Amier Hamsa Ali Abbas Rawther, vs Chairman Cum Managing Director, NLC India Ltd. - That the proceedings under the I&B Code is not a recovery proceeding and that too for the recovery of an amount which is disputed and arising out of contractual obligation contained in the terms of contract, which itself provided a mechanism for redressal of the dispute by agitating the same before the Arbitrator.

 NCLAT (2025.04.30) in Amier Hamsa Ali Abbas Rawther, vs Chairman Cum Managing Director, NLC India Ltd. [(2025) ibclaw.in 310 NCLAT, Company Appeal (AT) (CH) (Ins) No. 213/2025] held that.

• That the proceedings under the I&B Code is not a recovery proceeding and that too for the recovery of an amount which is disputed and arising out of contractual obligation contained in the terms of contract, which itself provided a mechanism for redressal of the dispute by agitating the same before the Arbitrator.

Excerpts of the Order;

# 1. The Appellant herein was an Applicant, to IA(IBC)/1618/CHE/2024, as it was preferred in CP(IB)/25(CHE)2022, before the Learned NCLT, Chennai. In the IA thus preferred by the Appellant, he had sought the following prayers: –

“Direct the Respondent to pay Rs. 40,98,41,115.76 towards:

ⅰ) Substation Maintenance charges of Rs.2,49,74,700 incurred the Corporate Debtor on behalf of the Respondent for evacuating power produced by the windmills of the Respondent; Performance Bank Guarantee of Rs.40.00.000 by the Respondent after the contract

ii) The unauthorized invocation of the period expiry and during the liquidation process of the Corporate Debtor;

iii) Retention amount of Rs.33.25 Crores of the Project Contract Amount by the Respondent despite completion of the project; and

iv) The unpaid invoices aggregating to issued by the Corporate Debtor to the Respondent for the O & M Contract. Rs.4,83,66,415:76 were issued by the Corporate Debtor to the Respondent for the O & M Contract.

B. To Pass any other order/orders that this Hon’ble Tribunal may deem fit and proper.

C. To direct the Respondent to pay a sum of Rs 50,000/- towards the cost of this Application.” 

# 2. During the course of the argument, what has been reflected from records and arguments is that the Appellant submits that there had been an execution of a contract for a project on 15.11.2013, between the NLC India Ltd. and LSML (India) Pvt. Ltd. pertaining to the erection, commissioning, testing and subsequent operation and maintenance of 34 units of 1.5 mw wind turbine generators, at Kaluneer Kulam, in the state of Tamilnadu, that the maintenance clause under the contract, was for a period of 5 years, which would be covering the warranty period too, in that on account of failure on the part of the Respondent NLC India Ltd in fulfilling the covenants of the contract and their financial commitments including timely release of payment for the work done the Appellant could not pay its suppliers and creditors and defaulted on its credit obligations leading to insolvency and subsequent liquidation of the Corporate Debtor (CD).

# 3. Owing to non-fulfilment of certain contractual obligations by the Respondent and also because of force-majeure condition, the Corporate Debtor suffered financial loss, which consequently affected the payment schedule to the suppliers of the Corporate Debtor leading to the default committed by the Corporate Debtor, on its credit obligations. This resulted into initiation of the insolvency process; a moratorium was declared by an order of 14.10.2022, by an order as it was passed in CP(IB)/25(CHE)2022, appointing the Resolution Professional. As no resolution plan was approved, liquidation of the Corporate Debtor was ordered on 12.10.2023 and the liquidator was appointed. The Appellant is the second liquidator, appointed on 30.11.2023.

# 4. After taking over, the Appellant identified certain receivables from the Respondent and sent notice for payment of the said amount to the Respondent. As per his submission and as per the notice sent, the total amount receivable from NLC India is Rs.40,98,41,115.76 and as the Respondent denied to pay the same, the Appellant filed an Application vide IA/1618/2024 before Learned NCLT, Chennai.

# 5. The said application was taken up for consideration before the Learned Tribunal and the Tribunal after observing that the Respondent has stated that nothing is payable to the Corporate Debtor as per the terms of the contract, that the amount claimed by the Appellant is disputed and that the issue raised is a triable issue which cannot be denied by it having summary jurisdiction, dismissed the Application giving liberty to the Appellant to approach appropriate forum for recovery of the claims thus raised.

