Rathi Steel And Power Limited vs Gridco Ltd
- CitationComp. App. (AT) (Ins) No. 1211 of 2022
Ratio decidendi
The rule this decision rests on
A Section 9 application under the Insolvency and Bankruptcy Code, 2016 may be rejected where the amount claimed as an operational debt has in fact been paid by the corporate debtor to the Government towards statutory duty which the operational creditor was liable to pay, so that no default in payment of the claimed debt subsists; and in such a case the pendency of a writ petition challenging the adjustment does not, of itself, prevent rejection. Where the corporate debtor is not insolvent and has in substance discharged the entire amount claimed, the existence of a default under Section 9 is not established and the Adjudicating Authority is not in error in rejecting the application; questions of adjustment and of the challenge pending in writ proceedings are left to be decided in accordance with law.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Rathi Steel and Power Ltd. ....Appellant Vs.
Gridco Ltd. ...Respondent For Appellant: Mr. P. Nagesh, Sr. Advocate with Mr. Karan Gandhi, Mr. Akshay Sharma, Mr. Kamal Karva, Advocates. For Respondent:
ORDER
17.10.2022: Heard Learned Counsel for the Appellant.
2. This Appeal has been filed against the order passed by the Adjudicating
Authority (National Company Law Tribunal), Cuttack Bench, Cuttack, by
which Application under Section 9 filed by the Appellant has been rejected.
The Appellant claims to be Operational Creditor engaged in the business of
manufacturing TMT bars/rods having a captive Power Plant. The Operational
Creditor supplied power to the Corporate Debtor from its Captive Generating
(CGP) since 23.03.2009. The Appellant claiming an amount of Rs.
1,46,74,996/- due on the Corporate Debtor filed Section 9 Application.
Corporate Debtor filed a Reply in Section 9 Application stating that
Operational Creditor owed electricity duty to the Government of Orissa and
the amount of Rs. 1,46,74,996/- have been remitted to the Government of
Orissa towards duty vide challan dated 23.04.2018. 2
3. Shri P. Nagesh, Learned Senior Counsel for the Appellant submits that
the payment of the amount by the Corporate Debtor shall not discharge the
operational debt of the Appellant. He submits that Appellant has already filed
a Writ Petition in the Orissa High Court which is pending.
4. The Adjudicating Authority taking the view that the amount has been
remitted by the Corporate Debtor to the Government of Orissa towards duty
which was to be paid by the Appellant, rejected Section 9 Application. We are
of the view that no error has been committed by the Adjudicating Authority
rejecting Section 9 Application. The amount has been paid to the Government
by the Corporate Debtor towards duty owed by the Appellant. It is not a case
that the Corporate Debtor was insolvent and was unable to clear its dues. The
entire amount has been paid. The question of adjustment and the challenge
in the Writ Petition are all questions which, if any, decided shall take its due
course in accordance with law but we do not find any error in the order of the
Adjudicating Authority rejecting Section 9 Application.
5. The Appeal is dismissed.
[Justice Ashok Bhushan] Chairperson
[Dr. Alok Srivastava] Member (Technical)
[Barun Mitra] Member (Technical) Anjali/nn
Comp. App. (AT) (Ins) No. 1211 of 2022 & I.A. No. 3674 of 2022
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free