The National Company Law Tribunal (NCLT) at Mumbai has dismissed Uniton Infra Pvt. Ltd.'s ₹4.31 crore insolvency plea against Shapoorji Pallonji and Company Pvt Ltd, holding that the alleged operational debt was not due and payable under the parties' payment terms.
A coram of Judicial Member Ashish Kalia and Technical Member Banwari Lal Meena said that payment was due only after Shapoorji received the corresponding Nellore Municipal Corporation payment. As Shapoorji denied receiving it and Uniton failed to prove otherwise, the debt was held not due and payable warranting dismissal of the Section 9 plea.
"Thus, we are of the considered view that, as per Section 9 of the Code, invoices so demanded shall be due for payment, and payment has not been made by the Corporate Debtor. Such payment is not due and payable unless the payment has been received from the Municipal Corporation by the Corporate Debtor. The Corporate Debtor denied the same on oath. In view of this, the present issue is also decided against the Petitioner Company. Thus, in our considered view, the Petition under Section 9 of the Code fails on its merits and the Petition is liable to be dismissed. Accordingly, the issue (iii) is decided against the Operational Creditor.", the Tribunal said.
The dispute arose from road resurfacing work awarded by the Nellore Municipal Corporation to Shapoorji which had subcontracted part of the work to RKI Builders Pvt. Ltd. RKI raised invoices of ₹3.41 crore dated September 15, 2020 and ₹89.60 lakh dated May 15, 2021, totalling ₹4.31 crore and assigned the debt to Uniton on April 10, 2022. Uniton filed the Section 9 petition on May 18, 2024.
Before the Tribunal, Shapoorji argued that the payment terms required it to pay RKI only after receiving the corresponding payment from NMC. It also argued that the ₹3.41 crore invoice fell within the Section 10A period and that the remaining ₹89.60 lakh was below the ₹1 crore threshold.
The Tribunal agreed with Shapoorji Pallonji's contention. It said that the ₹3.41 crore invoice dated September 15, 2020 fell within the March 25, 2020 to March 25, 2021 Section 10A Covid 19 period during which applications under Sections 7, 9 and 10 could not be filed for defaults arising during that period.
The remaining ₹89.60 lakh was below the ₹1 crore threshold under the IBC, hence the threshold for triggering insolvency proceedings was not met.
"Upon perusal of the said invoice, it was found that the outstanding invoice dated 15.09.2020 for the amount of Rs. 3,41,56,134/- was issued on 15.09.2020 which is clearly within Section 10A period. So, the default amount arising out of the invoice issued during Section 10A period cannot be considered for the purpose of adjudication by this Tribunal. Furthermore, the remaining default amount of Rs. 89,60,000/- arising out of the Operational Creditor's invoice dated 15.09.2021 bearing Invoice No. RKI/SPCPL 2021-22-01 is much below the threshold limit of Rs. 1 Crore as per Section 4 of the Code."
The Tribunal said that under Clause 4 of the Sub-Contract Agreement payment was due to the subcontractor within 10 working days of Shapoorji receiving the corresponding payment from NMC.
Since Shapoorji denied receiving the relevant payment and Uniton failed to establish otherwise, the debt was held not due and payable.
The Tribunal accordingly dismissed the petition, clarifying that its observations do not amount to an opinion on merits and would not prejudice the Operational Creditor's rights before any other judicial forum.
For Operational Creditor: Advocates Ranit Basu a/w Sakshi Telavane i/b Adv. Florence Reddy Sobrinho
For Corporate Debtor: Advocate Amir Arsiwala