Bannari Amman Spinning Mills Ltd vs My Choice Knit & Apparels Pvt. Ltd

M/s. Bannari Amman Spinning Mills Ltd. ...Appellant

Vs.

M/s. My Choice Knit & Apparels Pvt. Ltd. ...Respondent

Present: For Appellant: - Mr. Mudit Sharma and Ms. Nandini Sharma, Advocates.

O R D E R

03.09.2019─ The Appellant- 'M/s. Bannari Amman Spinning Mills

Ltd.' moved an application under Section 9 of the Insolvency and

Bankruptcy Code, 2016 ("I&B Code" for short) for initiation of the

'Corporate Insolvency Resolution Process' against 'M/s. My Choice Knit

& Apparels Pvt. Ltd.'- ('Corporate Debtor'). The Adjudicating Authority

(National Company Law Tribunal), Bengaluru Bench, Bengaluru, taking

into consideration the relevant facts, including the fact that the

Respondent denied certain parts of the claim, dismissed the application

mainly on the ground that the Respondent- ('Corporate Debtor') is a

Micro, Small and Medium Enterprise (MSME), and the Act provides some

safeguards to run its business and also a mechanism is provided in the

Act itself to settle the dispute arising out of the business transactions

made by the MSME with the other business establishments.

Contd/-...............

-2-

2. The Respondent has appeared and filed reply affidavit but not

disputed the aforesaid fact. We find that there is a debt payable by the

Respondent which is more than Rs. 1 Lakh.

3. In the aforesaid circumstances, as there being a default of debt of

more than Rs. 1 Lakh and, in absence of any pre-existence of dispute, we

hold that the Adjudicating Authority has no jurisdiction to reject the

application under Section 9 only on the ground that the 'Corporate

Debtor' is MSME. There is no such provision under the Act which

stipulates that a Company ('Corporate Debtor') which is MSME does not

come within the purview of 'I&B Code' or application under Sections 7 or

9 or 10 is not maintainable.

4. For the reasons aforesaid, we set aside the impugned order dated

4th April, 2019 and remit the case to the Adjudicating Authority which is

directed to admit the application under Section 9 of the 'I&B Code' after

notice to the 'Corporate Debtor' so as to enable the 'Corporate Debtor' to

settle the claim prior to the admission of application.

The appeal is allowed with aforesaid observations and directions.

No costs.

(Justice S.J. Mukhopadhaya) Chairperson

(Justice A.I.S. Cheema) Member(Judicial)

(Kanthi Narahari) Member(Technical) Ar/g Company Appeal (AT) (Insolvency) No. 513 of 2019