Case Law Details
R.B. Singh Vs Rashmi Cement Limited (NCLAT Delhi)
The case of R.B. Singh Vs Rashmi Cement Limited (NCLAT Delhi) revolves around a dispute initiated under Section 61 of the Insolvency and Bankruptcy Code 2016 (IBC). The appeal was filed by the Corporate Debtor, Bhilai Jaypee Cement Limited, against an order passed by the Adjudicating Authority, which allowed a petition by Rashmi Cement Limited (RCL) for initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor.
RCL claimed that it had made advance payments to Bhilai Jaypee Cement Limited (BJCL) for the supply of cement clinker. However, BJCL failed to supply the clinker as agreed upon and did not refund the advance payment. RCL sent a demand notice under Section 8 of the IBC to BJCL, seeking the return of the unpaid amount. As the outstanding amount was not received, RCL filed a Section 9 application for initiating the CIRP against BJCL.
The Adjudicating Authority admitted the Section 9 application, leading to the initiation of the CIRP. However, during the proceedings, BJCL made a payment of the entire outstanding amount claimed by RCL. BJCL filed applications before the Adjudicating Authority to bring this payment to its notice, but the authority proceeded to pass the impugned order without considering these applications. BJCL argued that the operational debt claimed by RCL had been satisfied, and hence, the Section 9 application should have been rejected.
RCL, on the other hand, argued that BJCL’s payment did not settle the entire dispute, as RCL had also suffered losses due to BJCL’s belated filing of GST returns, which prevented RCL from availing Input Tax Credit (ITC). RCL contended that this additional amount remained unpaid, constituting a default and justifying the initiation of the CIRP.
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