# 6. The Learned Tribunal while considering the aforesaid application being, IA(IBC)/1618/CHE/2024, taking into consideration that since no other dispute is pending consideration, coupled with the fact that as per records no amount was payable to the appellant/applicant besides that since no proceedings were pending consideration, except for IA(IBC)/1618/CHE/2024, as preferred by the present Appellant, which was an attempt made to enforce upon the contractual obligations, arising from the contract dated 15.11.2013, which contained an Arbitration Clause. Though the copy of contract is not on record in the Appeal but the Learned Counsel for the Appellant has submitted that the dispute pertaining to the maintenance charges, arises out of the work executed under the terms of the contract and that as per the admission of the Appellant, since, the contract contained an Arbitration Clause, which provided for the disputes redressal forum to be agitated before the arbitrator to be appointed in accordance with the process contemplated under the contract. The Tribunal observed that since it was a triable issue, which engages consideration of fact and which could only be settled after establishment of the liability of payment of maintenance charges and other claims raised by him, which requires determination, it may not be falling to be considered within the ambit of the provisions of the I&B Code. The contentions of Learned Adjudicating Authority cannot be faulted because: –

• i) The forum under the I&B Code, is not a forum, which could be abused to be resorted to as a substitute to the determination and recovery of dues.

• ii) The terms and conditions as agreed between the Appellant and the Corporate Debtor was governed by the terms of the contract, which contained within it an Arbitration Clause, and therefore the appropriate recourse which would be available to the Appellant, would be to approach the appropriate forum as agreed between the parties under the terms of the contract.

• iii) Since the amount is disputed and it requires submission of elaborate evidence for the establishment of the claims thus raised, it can only be decided by the forum as agreed between the parties.

# 7. Hence, the Tribunal concluded that the relief sought for in the interlocutory application may not be tenable under the I&B Code, and that, for redressal of the grievances qua the relief claimed in the said application the Appellant will have to approach the designated forum for a resolution of the said dispute between the parties and hence the Tribunal had rightly after considering the contention, has observed that the application would not lie before it and rather the Appellant should resort to the proceedings, as available to him, in accordance with law, and agitate his grievances by approaching before the appropriate forum for the recovery of the alleged amount due to be paid as prayed for in the relief clause as IA(IBC)/1618/CHE/2024. The logic, which has been assigned by the Tribunal for rejecting the IA seems to be absolutely justified for the reasons given above that the proceedings under the I&B Code is not a recovery proceeding and that too for the recovery of an amount which is disputed and arising out of contractual obligation contained in the terms of contract, which itself provided a mechanism for redressal of the dispute by agitating the same before the Arbitrator. Hence, the reason, which has been given in the Impugned Order does not suffer from any error which could call for any interference by this Appellate Tribunal in exercise of its appellate jurisdiction under Section 61 of I&B Code. The Company Appeal lacks merit and the same is dismissed.

# 8. All pending interlocutory applications would stand closed. 

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Vineet K. Chaudhary vs. NTPC Limited - Even otherwise, in the context of this case, undisputedly, the Corporate Debtor continued to render services to the Respondent despite initiation of CIRP against it and against those services, the Liquidator is seeking to realize the dues. Therefore, it cannot be said by any stretch of imagination that there is no nexus of the dues sought to be recovered or the relief(s) being claimed in the application with the insolvency/liquidation process.

 NCLT Mumbai-II (2024.07.23) in Vineet K. Chaudhary  vs. NTPC Limited [Interlocutory Application No. 3453 Of 2022 in CP (IB) No. 1374 (MB)/2017] held that; 

• Therefore, in our considered view, if the Applicant is relegated to civil court(s) or arbitral proceedings even in respect of admitted dues, it would definitely defeat the objects of the Code and the objective of concluding the process in a time bound manner would never be possibly adhered to. 

• Even otherwise, in the context of this case, undisputedly, the Corporate Debtor continued to render services to the Respondent despite initiation of CIRP against it and against those services, the Liquidator is seeking to realize the dues. 

• Therefore, it cannot be said by any stretch of imagination that there is no nexus of the dues sought to be recovered or the relief(s) being claimed in the application with the insolvency/liquidation process. 

