dated 13.06.2022 for the period 2018-19 and 2019-20, however, the copy of the same has not been submitted, in the absence of which we are not able to examine the same. Further, we note that the with regard to arrears of 2017-18, nothing has been stated in the Counter of the Corporate Debtor and we presume that there is no pre-existing dispute with regard to Arrear of 2017-18 amounting to Rs.7,74,03,361/-

The Operational Creditor has filed the judgement of the Hon’ble NCLAT, New Delhi in the matter of Mrs. Leena Salot, Proprietor of Riddhim Textiles vs. Ridham Synthetics Pvt. Ltd. (Supra), wherein the judgement of the Hon’ble Supreme Court in the matter of Mobilox Innovations Private Ltd vs Kirusa Software Private Ltd (Supra) is also referred, pleading that if undisputed claim amount in section 9 Petition is above the threshold limit of Rs. one crore, the Section 9 Petition needs to be admitted. The relevant extracts of the judgment are reproduced below;

In view of the judgement of the Hon’ble NCLAT, New Delhi in the matter of Mrs. Leena Salot, Proprietor of Riddhim Textiles vs. Ridham Synthetics Pvt. Ltd. (Supra), we are of the considered opinion that the undisputed amount exceeds the threshold limit of rupees one crore. Accordingly, the Petition filed under section 9 of the IBC is maintainable after splitting the bills as reflected in Part-IV of the Petition and is liable to be admitted.

Moratorium under section 14 (1) for prohibiting all of the following, namely:

The institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority;

Transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein;

Any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;

The recovery of any property by an owner or lessor, where such property is occupied by or in the possession of the Corporate Debtor.

It is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a licence, permit, registration, quota, concession, clearance or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concession, clearances or a similar grant or right during the moratorium period;

The provisions of sub-section of section 14(1) shall not apply to such transactions, agreements or other arrangement, as may be notified by the Central Government in consultation with any financial sector regulator or any other authority; and also to a surety in a contract of guarantee to a corporate debtor.

The supply of essential goods or services to the Corporate Debtor, as may be specified, shall not be terminated or suspended or interrupted during moratorium period, except where such Corporate Debtor has not paid dues arising from such supply during the moratorium period or in such circumstances, as may be specified.

The order of moratorium shall have effect from the date of this order till the completion of the CIRP or until this Bench approves the resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of the Corporate Debtor under Section 33 as the case may be.

The term of appointment of Mr. Srinivas Gudla Rao shall be in accordance with the provisions of Section 16(5) of the Code, subject to his written consent to be filed within 7 days of this order;

In terms of Section 17 of the Code, from the date of this appointment, the powers of the Board of Directors shall stand suspended and the management of the affairs shall vest with the IRP and the officers and the managers of the Corporate Debtor shall report to the IRP, who shall be enjoined to exercise all the powers, as are vested with the IRP and strictly perform all the duties as are enjoined on the IRP under Section 18 and other relevant provisions of the Code, including taking control and custody of the assets, over which the Corporate Debtor has ownership rights recorded in the balance sheet of the Corporate Debtor, etc. as provided in Section 18(1)(f) of the Code. The IRP is directed to prepare a complete list of the inventory of assets of the Corporate Debtor;

The IRP shall strictly act in accordance with the Code, all the rules framed thereunder by the Board or the Central Government and in accordance with the Code of Conduct governing his profession and as an Insolvency Professional with high standards of ethics and moral;

The IRP shall cause a public announcement within three days as contemplated under Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 of the initiation of the CIRP in terms of Section 13(1)(b) read with Section 15 of the Code calling for the submission of claims against Corporate Debtor;

The IRP/RP shall prepare the Audited Financial Statements as on date of the CIRP and shall submit before the CoC for consideration.

The IRP/RP shall also ensure that all the assets appearing in the Financial Statements on the CIRP date have been considered in the valuation report. The IRP/ RP shall send individual communication through post or electronic means along with a copy of public announcement to all the creditors as per last available books of accounts/ financial statements on the CIRP date of Corporate Debtor as prescribed under Regulation 6A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

The Corporate Debtor, its Directors, personnel and the persons associated with the management shall extend all cooperation to the IRP in managing the affairs of the Corporate Debtor as a going concern and extend all cooperation in accessing books and records as well as assets of the Corporate Debtor;

In view of the above mandatory provisions, the suspended directors of the board will ensure that the books of accounts for the eight previous financial years preceding the date of this order be made available to the IRP/ RP within 15 days of the initiation of the CIRP order. The statutory auditor is also directed to share the records maintained by him in the course of the audit of the accounts of the Corporate Debtor for the period of three years prior to the date of initiation of this CIRP order within the same period of 15 days.

In case of any non-cooperation by the Suspended Board of Directors or the statutory auditors, the IRP/RP may take the help of the police authorities to enforce this order. The concerned police authorities are directed to extend help to the IRP/ RP in implementing this order for retrieval of relevant information from the systems of the Corporate Debtor, the IRP/ RP may take the assistance of Digital Forensic Experts empanelled with this Bench for this purpose. The Suspended Board of Directors is also directed to hand over all user IDs and passwords relating to the Corporate Debtor, particularly for government portals, for various compliances. The IRP is also directed to make a specific mention of noncompliance, if any, in this regard in his status report filed before this Adjudicating Authority immediately after a month of the initiation of the CIRP.

The IRP/RP is directed to approach the Government Departments, Banks, Corporate Bodies and other entities with request for information/ documents available with those authorities/ institutions/ others pertaining to the Corporate Debtor, which would be relevant in the CIRP. The Government Departments, Banks, Corporate Bodies and other entities are directed to render the necessary information and cooperation to the IRP/RP to enable him to conduct the CIRP as per law.

The IRP shall, after collation of all the claims received against the Corporate Debtor and the determination of the operational position of the Corporate Debtor constitute a Committee of Creditors and shall file a report, certifying constitution of the Committee to this Adjudicating Authority on or before the expiry of thirty days from the date of his appointment, and shall convene first meeting of the Committee within seven days of filing the report of constitution of the Committee;

The IRP is directed to send a regular progress report to this Adjudicating Authority every fortnight.