NCLT Indore Dismisses ₹2.56 Crore Insolvency Plea Against Bari Foods Pvt. Ltd. Over Pre-Existing Dispute

The National Company Law Tribunal (NCLT) at Inodre has rejected a Rs 2.56 crore insolvency plea by ADM Agro Industries Kota & Akola Pvt. Ltd. against Bari Foods Pvt. Ltd., holding that disputes over contract formation, resale of goods and quantification of losses constitute a genuine pre-existing dispute beyond the scope of summary proceedings under the Insolvency and Bankruptcy Code.

The bench of Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta said the issues required detailed examination of facts and evidence and could not be decided under Section 9 of the Code.

“At this stage, this Adjudicating Authority is not required to examine the scope or merits of the proceedings before the Commercial Court. However, the existence of such proceedings, coupled with the disputes raised in the present matter, indicates that the issues between the parties require examination of facts and evidence, which cannot be undertaken in summary proceedings under Section 9 of the Code,” the bench observed.

ADM Agro had sought initiation of insolvency proceedings over an alleged default arising from a crude palm oil transaction, claiming losses after reselling the goods at a lower price.

Bari Foods opposed the plea, arguing that the claim was for unadjudicated and disputed damages and did not constitute an operational debt. It also pointed to parallel proceedings before a Commercial Court to demonstrate the existence of disputes.

The tribunal found that the existence of a binding contract itself was disputed, with the respondent denying execution of documents and the authority of the broker. It also noted that no independent evidence of resale or prevailing market price was produced and that the claim was based on unverified calculations.

Holding that the claim arose from an alleged breach of contract and was not a crystallised operational debt, the tribunal said such issues require adjudication by a competent forum and fall outside the scope of Section 9 proceedings.

“Proceedings under Section 9 of the Code are summary in nature and are not intended for adjudication of disputed questions of fact or for determination of contractual claims requiring evidence,” the bench said.

Finding that a pre-existing dispute existed, the tribunal dismissed the petition as not maintainable.