Excerpts of the order;

# 1. This is an application filed by the Applicant/Liquidator under Section 60(5) read with Section 35(1)(b), (d) & (n) of the Insolvency and Bankruptcy Code, 2016 (‘IB Code’) read with Rule 11 of the NCLT Rules, 2016 seeking necessary directions from the Adjudicating Authority to direct the Respondent to release outstanding amount of Rs. 22,72,62,756/- (Rupees Twenty-Two Crores, Seventy-Two Lakhs, Sixty-Two Thousand, Seven Hundred and Fifty-Six only) along with interest at the rate of 18% p.a. which is due and payable by the Respondent in terms of Work Orders dated 12.07.2013, issued by the Respondent in respect of Kudgi, Super Thermal Power Station (STPP) at Kudgi Village, District: Bijapur, State: Karnataka. 

# 2. The Facts of the case as pleaded by the Applicant in his application are briefly stated as under: 

i. The Corporate Debtor is engaged in providing services in mechanical, erection, piping, electrical, instrumentation, painting, refractory & insulation work for Refineries & other industrial plants. The Respondent is an Indian public sector undertaking, incorporated under Companies Act 1956 and which is engaged in generation of electricity and allied activities. 

ii. The Respondent issued two Work Orders dated 12.07.2013 for supply of electrical equipment and installation and erection works respectively to the Corporate Debtors. The Corporate Debtor duly completed the installation and erection works in January 2020 and work of supply of electrical equipment in July 2020, however despite completion of work, the Respondent has failed to release pending dues of Corporate Debtor being an amount of Rs. 22,72,62,756/­. It is pertinent to mention that the Respondent has itself admitted an amount of Rs. 12,34,01,237 (Rupees Twelve Crore Thirty-Four Lakh One Thousand Two Hundred and Thirty-Seven Only) as due and payable to the Corporate Debtor during reconciliation of accounts, however, the Respondent is illegally withholding even the said admitted amounts on the condition that the Corporate Debtor provides a No-Demand Certificate to the Respondent. 

iii. In accordance with the terms of the said Contract, the Corporate Debtor raised RA Bills from time to time, out of which 10% was retained by the Respondent from the bill amount. In the meantime, the Corporate Insolvency Resolution Process ("CIRP") was initiated against the Corporate Debtor by Learned National Company Law Tribunal, Mumbai Bench ("Adjudicating Authority") vide Order dated 23.03.2018 in Company Petition (IB) No. 1374 of 2017. As the CIRP could not succeed, the Adjudicating Authority passed a liquidation order dated 23.01.2020 in the above-captioned Company Petition against the Corporate Debtor. Despite the initiation of CIRP and Liquidation, the Corporate Debtor duly completed the installation and erection works in January 2020 and work of supply of electrical equipment in July 2020. 

iv. Despite the completion of work, the Respondent failed to clear the bills raised by the Corporate Debtor towards the completed works. The Corporate Debtor thus issued a letter dated 14.05.2020 to the Respondent informing the Respondent that the installation works has already been completed on 31.01.2020 and further requested the Respondent to certify its various bills regarding retention money which were pending. The Corporate Debtor issued a letter dated 05.07.2021 to the Respondent, requesting for granting completion certificate to the Corporate Debtor. However, the Respondent failed to even reply to the said letter and deliberately refrained from issuing a Completion Certificate to the Respondent with mala fide intention to escape from its own liabilities which would arise pursuant thereto.

v. The Corporate Debtor again vide letter dated 15.07.2021 informed the Respondent regarding the factum of CIRP as well as Liquidation against the Corporate Debtor and requested the Respondent to release the outstanding amounts and Bank Guarantees of Corporate Debtor held up by the Respondent. Instead of making payment towards the legitimate dues of the Corporate Debtor, the Respondent immediately issued a letter dated 16.07.2021, in a completely illegal and blatant manner levying Liquidated Damages ("LD") on the Corporate Debtor of an amount of Rs. 5,74, 64, 442/- (Rupees Five Crore Seventy-Four Lakh Sixty-Four Thousand Four Hundred and Forty-Two Only) along with GST [i.e., Rs.1,03,43,560/- GST]. It is pertinent to mention that the above said LD was imposed by the Respondent after a period of more than one year of completion of work by the Corporate Debtor. 

