NCLAT rejects insolvency plea against Sintex Prefab and Infra

The National Company Law Appellate Tribunal has dismissed the Lloyd Insultations' plea to initiate insolvency proceedings against Sintex Prefab and Infra.

The NCLAT bench headed by Chairperson Justice S J Mukhopadhaya observed that there was a pre-existence of dispute between the parties and upheld the order of the National Company Law Tribunal (NCLT), Ahemdabad.

The NCLT had on January 2, 2020, rejected the plea of Lloyd Insultations (India), an operational creditor, on the ground of pre-existence of a dispute over the claims.

"On perusal of the record, we find that there is pre-existence of dispute as rightly held by the Adjudicating Authority (NCLT)," the appellate tribunal said.

Lloyd Insultations had submitted that there was no pre-existence of dispute and e-mail etc relied upon does not suggest any dispute with regard to services rendered by it.

However, the National Company Law Appellate Tribunal (NCLAT) observed that e-mail exchanged between the parties shows that the tank fabrication was in progress, but not a single tank fabrication was completed. The workmanship was very poor as erection gang could not be retained by Lloyd Insultations (India).

"In view of the pre-existence of dispute, it is not desirable to decide whether the dispute raised by the Respondent (Sintex Prefab) is genuine or not which can be decided by Court of Competent Jurisdiction and not by the Adjudicating Authority (NCLT) or this Appellate Tribunal, " the appellate court said in its order on February 14.

"In absence of any merit, the appeal is dismissed," it added.

Lloyd Insultations (India) had moved under section 9 of the Insolvency and Bankruptcy Code, under which an operational creditor of a company may file a plea to initiate insolvency after serving a 10 days notice claiming default.