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IBC: Debts Arising From Different Work Orders Can Be Clubbed To Satisfy The Minimum Threshold

Cause Title : Wam India Private Limited vs SN Engineering Services Pvt. Ltd., CP (IB) No.1152/MB-IV/2020, National Company Law Tribunal Mumbai

Date of Judgment/Order : 17.03.2023

Corum : Mr. Prabhat Kumar (Technical) & Mr. Kishore Vemulapalli (Judicial)

Citied: 

M/s. A2 Interiors Products Pvt. Ltd. Vs. M/s. Ahluwalia Contracts (India) Ltd. (2021) SCC online NCLT 438

Background

The Operational Creditor and the Corporate Debtor had a long-standing business relationship with each other. Corporate Debtor used to issue purchase orders to the Operational Creditor for materials/goods/items whenever required for its business purpose and Operational Creditor based on the purchase orders prepared and dispatched the goods along with the invoices for the goods. However, the CD started delaying payment and eventually a demand notice was issued by the OC. The CD did not raise any dispute. Rather the CD assured payment but failed to clear the outstanding debt.

Judgment

The NCLT observed that as per the above narrated facts and material placed on record that there is no dispute raised with regards to the Debt of the Operational Creditor and towards repayment of the same. Secondly, there is admission of liability in the meetings, correspondence and part payments made by the Corporate Debtor. On the objection raised by the CD so to the debt being related to different work orders, the NCLT held that in A2 Interiors Products (supra), it has been decided by the NCLAT that debts arising from different work order(s) can be clubbed to satisfy the minimum threshold limit.

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