vi. The Respondent subsequently on 03.01.2022 & 18.01.2022, illegally encashed three Bank Guarantees submitted by Corporate Debtor for amount of Rs. 14,69,53,711/- (Rupees Fourteen Crores Sixty-Nine Lakh Fifty-Three Thousand Seven Hundred and Eleven Only) for alleged recovery of certain baseless amounts. 

vii. The Respondent issued an email dated 04.06.2022 to the Corporate Debtor regarding reconciliation of accounts along with the reconciliation sheet, whereby the Respondent has made several illegal deductions from the amounts due to Corporate Debtor, without any basis. All such deductions made by Respondent are completely wrongful, illegal and objected to by the Corporate Debtor. However, despite such deductions, the Respondent itself admitted an amount of Rs. 12,34,01,237 (Rupees Twelve Crore Thirty-Four Lakh One Thousand Two Hundred and Thirty-Seven Only) as due and payable to the Corporate Debtor by the Respondent towards the retention amount. Further, for making the payment of admitted dues, the Respondent raised a condition from the Corporate Debtor to issue a No Demand Certificate with respect to the remaining dues. Thus, it becomes clear from the email dated 04.06.2022 that despite admitting the due amounts owed by the Respondent to Corporate Debtor, the Respondent is deliberately withholding admitted legitimate dues of the Corporate Debtor by raising frivolous issues. 

viii. Despite repeated requests and several reminders by the Applicant, the Respondent is illegally and without any cause or dispute is withholding the unpaid dues of the Corporate Debtor. It is further submitted that the process of liquidation is time bound process and if the amounts are not distributed to the other creditors within the requisite period, the liquidation proceedings will fail to reach its logical conclusion. Thus, this Hon'ble Court have requisite jurisdiction under the Code to direct the Respondent to release the monies. Hence this application. 

# 3. Reply of the Respondent The Respondent has filed his Affidavit-in-Reply dated 27th January, 2023. The reply of the Respondent is summarized hereunder: 

i. The NCLT vide Order dated 23.01.2020, directed Liquidation of the Corporate Debtor. The Liquidator has today come up with certain claims on behalf of the Corporate Debtor by directly filing the present Application and not seeking remedy available to it under law. The Liquidator is conveniently trying to circumvent the laws in regard to recovery of money and the various remedies available to it by wrongly invoking the residuary powers of this Tribunal. The recovery of any sum of money, even if payable, is not a dispute that is either arising out of or in relation to the liquidation or insolvency of the Corporate Debtor. The Liquidator or the Corporate Debtor cannot ask this Tribunal to act beyond its jurisdiction and become a fact-finding court to decide disputes in relation to recovery of money. Recovery matters are matters of fact and law and require extensive adjudication and evidence which is neither practical before this Tribunal nor permitted in law. Therefore, in the present case, the Liquidator/ Applicant cannot come before this Tribunal to invoke its residuary jurisdiction to adjudicate upon any and every dispute which neither relates to nor arises out of the Liquidation proceedings of the Corporate Debtor. 

ii. The Corporate Debtor has not completed the works of supply and erection as per the scope of the contract. It is submitted that as per the Minutes of Meeting dated 27.11.2019 held at NTPC Kudgi with the Corporate Debtor's representatives, the Respondent had informed that it will procure the material which the Corporate Debtor had not supplied at its risk and cost as these are required for completion of works. The Corporate Debtor had agreed to the same. Further, it is denied that the Respondent had admitted any amount of Rs.12,34,01,237/- as payable. This amount was only a reconciliation amount which the Respondent had asked the Corporate Debtor to check and sign. For any amount to be released, the Corporate Debtor has not submitted a "No Demand Certificate" which is a contractual obligation for smooth closing of contract. Hence, any claim of the Corporate Debtor/Liquidator that the Respondent is illegally withholding amounts is factually incorrect. 

iii. The Respondent, vide mail dated 08.12.2021, informed the Corporate Debtor that for release of Bank Guarantees, as per terms and conditions of the contract, all contractual obligations are to be fulfilled. However, the Corporate Debtor neither responded to the mail nor extended the validity of the Bank Guarantees. In order to safeguard the interest of the works to be executed and as per the terms of the contract, the Respondent, upon the Corporate Debtor's failure to fulfil the contractual conditions, invoked the Bank Guarantees. Further supplies and works were delayed w.r.t. contractual work schedule and, therefore, as per the contract terms and conditions, Liquidated Damages were imposed. 

iv. In view of the facts and circumstance of the present case, the Respondent most respectfully prays that the application of the Applicant be rejected. 

