Tribunal holds liquidity crunch and restructuring plea no defence in absence of pre-existing dispute; Interim Resolution Professional appointed, moratorium imposed
In a significant ruling dated October 7, 2026, the National Company Law Tribunal (NCLT), Ahmedabad Bench, admitted the Corporate Insolvency Resolution Process (CIRP) against Sharanam Infraproject and Trading Limited on an application filed by Maruti Corporation, an operational creditor. The application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC), sought initiation of insolvency proceedings for an admitted outstanding operational debt of Rs. 10,35,00,710, including interest, for agricultural products supplied between December 2 and December 24, 2024.
The petitioner, Maruti Corporation, represented by advocates Ms. Prutha Bhavsar and Mr. V. Pandu Ranga Reddy, submitted that it had entered into a supply agreement dated October 22, 2024, with Sharanam Infraproject, under which it supplied agricultural goods. Despite raising invoices and receiving post-dated cheques from the corporate debtor, payment defaulted on December 24, 2024. The corporate debtor, through a letter dated December 25, 2025, acknowledged the debt but cited severe liquidity constraints and requested the operational creditor not to present the post-dated cheques, indicating its inability to pay on time.
The respondent's counsel, Mr. Anmol Giri and Mr. Pradyumn Yadav, argued that the corporate debtor was facing financial difficulties and sought time to restructure liabilities and improve its cash flow, which should be considered before admitting CIRP. However, the NCLT bench, comprising Mrs. Chitra Hankare (Judicial Member) and Mr. Velamur G Venkata Chalapathy (Technical Member), rejected this defence, emphasizing that financial difficulty or restructuring proposals cannot be grounds to reject an application under Section 9 when the debt and default are admitted, and no pre-existing dispute is shown as per Section 8(2) of the IBC.
The tribunal noted the petitioner's strong documentary evidence, including the supply agreement, invoices, transport receipts, copies of post-dated cheques, bank statements, ledger entries, and the corporate debtor's own admission of debt. The respondent did not contest the existence or quantum of debt but relied solely on cash flow issues and restructuring requests.
In its order, the tribunal allowed the Section 9 application, admitted Sharanam Infraproject into CIRP, and declared a moratorium under Section 14 of the IBC, prohibiting any legal actions against the corporate debtor during the insolvency process. The tribunal appointed Mr. Amrish Navinchandra Gandhi, a Registered Insolvency Professional, as the Interim Resolution Professional (IRP) to manage the affairs of the corporate debtor and oversee the CIRP.
Key directions include public announcement of the insolvency process, call for submission of claims, cooperation by the corporate debtor's management with the IRP, preservation of corporate debtor's assets, and an advance payment of Rs. 2,00,000 by the operational creditor to the IRP towards CIRP costs.
This ruling reiterates the principle that admitted operational debt and default entitle the creditor to initiate insolvency proceedings without the corporate debtor's liquidity or restructuring difficulties serving as valid defences. The judgment reinforces the IBC's objective to provide a time-bound and creditor-friendly insolvency resolution framework.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 Section 9 Operational creditor's application for initiation of CIRP - Debt admitted by corporate debtor - Mere plea of liquidity crunch, cash-flow issues and request for time to restructure liabilities does not constitute a valid defence - In absence of any pre-existing dispute, application liable to be admitted.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 8, 9, 13, 14, 19, 20, 21, 31, 33
