Shapoorji Pallonji and Company Private Limited Vs Shore Dwellings Pvt. Ltd. (NCLAT Chennai)
Summary: NCLAT Chennai allowed the appeal of Shapoorji Pallonji and Company Private Limited and set aside the NCLT order that had declined to admit its application under Section 9 of the Insolvency and Bankruptcy Code, 2016. The dispute arose from construction work undertaken for the Mantri Pinnacle High Rise Residential Project. Against the Final Bill, the parties recorded a settlement under which ₹6,98,47,408 was agreed as payable, followed by a revised instalment schedule. Despite this acknowledgement, payment was not made and the Operational Creditor issued a statutory demand notice under Section 8. NCLAT found a clear admission of debt and default and held that the amount constituted “operational debt” within Section 5(21) of the IBC.
It disagreed with the Adjudicating Authority’s reasoning that ongoing negotiations, the prevailing economic situation and willingness of the Corporate Debtor to pay justified postponing CIRP. Applying Mobilox Innovations Private Limited Vs Kirusa Software Private Limited, NCLAT held that the relevant inquiry was whether the statutory criteria under Section 9 were fulfilled, including whether a pre-existing dispute existed before the demand notice. There was no such dispute in the present case. NCLAT further held that the Adjudicating Authority is not a court of equity and cannot refuse admission merely because parties were negotiating payment or because some time should be afforded to the Corporate Debtor.