FINDINGS 

# 4. We have heard the learned Counsels for the Applicant and the Respondent. 

# 5. During the course of the arguments, the counsel for the Applicant has argued that the respondent itself has admitted that an amount of INR 12.34 crores is due and payable to the Corporate Debtor. In this regard, the Counsel for the Applicant/Liquidator has referred to the email dated 04.06.2022 (Exhibit I of the Application) and the payment reconciliation statement annexed with the said email whereby the Respondent has admitted its liability to the extent INR 12,36,28,455/-. According to the counsel for the Applicant, since there is no dispute with regard to the liability of the Respondent to the extent of INR 12.36 crores for which no adjudication is required, a direction can be issued to pay this amount invoking the provisions of Section 60(5) of the Code. In support of his contentions, the counsel for the Applicant has relied upon the judgment of Hon’ble Supreme Court of India in Gujarat Urja Vikas Nigam Ltd v/s. Amit Gupta [Citation: (2021) 7 SCC 209] whereby it was held that all disputes pertaining to the issues of insolvency of the Corporate Debtor can be resolved u/s 60(5) of the Code. 

# 6. Per contra, the learned Counsel for the Respondent has argued that the dispute with regard to the payment of outstanding dues, if any, by the Respondent to the Corporate Debtor has to be resolved by resorting to either arbitration proceedings or by filing appropriate proceedings in a civil court of competent jurisdiction and the provisions of Section 60(5) cannot be invoked as the disputes between the parties are purely contractual in nature which cannot be resolved under the residuary jurisdiction of this Tribunal. In this regard, the learned Counsel for the Respondent has relied upon Ramachandra D. Chaudhary v/s. Bansal Trading Co. & Ors. [2022 SCC Online NCLAT 360] whereby it has been held by the Hon’ble NCLAT that remedy for recovery of debts, disputed or not, cannot be determined in summary proceedings and the Code does not contemplate adjudication of any such nature. It was further held in this very case that any steps taken u/s 60(5) of the Code before the Adjudicating Authority would tantamount to bypassing/short-circuiting the judicial proceedings. 

# 7. Having heard the counsel for the parties and after going through the records, we are of the considered view that the Respondent has candidly and unequivocally admitted in the email dated 04.06.2022 its liability to pay a sum of INR 12,36,28,455/- to the Corporate Debtor. Therefore, there is not even a semblance of dispute so far as this amount is concerned. In Gujarat Urja Vikas Nigam Ltd (supra), it has been held by the Hon’ble Supreme Court that one of the important objects of the Code is to bring the insolvency law in India under a single unified umbrella with the object of speeding up the insolvency process. It was further observed in the aforesaid case that the non-obstante clause in Section 60(5) of the Code is designed for a purpose i.e. to ensure that NCLT alone has the jurisdiction when it comes to applications or proceedings by or against the Corporate Debtor covered by the Code, making it clear that no other forum has jurisdiction to entertain or dispose of such applications or proceedings and therefore, NCLT has jurisdiction to adjudicate disputes which arise solely from or which relate to the insolvency of the corporate debtor. 

# 8. It can also not be disputed that the process of undergoing CIRP or liquidation under the IB Code is a time bound process. Any delay in the process tends to defeat the objects of the Code, as the value of the assets gets eroded with passage of time. Therefore, in our considered view, if the Applicant is relegated to civil court(s) or arbitral proceedings even in respect of admitted dues, it would definitely defeat the objects of the Code and the objective of concluding the process in a time bound manner would never be possibly adhered to. Even otherwise, in the context of this case, undisputedly, the Corporate Debtor continued to render services to the Respondent despite initiation of CIRP against it and against those services, the Liquidator is seeking to realize the dues. Therefore, it cannot be said by any stretch of imagination that there is no nexus of the dues sought to be recovered or the relief(s) being claimed in the application with the insolvency/liquidation process. 

