NCLT Mumbai Rejects Ex-Buzz Insolvency Plea Against Future Market Networks As Debt Falls Below Rs 1 Crore
The National Company Law Tribunal (NCLT) in Mumbai has rejected an insolvency plea filed by Ex-Buzz Fire & Security Private Limited against Future Market Networks Limited, a Future Groups company.
The tribunal held that the principal operational debt fell below the Rs 1 crore threshold required to trigger insolvency proceedings under the Insolvency and Bankruptcy Code.
A bench of Judicial Member Nilesh Sharma and Technical Member Sameer Kakar held that the principal operational debt was only Rs 27.03 lakh and that the additional claims were unsupported by any contractual or documentary basis.
The bench said, “Accordingly, we hold that this Application under Section 9 of the IBC is not maintainable as the principal operational debt, which is Rs. 27,03,855.08/-, falls below the prescribed threshold limit as per Section 4 of IBC, 2016. Further, Applicant has failed to establish any legal or contractual entitlement to the other amounts as claimed herein, as required under law.”
The operational creditor had claimed a total debt of Rs 1.06 crore along with 18% interest, alleging dues arising from the supply, installation and upgradation of fire fighting systems at Orchid City Mall under purchase orders dated April 20, 2019.
According to Ex-Buzz, delays and non-cooperation by Future Market Networks caused escalation in costs, site overheads, and supervisory expenses.
Opposing the plea, Future Market Networks argued that Ex-Buzz had artificially inflated its claim by adding arbitrary amounts such as interest, project management charges, construction loan and loss of use claims without any contractual basis.
The tribunal found that Ex-Buzz had not produced any agreement, purchase order clause, written acknowledgment, or invoices to back its additional claims.
Referring to NCLAT rulings in Rishabh Infra v. Sadbhav Engineering and G.L. Engineering Industries v. Supreme Engineering, the tribunal said unsupported, one-sided claims with no documentary backing could not be treated as operational debt under the IBC.
The insolvency plea was consequently dismissed, though Ex-Buzz was left free to pursue other legal remedies to recover its dues.
For Operational Creditor: Advocate M.P. Sahay, Advocate Yaman Verma, Advocate Chitra Chanda, Kartik Virmani.
For Corporate Debtor: Advocate Nausher Kohli and Advocate Soumya Srinivasan, Instructed by Legasis Partners.