As per our reports, the National Company Law Tribunal, Mumbai Bench, on 03rd June, 2020 has held that in view of Section 3(23) of Insolvency & Bankruptcy Code, 2016, a foreign entity can also file a petition for initiation of Corporate Insolvency Resolution Process under Section 9 of IBC. A plea under Section 9 of IBC was filed by Forever Glory Trading Limited, the Operational Creditor or petitioner against Global Powersource (India) Limited, Corporate Debtor for default of payment of USD 2,90,260 which amounted to Rs. 2,10,97,389. The petitioner was a company incorporated under the laws of Angilla & supplied batteries to its various clients all over the world.
The Corporate Debtor, in 2015, issued many purchase orders to the petitioner & also separate contracts were signed between them for dealing with the sale of batteries & other items relating to warranty claim. Many orders were also issued in 2016. The corporate debtor failed to make the payments towards certain orders to the petitioner. In 2017, the parties agreed to a payment agreement, to which the corporate debtor agreed to clear all the pending dues in the next few months. It was also agreed between them that certain invoices would be settled against the corporate debtor’s warranty claim in terms of the warranty agreement.
A second payment agreement between the corporate debtor & the petitioner came into existence after the corporate debtor again defaulted on the payment as it raised issues relating to the warranty claims. Money was not received from the corporate debtor, so the petitioner issued a demand notice under Section 8 of IBC to corporate debtor & then proceeded to file the insolvency plea.
It was concluded that there was a clear contractual liability on the part of the corporate debtor to pay to the petitioner. It further held that the claim of warranty was collateral to the main contract of supplying batteries & a separate contract was made between the corporate debtor & the holding company of the petitioner. Since, the liability of payment of outstanding dues was admitted, no dispute exists in relation to Section 9 of IBC. Petition under Section 9 of IBC for the initiation of Corporate Insolvency Resolution Process against the corporate debtor should be admitted.
Your email address will not be published. Required fields are marked *