# 9. So far as the law laid down in Ramachandra D. Chaudhary v/s. Bansal Trading Co (supra) relied upon by the counsel for the Respondent is concerned, in our considered view, the same cannot be applied to the facts and circumstances of the instant case, as in the said case there was a genuine dispute between the parties with respect to the payment of the outstanding dues. On the contrary, in the instant case, there is no such dispute to the extent of admitted liability of INR 12,36,28,455/- and for undisputed liabilities, the parties cannot be driven to unnecessary and lengthy litigation. 

# 10. So far as the outstanding dues beyond the admitted dues of INR 12,36,28,455/- are concerned, the necessary permission can be granted u/s 33(5) of the Code to the liquidator to initiate appropriate legal proceedings. 

# 11. In view of the above discussion, we are of the considered opinion that this application deserves to be partly-allowed directing the Respondent to pay the admitted liability of INR 12,36,28,455/- to the Applicant forthwith. For the remaining amount, permission is hereby granted to the Liquidator u/s 33(5) of the Code to initiate appropriate legal proceedings. The Application is partly allowed to the extent indicated above, leaving the parties to bear their own costs 

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Mr. Mahesh Sureka Resolution Professional Vs. Minesh Prints Limited & others, - The Applicant has sought directions from this Tribunal to make the Suspended Board to contribute to the Corporate Debtor in terms of Section 19(2) of the Code, to the extent the money is not paid by the stated parties. However, we are of the considered view that such directions are not permissible under section 19(2) and this Bench can not direct them to co-operate.

 NCLT Mumbai-1 (03.01.2023) in Mr. Mahesh Sureka Resolution Professional  Vs. Minesh Prints Limited & others,  [I.A. 87 OF 2021 in C.P.(IB) No. 4461/MB/2019 ] held that;

• The Applicant has sought directions from this Tribunal to make the Suspended Board to contribute to the Corporate Debtor in terms of Section 19(2) of the Code, to the extent the money is not paid by the stated parties. However, we are of the considered view that such directions are not permissible under section 19(2) and this Bench can not direct them to co-operate. 

• Had this Application been filed in terms of Section 66 of the Code meeting the conditions precedent provided therein, this Bench could have assumed jurisdiction to consider the prayer of the Application, if such prayer would otherwise be permissible under that Section.

• We are of considered view that the Applicant has lien over such Goods as “Unpaid Seller” in terms of Provisions contained in Section 47 of Sale of Goods Act, 1930. Accordingly, no specific direction is necessary from this Tribunal.

Excerpts of the order;

# 1. This Application IA 87/2021 is filed by Sh. Mahesh Sureka, the Resolution Professional (“Applicant”) of the M/s Minesh Prints Limited (“Corporate Debtor”) against the Respondents, which includes Corporate Debtor & the Suspended Directors as Respondent No. 1-4, and the Debtor parties from the outstanding balances towards sale are receivable by the Corporate Debtor as Respondent No. 5 to 19. The Applicant has sought following reliefs:

• a. Direction to the Respondents 1,2,3,4 to assist Resolution Professional to recover the amount from sundry debtors or to identify the stocks which sundry debtors may opt to return to Resolution Professional;

• b. Directions to the Respondents No 5 to 19 to make immediate payment or return the goods, assist Resolution professional to recover the amount from sundry debtors or to identify the stock which sundry debtors may opt to return to Resolution professional.

# 2. The Applicant was appointed as the Interim Resolution Professional of Minesh Prints Limited, by this Tribunal vide its order dated 04-03-2020 passed in CP (IB) 4461 (MB) 2019 admitting the Corporate Debtor into the Corporate Insolvency Resolution Process (“CIRP”).

# 3. It is stated that the CIRP commenced pursuant to application filed by the Corporate Debtor’s Suspended Board in terms of Section 10 of the Insolvency & Bankruptcy Code, 2016 (“Code”). The Respondent No. 3 is the brother of Respondent No. 2 and The Respondent No. 4 is the son of Respondent No. 2. Prior to initiation of Corporate Insolvency Resolution Process ("CIRP") of the Corporate Debtor, the Respondents are stated to be in charge, responsible for and managing and controlling all the business and affairs of the Corporate Debtor and as such have been well aware and possess all the relevant information and documents in relation to the Corporate Debtor including but not limited to its financial position, assets and liabilities.

