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Case Law Details

Case Name : Agarwal Veneers Vs Fundtonic Service Pvt. Ltd. (NCLAT Delhi)
Appeal Number : Company Appeal (AT) (Ins) No. 968 of 2020
Date of Judgement/Order : 05/08/2022
Related Assessment Year :
Courts : NCLAT
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Agarwal Veneers Vs Fundtonic Service Pvt. Ltd. (NCLAT Delhi)

Held that application to initiate CIRP, against solvent and going concern company, can be denied when creditor is using insolvency as a substitute for debt recovery procedure.

Facts- The appellant had filed a petition u/s. 9 of the Insolvency and Bankruptcy Code, 2016 before the NCLT seeking initiation of Corporate Insolvency Resolution Process (CIRP) against Fundtonic Service Pvt. Ltd. (Respondent). NCLT vide an order dated 29.09.2020 had rejected the petition while observing that –

1. The Demand Notice issued u/s. 8 of the IBC was issued by an advocate to whom no authority was given to issue such notice and there was nothing on record to show that the advocate was associated to the Appellant.

2. The Respondent is a going concern and at present giving employment to 20 employees. Hence, it would defeat the very purpose of the IBC, if a going concern generating revenue, the employees and stakeholders are subject to the rigors of the CIRP.

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