Noveltech Feeds Private Limited Vs Gold Chick Hatcheries & Foods Pvt Ltd. (NCLT Hyderabad)
The National Company Law Tribunal (NCLT) Hyderabad addressed a petition filed by Noveltech Feeds Private Limited under Section 9 of the Insolvency & Bankruptcy Code, 2016 (IBC) seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Gold Chick Hatcheries & Foods Pvt Ltd. The operational creditor claimed a total outstanding debt of ₹1,29,03,363/- along with interest. However, the corporate debtor contested the application on several grounds, including the improper service of the demand notice, the poor quality of supplied feed leading to losses, the incorrect calculation of interest, and most significantly, that a substantial portion of the principal debt pertained to invoices falling within the period specified under Section 10-A of the IBC (March 25, 2020 to March 25, 2021), which prohibits the initiation of CIRP for defaults occurring during this time.
The NCLT, after considering the arguments and records, ruled in favor of the corporate debtor and dismissed the petition. The tribunal emphasized the clear legislative intent behind Section 10-A of the IBC, which was to provide relief to corporate debtors during the COVID-19 pandemic by barring CIRP initiation for defaults within the specified period. Consequently, any default falling within this timeframe must be excluded when calculating the total outstanding debt. The NCLT found that a significant portion of the invoices leading to the claimed debt fell within this Section 10-A period, bringing the outstanding debt below the statutory threshold. Additionally, the tribunal noted the operational creditor’s failure to include the interest amount in the initial demand notice and the improper service of the demand notice at an incorrect address, which was a procedural irregularity fatal to the application. Based on the exclusion of Section 10-A defaults, the incorrect interest claim, and the flawed service of notice, the NCLT concluded that the petition did not meet the requirements for initiating CIRP under Section 9 of the IBC.