3.1.The Applicant is constrained to prefer the present Application under Section 19(2), and 60 (5) of the Insolvency and Bankruptcy Code, 2016 ("Code") read with Regulation of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person)) Regulations, 2016 ("CIRP") seeking appropriate orders and directions from this Hon'ble Tribunal on account of the non-co-operation from the Respondent No 5,6,7,8,9,10,11,12,13,14,15,16,17,18,19 as sundry debtors of the corporate debtor and from Respondent no 1,2,3,4, for not taking any action for recovery of dues for last 2 and half years intentionally. Non collection of dues from these sundry debtors is affecting the CIRP process.

3.2.The details of the sundry debtors is as follows : 

i. Asha Textile Rs. 7, 19, 92,461/- (Rupees Seven Crore Nineteen Lakhs, Ninety Two Thousand Four Hundred and Sixty One only). The outstanding is pending from June 2017 and since at the time of initiation of CIRP period the debt was within 3 year and hence the entire amount is under limitation period.

ii. Bhagwati Enterprises Rs. 7, 40, 35,557/- (Rupees Seven Crore Forty Lakhs, Thirty Five Thousand Five Hundred and Fifty Seven Only). The outstanding is pending from June 2017 and since at the time of initiation of CIRP period the debt was within 3 year and hence the entire amount is under limitation period..

iii. Khushi Fabrics Rs.76,50,888/- (Rupees Seven Six Lakhs, Fifty Thousand Eight Hundred and Eighty Eight Only). The outstanding is pending from June 2017 and since at the time of initiation of CIRP period the debt was within 3 under limitation period..

iv. Mahalaxmi Fashion Rs 56,61,588/- (Rupees Fifty Six Lakhs, Sixty One Thousand Five Hundred and Righty Eight Only) The outstanding is pending from June 2017 and since at the time of initiation of CIRP period the debt was within 3 year and hence the entire amount is under limitation period.

v. Sona Synthetic Rs 84,87,006/-(Rupees Eighty Four Lakhs, Eighty Seven Thousand and Six Only). The outstanding is pending from June 2017 and since at the time of initiation of CIRP period the debt was within 3 year and hence the entire amount is under limitation period..

vi. Sparsh Silk Mills Rs. 1,20,80,431/- (Rupees One Crore Twenty Lakhs, Eighty Thousand Four Hundred and Thirty One Only). The outstanding is pending from much earlier of April, 2017

vii. SR Silk Fashion Rs. 39,29,876/-(Rupees Thirty Nine Lakhs, Twenty Nine Thousand Eight

Hundred and Seventy Six Only). The outstanding is pending from much earlier of April, 2017.

viii. Devka Art Pvt Ltd Rs 6,694/- (Rupees Six Thousand Six Hundred and Ninety Four Only).

The outstanding is pending from much earlier of April 2017.

ix. Gomati Sales Corporation Rs. 8,61,500/- (Rupees Eight Lakhs, Sixty One Thousand Five Hundred Only). The outstanding is pending for sale of fixed assets ie machinery.

x. Himeer Textile Rs. 1,26,416/-(Rupees One Lakhs, Twenty Six Thousand Four Hundred and Sixteen Only). Running Account but from April, 2019 no activity

xi. Lotus Industries Rs. 4,00,997/- (Rupees Four Lakhs, Nine Hundred and Ninety Seven Only). Running Account but from April, 2019 no activity

xii. Prabhat Industries Rs 2,70,090/- (Rupees Two Lakhs, Seventy Thousand and Ninety Only). The outstanding is pending from much earlier of April 2017

xiii. Sangeeta Fashion Rs. 3,63,607/- (Rupees Three Lakhs, Sixty Three Thousand Six Hundred and Seven Only). Running Account but from April, 2019 no activity

xiv. Vaibhav Fashions Fab Rs14,835/- (Rupees Fourteen Thousand Eight Hundred and Thirty Five Only). The outstanding is pending from much earlier of April 2017

xv. Yash Art Rs 13,515/- (Rupees Thirteen Thousand Five Hundred and Fifteen Only) The outstanding is pending starting from April 2017 amount is too big of Rs. 18, 58, 95,460 (Rupees Eighteen Crore Fifty Eight Lakhs Ninety Five Thousand Four Hundred and Sixty Only). More than 50% of the amount is for June 2017 ie: just before the starting of GST Taxation.

