IBC Does Not Require Same Due Date On All Invoices For Insolvency Plea: NCLT Mumbai

The National Company Law Tribunal (NCLT) at Mumbai has recently observed that there is no requirement under the Insolvency and Bankruptcy Code that the due dates of all invoices must be identical to trigger insolvency proceedings.

The ruling came in a petition filed in June 2024 by ABV Electronic, an operational creditor, seeking initiation of corporate insolvency resolution process (CIRP) against Anmol Innovative Electrical Private Limited for default in payment of dues arising from supply of electrical goods.

A bench of Judicial Member K.R. Saji Kumar and Technical Member Anil Raj Chellan observed:

“There is no requirement under the Code that the due date on all invoices be the same to trigger an Application for insolvency resolution.”

The dispute stemmed from a purchase order dated April 6, 2023 for supply of goods worth Rs 1.20 crore. Multiple invoices were raised between April 19, 2023 and May 30, 2023, with payment terms requiring settlement within 45 days from the date of each invoice. Despite reminder letters issued between July 2023 and April 2024, the corporate debtor failed to clear the outstanding amount.

The corporate debtor opposed the plea on the ground that multiple dates of default were pleaded, making the application defective.

Rejecting this contention, the tribunal held that each invoice carries its own due date and default can be determined accordingly. It clarified that the Code does not mandate uniformity in due dates across invoices for initiation of CIRP.

The tribunal further noted that the corporate debtor had acknowledged the outstanding dues through correspondence and failed to raise any pre-existing dispute despite receipt of the demand notice dated April 15, 2024. The tribunal said:

“It is an admitted position that the Operational Creditor issued a Demand Notice dated 15.04.2024 in Form 4 pursuant to Section 8 of the Code, demanding payment of the outstanding operational debt. Notwithstanding the proper service of the aforementioned Demand Notice, the Corporate Debtor failed to make payment of the demanded amount and did not inform the Operational Creditor of any dispute within the statutory period of ten days.”

Finding that the operational debt and default were established and the application was complete in all respects, the tribunal admitted the petition, declared a moratorium under Section 14 of the Code, and appointed Satyendra Kumar Sinha as the interim resolution professional to take over the management of the corporate debtor.