The Tax Publishers 2017 TaxPub(CL) 0854 (NCLAT-Hyd)

 

PEC Ltd. v. Sree Ramakrishna Alloys Ltd.

 

INSOLVENCY AND BANRKRUPTCY CODE, 2016

--Initiation of corporate insolvency resolution process by operational creditor --Petition filed under section 7 against non-payment of outstanding amount Petition completed in all respects as per provisions of section 9--Whether petition was to be considered under section 9 and was to be admitted.--Where financial creditor filed petition under section 7 for initiation of corporate insolvency resolution process against corporate debtor on the ground that the corporate debtor had failed to pay huge amount outstanding to it, but petition was completed in all respects as per provisions of section 9, therefore, the petition for initiation of corporate insolvency process against the corporate debtor was to be considered under section 9 and was to be admitted.--Corporate debtor made a request to financial creditor for approval and clearance for purchase of inland Letter of Credits for a sum and the same was given by the financial creditor. However, the corporate debtor failed to clear the amount along with overdue interest inspite of various notices. Therefore, the financial creditor filed petition under section 7 for initiation of corporate insolvency resolution process. Corporate debtor raised objection that the financial creditor would come under the definition of operational creditor, therefore, the petition was not maintainable.Held: Huge amount was outstanding to the financial creditor and the corporate debtor had not paid even a single rupee even though the petition was submitted under Insolvency and Bankruptcy Code. Further that, petitioner being Government enterprise had taken steps for recovery of its dues and considerable time had already lapsed, therefore, in the interest of both the parties, the petition was maintainable, as the petition was completed in all respects as per provisions of section 9. Hence, the petition was to be admitted.

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