NCLT Chandigarh Admits Kokila Mining Section 9 Petition, Rejects Set-Off Defence By Tycoons Industries

The Chandigarh Bench of the National Company Law Tribunal (NCLT) on 11 June admitted a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, filed by Kokila Mining Pvt. Ltd. and initiated the Corporate Insolvency Resolution Process against Tycoons Industries Pvt. Ltd..

Judicial Member Khetrabasi Biswal and Technical Member Shishir Agarwal appointed Neehal Mahamulal Pathan as Interim Resolution Professional and declared a moratorium. The Bench observed:

“Under the summary jurisdiction of the Code, the Corporate Debtor cannot unilaterally set-off the liabilities of distinct corporate entities against the Operational Creditor's legally crystallised invoices to artificially drag the debt below the prescribed threshold.”

Kokila Mining supplied heavy mining equipment on lease to Tycoons Industries under work orders executed in August 2022 and July 2023 for deployment of tippers and excavators at coal mining sites in Jharkhand. It raised invoices aggregating to Rs 18.53 crore, and Tycoons Industries made part payments of Rs 7.51 crore.

On 1 April 2024, Tycoons Industries' Director Joy Deb Chatterjee signed a reconciliation statement cum balance confirmation and acknowledged an outstanding liability of Rs 11.02 crore. Kokila Mining issued a statutory demand notice on 19 July 2024, which Tycoons Industries did not reply to. The NeSL record of default dated 17 August 2024 recorded the default as “Deemed to be Authenticated”. Kokila Mining later received Rs 30 lakh from a vendor of Tycoons Industries and adjusted it against the outstanding dues, which reduced the balance to Rs 10.72 crore.

Tycoons Industries opposed the petition and contended that Kokila Mining inflated the debt and that genuine disputes existed. It alleged equipment breakdowns, performance deficiencies, and prior disputes between the parties. It also argued that invoices were marked “received not verified”, GST mismatches existed, and worker salary and accommodation costs required adjustment. It further sought set-off of liabilities of alleged group entities, including Adhunik Power and Viraj Steel, to reduce the claim below the statutory threshold.

Kokila Mining opposed these contentions and submitted that Tycoons Industries had acknowledged all invoices and that the absence of the word “verified” did not invalidate them. It further submitted that Tycoons Industries raised GST and wage-related objections without documentary support and relied on afterthought correspondence.

The Tribunal held that Tycoons Industries admitted the contractual relationship and part payments, which established an operational debt under Section 5(21) of the Code. It also relied on the signed reconciliation statement and the NeSL record as prima facie evidence of liability.

It further held that invoices marked “received not verified” did not establish a dispute in the absence of credit notes, rejection memos, or contemporaneous documentary evidence. The Tribunal also held that GST discrepancies did not constitute a pre-existing dispute since Tycoons Industries had already received communication on the issue.

The Bench rejected reliance on post-demand notice correspondence, holding that such communications could not establish disputes that existed prior to the statutory notice. It also found no link between Kokila Mining and the entities whose liabilities Tycoons Industries sought to set off, as MCA records showed no such relationship. It observed:

“In the absence of any demonstrated relationship between the Operational Creditor and the said entities, amounts owed by separate legal entities cannot be set off against the Operational Creditor's claims in these proceedings. This contention is accordingly rejected.”

Accordingly, the NCLT held that the debt remained well above Rs 1 crore and admitted the petition, initiated CIRP against Tycoons Industries, declared a moratorium, and appointed the Interim Resolution Professional.