NATIONAL COMPANY LAW TRIBUNAL

NEW DELHI, BENCH-V

PETITION NO.: CP IB (IBC)/ 89(ND)/2022

Date of Order/ Judgement: 17.03.2023

Parties:

CONNECTING PEOPLE OF INDIA

...Operational Creditor
V.
G.S.P. POWER SYSTEMS PRIVATE LIMITED
CIN U31909DL2003PTC123568
...Corporate Debtor

Bench: SHRI P.S. N. PRASAD, HON’BLE MEMBER (J ), SHRI RAHUL

BHATNAGAR MEMBER (T)

Filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 read with Rule 6 of the
Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

The application filed under Section 9 stands dismissed.

There is a default on the part of the Corporate Debtor (‘CD’) in repayment of an amount.
Thus, an application was filed by the Operational Creditor (‘OC’) to initiate Corporate
Insolvency Resolution Process (“CIRP”) against Corporate Debtor under Section 9 of the
Insolvency and Bankruptcy Code, 2016 read with Rule 6 of the Insolvency and Bankruptcy
(Application to Adjudicating Authority) Rules, 2016.

Mandatory Tags Keywords Phrases

Insolvency and Bankruptcy Corporate Debtor, Application to initiate

Code, Insolvency and Operational Creditor, Corporate Insolvency
 Bankruptcy (Application to Liquidator, Interim Resolution Process against
Adjudicating Authority) Resolution Professional the Corporate Debtor.
Rules ,CIRP, Section 9, NCLT.
Rule 6

Facts:

1. A Company Petition was filed under Section 9 of the Insolvency and Bankruptcy
Code, 2016 along with Rule 6 of the Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016, by Connecting People of India, an Operational
Creditor. The petition was filed before the Adjudicating Authority on 10th January
2022, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against
G.S.P. Power Systems Private Limited, the Corporate Debtor. The Operational
Creditor claims a total default amount of Rs. 4,15,08,378.56, with the default dates
being 5th November 2020 and 25th November 2020.
2. It was contended on behalf of the OC that, Reliance Jio is the end customer and
Mahindra & Mahindra is the vendor responsible for support services related to setting
up Jio's infrastructure. The CD, along with other entities like Mitraa and Greenland,
are sub-vendors of Mahindra & Mahindra, but their role is primarily limited to
disbursing payments and not being directly involved in the work. The dispute at hand
emerged after CD defaulted in making payments, citing issues with Mahindra's
payment. Allegations of fund misappropriation by employees and subsequent police
complaints from sub-vendors complicated the situation. Attempts to settle the dispute
in February 2020 failed, and amidst the Covid-19 pandemic, CPI raised invoices for
completed work in October 2020, leading to a legal exchange of notices. Ultimately,
the Operational Creditor filed the present Application under the Insolvency and
Bankruptcy Code in December 2020.
3. It was contended on behalf of the CD that, on 26th November 2020, the Corporate
Debtor responded to a demand notice issued by the Operational Creditor. The
Corporate Debtor claimed that 'GSP Power Systems Pvt. Ltd.' had sent a legal notice
dated 3rd November 2020, stating that they had overpaid the Operational Creditor for
pending and incomplete work and demanded a payment of Rs. 1,69,91,180 along with
12% interest. Despite responding to the notice, the Corporate Debtor did not appear
 before the Tribunal and was set ex-parte on 29th July 2022, despite multiple notices
and orders to do so by the Operational Creditor and the Court Officer.
Issues:

1. Whether the Application filed under Section 9 of the IBC for initiation of CIRP valid?
2. Whether settlement agreement for payment of outstanding amount comes under the
ambit of ‘Operational Debt’?

Order:

In concurrence to the facts, the petitioner had previously filed a Company Petition, which was
allowed to be withdrawn with the liberty to file a fresh petition. The petitioner is an
operational creditor who sent a demand notice for payment to the corporate debtor. Since the
corporate debtor did not respond, the petitioner filed for the initiation of Corporate
Insolvency Resolution Process (CIRP) with a claimed default amount of Rs. 4,15,08,378.56.
The court analyzed whether the debt falls under the definition of "Operational Debt" as per
the Insolvency and Bankruptcy Code and found it to be valid. However, the court noted the
introduction of Section 10A, which excludes certain defaults from CIRP initiation for a
specific period, and the default in this case occurred after that period, rendering the petition
inapplicable. Consequently, the court dismissed the petition, stating that it did not meet the
criteria under Section 10A.

Cases Referred: NIL

Cases Cited: NIL

Industry: Associated with Manufacture of other electrical equipment.

Link to the Order/ Judgement:

https://ibbi.gov.in//uploads/order/6f2b6aad569ccfa035885f9a2c4cee5b.pdf