3.3.It is stated that if sundry debtors have any issue for non payment than they would have returned the goods or should be ready to hand over the stock to Resolution professional. If sundry debtors are not making payment and neither ready to hand over the stock back to Resolution professional and members of the board of the suspended directors have not taken any legal action, it implies that all respondent are tied up with each other. The Applicant is stated to have tried to call them and discussed with them and also sent notices to them for payment.

3.4.It is stated that the Applicant Resolution Professional has discussed and kept this matter in the 3rd CoC and have now taken up the matter with this Tribunal which has been discussed in the 3 COC meeting.

3.5.In view of the aforesaid facts and circumstances, the Applicant has stated that it is just and necessary and in the interest of justice that appropriate orders should be passed to makes CIRP process as transparent and the resolution applicant, if any, can comes out with reasonable terms for all creditors who have filed their claims; the sundry debtors should be asked to make payment immediately or hand over the material back to Resolution Professional as for non-payment of material, this stock should be considered as asset of corporate debtor; and the members of the board of the suspended director should be directed to assist the Resolution professional in identifying the stock and taking back the material.

# 4. The Respondents No. 2, 3 and 4 have filed the Reply jointly stating that the present application seeks reliefs that fall outside the jurisdiction of this Tribunal and the Applicant is attempting to convert this Tribunal into a money recovery forum for Corporate Debtor, and the Resolution Professional is also attempting to outsource his responsibilities and duties to the Suspended Directors. It is further pleaded that the reliefs sought in the present application against the suspended directors are completely vague and ambiguous, hence it must be dismissed in limine.

4.1.It is further stated that The CIRP period of 180 days has expired and the Respondents are not aware of any resolution passed by the CoC for extension of the CIRP period or any order extending the CIRP period passed by this Tribunal. Accordingly, the Applicant is now functus office after expiry of 180 days from 24th March, 2020.

# 5. We have heard the Learned Counsel and perused the material available on record.

5.1.We find that the Applicant is seeking directions for cooperation from the Sundry Debtors and the Suspended Directors in realisation of debts owed by the Sundry Debtors to the Corporate Debtor for goods sold to them prior in time. The Applicant has stated the position of such debtors in the application and has pleaded that most of such debts are overdue and in some cases, no business is being done with such parties. Needless to say, the Sundry Debtors ought to have paid this money without intervention of this Tribunal, as this money is owed to the Corporate Debtor by them and Suspended Directors are statutory obligations to assist the Resolution Professional in realisation of these debts.

5.2.The Applicant has sought directions from this Tribunal to make the Suspended Board to contribute to the Corporate Debtor in terms of Section 19(2) of the Code, to the extent the money is not paid by the stated parties. However, we are of the considered view that such directions are not permissible under section 19(2) and this Bench can not direct them to co-operate. Had this Application been filed in terms of Section 66 of the Code meeting the conditions precedent provided therein, this Bench could have assumed jurisdiction to consider the prayer of the Application, if such prayer would otherwise be permissible under that Section.

5.3.The Applicant has also sought the directions to the Sundry Debtors stated in this Application to pay towards outstanding dues or return the goods lying unsold with them. We are of considered view that the Applicant has lien over such Goods as “Unpaid Seller” in terms of Provisions contained in Section 47 of Sale of Goods Act, 1930. Accordingly, no specific direction is necessary from this Tribunal. As regards payment of debts owed by them to the Corporate Debtor, we are of considered view that these debtors are under an obligation to pay the same to the Corporate Debtor and must pay the same. To this extent, we consider it appropriate to direct Respondent No 5 to 19 to co-operate the Applicant in realisation of the debts owed by them to the Corporate Debtor without any further delay. Needless to say, the Respondent No. 1 to 4 shall extend necessary co-operation, as sought by the Applicant from time to time, to expedite the realisation of these debts.

# 6. In view of aforesaid directions, this IA 87/2021 is partly allowed and disposed of accordingly.

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