NCLAT says no to insolvency proceedings against Gujarat Ambuja Exports

The National Company Law Appellate Tribunal (NCLAT) has upheld an NCLT order setting aside a plea to initiate insolvency proceedings against Gujarat Ambuja Exports Ltd.

A three-member NCLAT bench upheld the order of the Ahmedabad bench of the National Company Law Tribunal (NCLT), which had set aside the plea of Samay Impex, an operational creditor of Gujarat Ambuja Exports Ltd (GAEL).

Earlier on February 17, 2020, the NCLT had dismissed the plea of Samay Impex to initiate corporate insolvency resolution process (CIRP) against GAEL on the ground of pre-existing dispute regarding the supply of goods.

"We find no legal infirmity in the impugned order. The appeal is accordingly dismissed at the very pre-admission stage," said the NCLAT bench headed by Acting Chairperson Justice B L Bhat.

The NCLAT order came over the petition filed by Samay Impex, challenging the NCLT order before it.

The appellate tribunal said dispute raised by GAEL over the demand notice and payment made after reconciliation and settlement of accounts between the two parties is of much before the issuance of demand notice.

"Such dispute, being pre-existing i.e. prior to issuance of demand notice and corporate debtors plea of having satisfied the operational debt after reconciliation of accounts and rebate allowed cannot be resolved in CIRP. In the given circumstances, the Adjudicating Authority (NCLT) was right in declining to initiate CIRP against the corporate debtor," it said.

Samay Impex had claimed default of an operational debt of Rs 9.39 lakh over supply of steam coal.

However, Gujarat Ambuja Exports submitted before the NCLAT that the accounts are stood fully settled and paid after reconciliation based on the consideration of the debit note and the rebate given later through the credit note.

"Appellant could not satisfy us as to how the corporate debtor could be held to be in default after reconciliation followed by last payment effected through cheque...," it said.

It further said that the rebate given later through the credit note cannot be said to be illusory or moonshine.

GAEL, which is in theagro-processing business, caters to food, pharmaceutical and feed industry.