Bjain Pharmaceuticals' Application for Corporate Insolvency Resolution Process Approved; Moratorium Declared
In a significant development, the National Company Law Tribunal (NCLT) in New Delhi has admitted an application filed by M/s Bjain Pharmaceuticals Private Limited to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s Amishi Consumer Technologies Pvt Ltd. The bench comprising Justice Jyotsna Sharma and Ms. Anu Jagmohan Singh ruled in favor of the operational creditor, declaring a moratorium in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016.
Bjain Pharmaceuticals, the operational creditor, sought to recover an operational debt amounting to Rs. 1,32,02,182 from Amishi Consumer Technologies, a corporate debtor involved in the manufacturing and supply of personal care products. The application was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, following the corporate debtor's failure to respond to a statutory demand notice issued by Bjain Pharmaceuticals.
The case presented several objections by Amishi Consumer Technologies, including claims of unilaterally altered payment terms, delayed and deficient supply of goods, and disputes regarding the quantum of outstanding debt. However, the tribunal found these objections unsubstantiated, as Amishi failed to provide evidence of any mutual modification of payment terms and did not exercise its contractual rights to reject goods or raise disputes contemporaneously.
The tribunal emphasized that the payment terms stipulated in the Contract Manufacturing Agreement between the parties prevailed over any unilateral terms mentioned in purchase orders. It held that Amishi Consumer Technologies did not produce any evidence to support its claims of a pre-existing understanding of a 90-day payment term, nor did it object to the invoices raised by Bjain Pharmaceuticals at the time of receipt.
Furthermore, the tribunal noted that Amishi Consumer Technologies did not provide any documentary evidence of rejection or deficiency notices concerning the goods supplied. The tribunal deemed the allegations of delayed or deficient performance as afterthoughts, highlighting the absence of contemporaneous evidence to substantiate such claims.
Regarding the quantum of outstanding dues, the tribunal observed that Amishi Consumer Technologies failed to furnish its ledger account or identify specific disputed invoices, whereas Bjain Pharmaceuticals provided a clear computation of the outstanding amount. The tribunal also highlighted Amishi's failure to respond to the statutory demand notice, underscoring the lack of any genuine dispute regarding the operational debt.
Consequently, the tribunal admitted the application and appointed Mr. Amit Talwar as the Interim Resolution Professional (IRP) to oversee the insolvency process. The tribunal directed Bjain Pharmaceuticals to deposit Rs. 2 lacs with the IRP to cover expenses related to the insolvency proceedings.
The tribunal declared a moratorium under Section 14 of the Code, imposing prohibitions on the institution of suits, disposal of assets, and enforcement of security interests against Amishi Consumer Technologies during the insolvency process. The tribunal also emphasized the IRP's duty to protect the value of the corporate debtor's property and ensure compliance with the Code.
This ruling is a crucial step in resolving the financial distress faced by Amishi Consumer Technologies, providing an opportunity for restructuring and revival under the CIRP framework. The tribunal's decision reinforces the importance of adhering to contractual obligations and maintaining transparency in business transactions.
Bottom line:-
Insolvency - Operational debt owed by Corporate Debtor - Application under Section 9 of Insolvency and Bankruptcy Code, 2016 seeking initiation of Corporate Insolvency Resolution Process (CIRP) - Objections by Corporate Debtor regarding payment terms, delayed supplies, and quantum of outstanding debt found unsubstantiated - Application admitted; moratorium declared.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 8, 9, and 14
